As filed with the Securities and Exchange Commission on July 11, 2001
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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VENATOR GROUP, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of
incorporation or organization)
13-3513936
(I.R.S. Employer Identification No.)
---------------
112 W. 34th Street
New York, New York 10120
(212) 720-3700
Fax: (212) 720-3643
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
---------------
Gary M. Bahler, Esq.
Senior Vice President, General Counsel and Secretary
Venator Group, Inc.
112 W. 34th Street
New York, New York 10120
(212) 720-3700
Fax: (212) 720-3643
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
David J. Goldschmidt, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, NY 10036
(212) 735-3000
Fax: (212) 735-2000
----------------------
Approximate date of commencement of proposed sale to
the public: From time to time after the effective date of
this registration statement.
----------------------
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, check the
following box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
============================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class Amount to be Offering Price Aggregate Amount of
of Securities to be Registered Registered Per Note Offering Price Registration Fee
- ----------------------------------------------------------------------------------------------------------------------------
5.50 % Convertible Subordinated Notes due 2008 $150,000,000(1) 115%(2)(3) $172,500,000(2)(3) $43,125
- ----------------------------------------------------------------------------------------------------------------------------
Common stock, par value $0.01 per share..... 9,490,067(4) -- -- (5)
============================================================================================================================
(1) Represents the aggregate principal amount at maturity of the notes
that were originally issued by the Registrant in June 2001.
(2) This estimate is made pursuant to Rule 457(c) of the Securities Act of
1933, as amended, solely for purposes of determining the registration
fee. The above calculation is based on the average bid and ask prices
for the Registrant's notes in secondary market transactions executed
by the initial purchasers of the notes on July 9, 2001, as reported to
the Registrant by the initial purchasers.
(3) Exclusive of accrued interest.
(4) Represents the number of shares of common stock that are currently
issuable upon conversion of the notes registered hereby. The number of
shares of common stock that may be issued upon conversion of the notes
in the future is indeterminate, and the Registrant is also registering
this indeterminate amount pursuant to Rule 416 of the Securities Act.
(5) No separate consideration will be received for the shares of common
stock issuable upon conversion of the notes and, therefore, no
registration fee is required pursuant to Rule 457(i) under the
Securities Act.
------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
SUBJECT TO COMPLETION, DATED JULY 11, 2001
[VENATOR LOGO]
VENATOR GROUP, INC.
$150,000,000
5.50% CONVERTIBLE SUBORDINATED NOTES DUE 2008
AND SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
We issued the notes in a private placement in June 2001. Under this
prospectus, the selling securityholders named in this prospectus or in
prospectus supplements may offer and sell their notes and/or the shares of
common stock issuable upon conversion of their notes.
Holders may surrender the notes for conversion into shares of our common
stock at a conversion price of $15.806 per share at any time before the
close of business on the maturity date, unless we have previously redeemed
or repurchased the notes. The conversion rate may be adjusted as described
in this prospectus under "Description of Notes -- Conversion." The notes
will mature on June 1, 2008.
We will pay interest on the notes in cash on June 1 and December 1 of each
year. The first interest payment will be made on December 1, 2001. The
notes will bear interest at a fixed annual rate of 5.50%.
We may redeem all or a portion of the notes at any time on or after June 4,
2004 at the prices set forth in this prospectus under "Description of the
Notes -- Optional Redemption by Venator." In addition, upon the occurrence
of a change in control, holders of the notes may require us to repurchase
all or a portion of their notes at 100% of the principal amount thereof,
plus accrued and unpaid interest.
The notes are general unsecured obligations of Venator and are subordinated
in right of payment to all of our existing and future senior indebtedness
and structurally subordinated to the indebtedness and other liabilities of
our subsidiaries.
Shares of our common stock are quoted on the New York Stock Exchange under
the symbol "Z." The last reported sale price of our common stock on July
10, 2001 was $14.65 per share.
INVESTING IN OUR NOTES OR SHARES OF OUR COMMON STOCK INVOLVES RISKS. SEE
"RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
We will not receive any of the proceeds from the sale of the notes or the
shares of common stock by any of the selling securityholders. The notes and
the shares of common stock may be offered in negotiated transactions or
otherwise, at market prices prevailing at the time of sale or at negotiated
prices. The timing and amount of any sale are within the sole discretion of
the selling securityholders. In addition, the shares of common stock may be
offered from time to time through ordinary brokerage transactions on the
New York Stock Exchange. See "Plan of Distribution." The selling
securityholders may be deemed to be "underwriters" as defined in the
Securities Act of 1933, as amended. Any profits realized by the selling
securityholders may be deemed to be underwriting commissions. If the
selling securityholders use any broker-dealers, any commission paid to
broker-dealers and, if broker-dealers purchase any notes or shares of
common stock as principals, any profits received by such broker-dealers on
the resale of the notes or shares of common stock may be deemed to be
underwriting discounts or commissions under the Securities Act.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is July 11, 2001.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
VENATOR. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF VENATOR SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY SECURITIES OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY OR OF
ANY SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON
TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THE INFORMATION
CONTAINED IN THIS PROSPECTUS SPEAKS ONLY AS OF THE DATE OF THIS PROSPECTUS
UNLESS THE INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.
Table of Contents
Special Note Regarding Forward-Looking Statements.............................2
Incorporation Of Certain Documents By Reference...............................2
Prospectus Summary............................................................4
The Offering..................................................................6
Risk Factors..................................................................7
Use of Proceeds..............................................................12
Price Range of Common Stock..................................................12
Dividend Policy..............................................................12
Ratio of Earnings to Fixed Charges...........................................13
Business.....................................................................14
Management...................................................................21
Description of Notes.........................................................24
Description of Revolving Credit Facility.....................................38
Description of Capital Stock.................................................39
Selling Securityholders......................................................56
Plan of Distribution.........................................................57
Legal Matters................................................................59
Experts......................................................................59
Where You Can Find More Information..........................................59
Special Note Regarding Forward-Looking Statements
This prospectus and the documents incorporated by reference in this
prospectus contain "forward-looking statements" within the meaning of the
securities laws. These forward-looking statements are subject to a number
of risks and uncertainties, many of which are beyond our control. All
statements other than statements of historical facts included or
incorporated by reference in this prospectus, including the statements
under "Prospectus Summary - Venator Group, Inc." and elsewhere in this
prospectus regarding our strategy, future operations, financial position,
estimated revenues, projected costs, prospects, plans and objectives of
management are forward-looking statements. When used in this prospectus,
the words "will," "believe," "anticipate," "intend," "estimate," "expect,"
"project" and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain such
identifying words. All forward-looking statements speak only as of the date
of this prospectus. We do not undertake any obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. Although we believe that our
plans, intentions and expectations reflected in or suggested by the
forward-looking statements we make in this prospectus are reasonable, we
can give no assurance that such plans, intentions or expectations will be
achieved. The cautionary statements qualify all forward-looking statements
attributable to us or persons acting on our behalf.
Incorporation Of Certain Documents By Reference
This prospectus "incorporates by reference" certain of the reports, proxy
and information statements and other information that we have filed with
the Commission under the Exchange Act. This means that we are disclosing
important information to you by referring you to those documents. The
information that we file later with the Commission will automatically
update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the Commission
under sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until all of
the securities offered by this prospectus are sold.
o Quarterly Report on Form 10-Q for the quarter ended May 5,
2001, filed on June 13, 2001;
o Definitive Proxy Statement with respect to the Annual Meeting
of Shareholders held on June 14, 2001 filed on May 2, 2001;
o Annual Report on Form 10-K for the year ended February 3,
2001, filed on April 23, 2001;
o Current Report on Form 8-K dated June 11, 2001, filed on June
11, 2001;
o Current Report on Form 8-K dated May 30, 2001, filed on May
30, 2001;
o Current Report on Form 8-K dated May 24, 2001, filed on May
24, 2001; and
o Current Report on Form 8-K dated May 17, 2001, filed on May
18, 2001.
All documents that we file with the Commission from the date of this
prospectus to the end of the offering of the notes and shares of common
stock shall also be deemed to be incorporated herein by reference.
Any statement contained in a document incorporated or considered to be
incorporated by reference in this prospectus shall be considered to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any subsequently filed
document that is or is considered to be incorporated by reference modifies
or supersedes such statement. Any statement that is modified or superseded
shall not, except as so modified or superseded, constitute a part of this
prospectus.
You may request a copy of any of the documents that are incorporated by
reference in this prospectus, other than exhibits which are not
specifically incorporated by reference into such documents, at no cost by
writing or telephoning us at the following:
Venator Group, Inc.
112 West 34th Street
New York, New York 10120
Attention: Investor Relations
Telephone: (212) 720-4600
Prospectus Summary
This prospectus constitutes part of the Registration Statement on Form S-3
that we filed with the Securities and Exchange Commission (the "SEC") using
a "shelf" registration process. Under the shelf process, any selling
security holder may sell any combination of the securities described in
this prospectus in one or more offerings. This prospectus provides you with
a general description of the securities the selling securityholders may
offer. When used in this prospectus, unless otherwise indicated, the terms
"we," "our" and "us" refer to Venator and its subsidiaries. Our fiscal year
ends on the Saturday closest to January 31. Our 1997 and 2000 reporting
years included 53 weeks whereas all other reporting years in this
prospectus include 52 weeks. All references to years in this prospectus
when discussing our financial results relate to fiscal years; all other
references to years relate to calendar years. Therefore, references to the
year 2000 in this prospectus shall mean the fiscal year ended February 3,
2001.
Venator Group, Inc.
We are a leading global specialty retailer of athletic footwear and
apparel, offering high quality branded and private label products to men,
women and children through our retail stores and direct-to-customers
business. We currently operate approximately 3,600 stores through a network
of complementary retail store formats under the brand names Foot Locker,
Lady Foot Locker, Kids Foot Locker and Champs Sports. Our stores are
primarily mall-based and are located in 14 countries in North America,
Europe and Australia. Our direct-to-customers business, Footlocker.com,
Inc., through its affiliates, is an integrated e-commerce and direct
marketing business consisting primarily of websites for each of our store
formats and catalogs. We believe that our portfolio strategy is unique in
the athletic industry, with specialized retail store formats, catalogs and
Internet websites targeted specifically to the men's, women's and
children's segments of the market, allowing us to tailor our merchandise
assortments more effectively and enhance our customer service to appeal to
a broad range of customers.
In 1997, we initiated a strategic plan aimed at building on the core
strengths of the Foot Locker business and divesting all non-athletic
footwear and apparel operations to establish a foundation for our future
growth. We believe that our 2000 financial results continue to affirm the
direction of our strategic initiatives. For the fiscal year ended February
3, 2001, sales from our ongoing core athletic businesses grew 11.1 percent,
to $4,232 million, and comparable store sales increased by 11.5 percent.
Operating profit from ongoing operations more than doubled to $270 million
in 2000 from $111 million in 1999, increasing as a percentage of sales to
6.4 percent from 2.9 percent, respectively. Our income from continuing
operations before the cumulative effect of accounting changes increased to
$0.77 per share on a diluted basis in 2000 from $0.43 on a diluted basis in
1999.
Competitive Strengths
Our market leadership position provides competitive advantages that we
strategically leverage across our operations, resulting in the following
key competitive strengths:
o Strong brand recognition. The Foot Locker brand is one of the most
widely recognized names in the market segments in which we operate,
epitomizing high quality for the active lifestyle customer. This brand
equity has aided our ability to successfully develop and increase our
portfolio of complementary retail store formats, specifically, Lady
Foot Locker and Kids Foot Locker, as well as our Footlocker.com, Inc.
direct-to-customers business.
o Key vendor relationships. Our position as a leading global specialty
retailer of athletic footwear and apparel has enabled us to build
strong relationships with key branded vendors, including Nike, adidas,
Reebok, Timberland, New Balance and K-Swiss. From these and other
vendors, we enjoy significant allocations of exclusive and limited
distribution products.
o Product sourcing strengths. Our size and purchasing power enable us to
source private-label products at competitive prices. Our private-label
program provides our customers with athletic footwear and apparel at
lower prices than branded products, driving incremental customer
traffic and sales to our retail stores and direct-to-customers
business.
o International expertise and presence. Through our presence in
international markets, we have established strong brand recognition
and an advantage over our domestic competitors contemplating expansion
into overseas markets. Operating internationally allows our merchants
to share product trend information with our domestic operations. The
sharing of information among our various domestic and international
businesses enables us to anticipate more rapidly new fashion trends
that move from one market to another, often allowing us to be
trend-setters in the domestic market.
o Three synergistic distribution channels. We offer our products through
three integrated channels of distribution: our stores, catalogs and
websites. We believe that our three sales channels allow us to provide
customers with increased shopping flexibility and ease of service,
leverage our existing infrastructure and our experience in customer
service and order fulfillment and increase the visibility of our brand
names.
Business Strategies
We are pursuing the following strategies for future growth:
o Improve productivity of existing stores. We employ a variety of
initiatives designed to increase the productivity of our existing
athletic store formats, including store renovations, stock keeping
unit, or SKU, count reductions and floor space reallocations. As a
result of these initiatives, our comparable store sales increased by
11.5 percent and our stores generated sales of nearly $300 per gross
square foot in 2000, an improvement of approximately $20 from 1999.
Our objective is to increase sales productivity to greater than $350
per gross square foot.
o Further penetrate European markets. We intend to significantly expand
our presence in Europe, where the athletic footwear retail market is
fragmented and there is a strong customer interest in American brands,
such as Nike. We will continue to identify suitable retail locations
in this region and plan to double our current 289 store base in Europe
over the next few years. To support this growth, we recently completed
the construction of a new distribution center in the Netherlands.
o Increase our North American store base. Our plan is to open
approximately 300 Foot Locker stores in urban markets over the next
several years, with 50 scheduled to open in 2001. Since occupancy
costs in urban locations are often significantly lower than in
mall-based stores, resulting in considerably higher profit margins, we
believe our expansion in urban areas will reinforce our brands and
generate strong financial performance.
o Differentiated merchandising strategy. Our objective is to
differentiate our merchandise assortments from those of our
competitors by offering trend-right products at competitive prices
from both branded manufacturers and our own private label program. For
example, we maximize exclusive and marquee product offerings from
leading vendors as a means of differentiation from most smaller
specialty retail chains and department stores.
o Capitalize on profitable direct-to-customers business. During 2000, we
enhanced our websites, which helped drive online sales volume to $58
million from $14 million in 1999, positioning us as a leading online
athletic footwear and apparel retailer. Additionally, each of our
catalog and e-commerce businesses was profitable in 2000. We believe
that our integrated operations, combined with the strength of our Foot
Locker brand name, will allow us to further develop our presence in
this growing market segment. We also plan to develop an international
Internet strategy over the next several years.
Our principal executive offices are located at 112 West 34th Street, New
York, N.Y. 10120. Our telephone number is (212) 720-3700.
The Offering
Notes Offered............................ $150,000,000 aggregate principal
amount of 5.50% convertible
subordinated notes due 2008.
Maturity................................. June 1, 2008.
Interest................................. The notes bear interest at a
fixed annual rate of 5.50% to be
paid in cash every June 1 and
December 1 of each year,
beginning on December 1, 2001.
The first interest payment will
include interest from June 8,
2001.
Conversion............................... The notes are convertible into
shares of our common stock at a
conversion price of $15.806 per
share. The conversion price may
be subject to adjustment under
certain circumstances. The notes
are convertible at any time
prior to the close of business
on the business day prior to the
date of repurchase, redemption
or final maturity of the notes,
as appropriate. See "Description
of Notes - Conversion of Notes."
Subordination............................ The notes are subordinated to
all existing and future senior
indebtedness and are effectively
subordinated to all of the
indebtedness and other
liabilities (including trade and
other payables) of our
subsidiaries. As of February 3,
2001, we had approximately $290
million of senior indebtedness
and we and our subsidiaries had
approximately $929 million of
other liabilities reflected on
our consolidated balance sheet.
In addition, with respect to our
continuing operations, we and
our subsidiaries had total
operating lease commitments of
$1,907 million as of February 3,
2001. Other liabilities on our
consolidated balance sheet
include our estimate of costs to
exit leases of our discontinued
operations. The indenture
governing the notes does not
limit the amount of
indebtedness, including senior
indebtedness, that we and our
subsidiaries may incur. See
"Description of Notes --
Subordination of the Notes."
Sinking Fund............................. None.
Optional Redemption...................... At any time on or after June 4,
2004, we may redeem some or all
of the notes at the declining
redemption prices listed herein,
plus accrued interest. See
"Description of Notes --
Optional Redemption by Venator."
Repurchase At Holder's Option
Upon A Repurchase Event................ You may require us to repurchase
your notes upon a repurchase
event in cash or, at our option,
in common stock, at 100% of the
principal amount of the notes,
plus accrued and unpaid
interest.
Use Of Proceeds.......................... We will not receive any of the
proceeds from the sale by any
selling securityholder of the
notes or shares of common stock
offered under this prospectus.
Risk Factors
An investment in the notes and shares of common stock involves significant
risks. In addition to reviewing other information in this prospectus, you
should carefully consider the following factors before deciding to purchase
the notes or shares of common stock.
Risks Related to Our Business
The industry in which we operate is dependent upon fashion trends, customer
preferences and other fashion-related factors.
The athletic footwear and apparel industry is subject to changing fashion
trends and customer preferences. We cannot guarantee that our merchandise
selection will accurately reflect customer preferences on the date of sale
or that we will be able to identify and respond quickly to fashion changes,
particularly given the long lead times for ordering much of our merchandise
from vendors. For example, like our competitors, we order athletic footwear
four to six months prior to delivery to our stores. If we fail to
accurately anticipate either the market for the merchandise in our stores
or our customers' purchasing habits, we may be required to sell a
significant amount of unsold inventory at below average markups or below
cost, which would have a material adverse effect on our business, financial
condition and results of operations.
A substantial portion of our highest margin sales are to young males (ages
12-25), many of whom we believe purchase athletic footwear and licensed
apparel as a fashion statement and are frequent purchasers of athletic
footwear. Any shift in fashion trends that would make athletic footwear or
licensed apparel less attractive to these customers would have a material
adverse effect on our business, financial condition and results of
operations.
The businesses in which we operate are highly competitive.
The retail athletic footwear and apparel business is highly competitive
with relatively low barriers to entry. Our athletic footwear and apparel
operations compete primarily with athletic footwear specialty stores,
sporting goods stores and superstores, department stores, discount stores,
traditional shoe stores and mass merchandisers, many of which are units of
national or regional chains that have significant financial and marketing
resources. The principal competitive factors in our markets are price,
quality, selection of merchandise, reputation, store location, advertising
and customer service. We cannot assure you that we will continue to be able
to compete successfully against existing or future competitors. Our
expansion into markets served by our competitors and entry of new
competitors or expansion of existing competitors into our markets could
have a material adverse effect on our business, financial condition and
results of operations.
Although we sell merchandise via the Internet through Footlocker.com and
its affiliates, a significant shift in customer buying patterns to
purchasing athletic footwear, athletic apparel and sporting goods via the
Internet could have a material adverse effect on us. In particular, some of
the manufacturers of our products distribute products directly through the
Internet and others may follow. Should this occur and if our customers
decide to purchase directly from our manufacturers, it could have a
material adverse effect on our business, financial condition and results of
operations.
We depend on mall traffic and our ability to identify suitable store
locations.
Our sales, particularly in the United States and Canada, are dependent in
part on a high volume of mall traffic. Our stores are located primarily in
enclosed regional and neighborhood malls. Mall traffic may be adversely
affected by, among other things, economic downturns, the closing of anchor
department stores or changes in customer preferences. A decline in the
popularity of mall shopping among our target customers could have a
material adverse effect on us.
To take advantage of customer traffic and the shopping preferences of our
customers, we need to maintain or acquire stores in desirable locations
such as in regional and neighborhood malls anchored by major department
stores. We cannot assure you that desirable mall locations will continue to
be available.
A change in the relationship with any of our key vendors or the
unavailability of our key products at competitive prices could affect our
financial health.
Our business is dependent to a significant degree upon our ability to
purchase brand-name merchandise at competitive prices, including the
receipt of volume discounts and cooperative advertising and other
allowances from our vendors. For the fiscal year ended February 3, 2001,
approximately 71 percent of our merchandise was purchased from five vendors
and approximately 49 percent of our merchandise was purchased from Nike,
reflecting Nike's overall share of the athletic footwear and apparel
market. We have no long-term supply contracts with any of our vendors. Our
inability to obtain merchandise in a timely manner from major suppliers
(particularly Nike) as a result of any disruption in the supply chain could
have a material adverse effect on our business, financial condition and
results of operations. Because of our strong dependence on Nike, any
adverse development in Nike's financial condition and results of operations
or the inability of Nike to develop and manufacture products that appeal to
our target customers could also have an adverse effect on our business,
financial condition and results of operations. We cannot assure you that we
will be able to acquire merchandise at competitive prices or on competitive
terms in the future.
Merchandise that is high profile and in high demand is allocated by our
vendors based upon their internal criteria. Although we have generally been
able to purchase sufficient quantities of this merchandise in the past, we
cannot assure you that our vendors will continue to allocate sufficient
amounts of such merchandise in the future. In addition, our vendors provide
support to us through cooperative advertising allowances and promotional
events. We cannot assure you that such assistance from our vendors will
continue in the future. These risks could have a material adverse effect on
our business, financial condition and results of operations.
We may experience fluctuations in and cyclicality of our comparable store
sales results.
Our comparable store sales have fluctuated significantly in the past, on
both an annual and a quarterly basis, and we expect them to continue to
fluctuate in the future. A variety of factors affect our comparable store
sales results, including, among others, fashion trends, the highly
competitive retail store sales environment, economic conditions, timing of
promotional events, changes in our merchandise mix, calendar shifts of
holiday periods and weather conditions.
Many of our products, particularly high-end athletic footwear and licensed
apparel, represent discretionary purchases. Accordingly, customer demand
for these products could decline in a recession. These risks could have a
material adverse effect on our business, financial condition and results of
operations.
Our operations may be adversely affected by economic or political
conditions in other countries.
Approximately 10 percent of our sales and a significant portion of our
operating profits for 2000 were attributable to our sales in Europe and
Australia. As a result, our business is subject to the risks generally
associated with doing business outside North America, such as foreign
governmental regulations, foreign customer preferences, political unrest,
disruptions or delays in shipments and changes in economic conditions in
countries in which we operate. Although we enter into forward foreign
exchange contracts and option contracts to reduce the effect of foreign
currency exchange rate fluctuations, our operations may be adversely
affected by significant changes in the value of the U.S. dollar as it
relates to certain foreign currencies. In addition, the adoption of a
single European currency will lead to greater product pricing transparency
and a more competitive environment.
In addition, because we and our suppliers have a substantial amount of our
products manufactured in foreign countries, our ability to obtain
sufficient quantities of merchandise on favorable terms may be affected by
governmental regulations and economic, labor and other conditions in the
countries from which our suppliers obtain their product. The People's
Republic of China is a significant source of our footwear and apparel
merchandise. China's failure to maintain its Normal Trading Status
(previously known as "most favored nation" status) could result in a
substantial increase in tariff rates on goods imported from China and,
therefore, could adversely affect our operations. In addition, trade and
other sanctions in the form of retaliatory duties or otherwise, which have
and continue to be threatened against China, could restrict or eliminate
imports from China and thereby adversely affect our business, financial
condition and results of operations.
There are certain risks associated with our businesses currently held for
sale.
In January 2001, we announced a plan for the discontinuance of the Northern
Group operations, which consist of retail outlets selling private label
apparel. The plan provides for the shutdown of 324 U.S. stores and the sale
of 370 Canadian stores. We also currently hold two other businesses for
sale -- The San Francisco Music Box Company and the Hospitality Group. If
we are unable to implement the divestitures of the Northern Group and other
businesses held for sale as planned or if we do not realize the planned
cash proceeds from those divestitures, we may be required to adjust the
reserve already provided for on our balance sheet and our financial
position may be adversely affected.
Complications in our distribution centers may affect our business.
We operate four distribution centers worldwide to support our athletic
business. If complications arise with any one facility or any facility is
severely damaged or destroyed, the other distribution centers may not be
able to support the resulting additional distribution demands. This may
adversely affect our ability to deliver inventory on a timely basis.
We may not be able to successfully expand and implement our point of sale
systems.
Our failure to implement and improve our point of sale systems as required
could adversely affect our future operating results. We are continually
evaluating the adequacy of our existing point of sale systems. However, our
ability to install and operate this point of sale system in each of our
stores depends on our ability to replace existing systems without
disrupting our operations. In connection with the introduction of a single
European currency, we need to modify our point of sale systems in affected
countries to accommodate the single currency. We cannot assure you that we
will be able to install our point of sale systems successfully. We also
cannot assure you that our systems can address all of the changing demands
that our expanding operations will impose on them.
Issues of global workplace conditions may impact our business.
If any one of our manufacturers or vendors:
o fails to operate in compliance with applicable laws and regulations,
o is perceived by the public as failing to meet certain labor standards
that are generally accepted as ethical in the United States or
o employs unfair labor practices,
our business may be adversely affected. Current global workplace concerns
of the public include perceived low wages, poor working conditions, age of
employees and various other employment standards. These globalization
issues may impact the available supply of certain manufacturers' products,
which may result in increased costs to us. Furthermore, a negative customer
perception of any of our key vendors or their products may result in a
lower customer demand for our athletic footwear and apparel.
Risks Related to the Notes
Our substantial indebtedness could adversely affect our financial condition
and prevent us from fulfilling our obligations under these notes.
We have now and, after this offering, will continue to have a significant
amount of indebtedness that could have important consequences to you. For
example, it could:
o make it more difficult for us to satisfy our obligations with respect
to the notes;
o increase our vulnerability to general adverse economic and industry
conditions;
o require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures and other general corporate purposes;
o limit our flexibility in reacting to changes in our business and the
industry in which we operate;
o place us at a competitive disadvantage compared with our competitors
that have less debt;
o limit, along with the financial and other restrictive covenants in our
indebtedness, among other things, our ability to borrow additional
funds; and
o if we fail to comply with covenants in our indebtedness, result in an
event of default that, if not cured or waived, could result in our
indebtedness becoming immediately due and payable.
Our amended revolving credit facility contains covenants that, among other
things, restrict our ability to incur debt, incur liens and make
investments or acquisitions. We also are required to achieve certain
financial ratios. See "Description of Revolving Credit Facility." In
addition, certain of our other indebtedness contains covenants that, among
other things, restrict our business decisions. These risks could have a
material adverse effect on us. The indenture does not limit our ability to
incur additional indebtedness in the future. If new indebtedness is
incurred, the related risks that we now face could intensify. Our ability
to make required payments on the notes and to satisfy any other debt
obligations will depend upon our future operating performance and our
ability to obtain additional debt or equity financing.
If our subsidiaries do not make sufficient distributions to us, we will not
be able to make payment on our debt, including the notes.
We are a holding company with no material operations and only limited
assets. Because a significant portion of our operations are conducted by
our subsidiaries, our cash flow and our ability to service indebtedness,
including our ability to pay the interest on and principal of the notes,
are dependent to a large extent upon cash dividends and distributions or
other transfers from our subsidiaries. In addition, any payment of
dividends, distributions, loans or advances by our subsidiaries to us could
be subject to restrictions on dividends or repatriation of earnings under
applicable local law, monetary transfer restrictions and foreign currency
exchange regulations in the jurisdictions in which our subsidiaries
operate, and any restrictions imposed by the current and future debt
instruments of our subsidiaries. Such payments to us by our subsidiaries
are contingent upon our subsidiaries' earnings.
Our subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amounts due pursuant to the
notes or to make any funds available therefor, whether by dividends, loans,
distributions or other payments, and do not guarantee the payment of
interest on, or principal of, the notes. Any right that we have to receive
any assets of any of our subsidiaries upon the liquidation or
reorganization of any such subsidiary, and the consequent right of holders
of notes to realize proceeds from the sale of their assets, will be
effectively subordinated to the claims of subsidiary creditors, including
trade creditors and holders of debt issued by the subsidiary.
The notes are subordinated and unsecured.
The notes are subordinated and unsecured in right of payment in full to all
of our existing and future senior indebtedness and are effectively
subordinated to all of the indebtedness and other liabilities (including
trade and other payables) of our subsidiaries. As a result, in the event of
our bankruptcy, winding-up, liquidation, reorganization, insolvency or
similar proceedings, or upon acceleration of the notes due to an event of
default under the indenture, our assets will be available to pay
obligations on the notes only after all senior indebtedness and the
indebtedness of our subsidiaries have been paid in full. After retiring our
senior indebtedness and the indebtedness of our subsidiaries, we may not
have sufficient assets remaining to pay amounts due on any or all of the
notes then outstanding.
The notes are not protected by restrictive covenants.
The indenture governing the notes does not contain any financial or
operating covenants or restrictions on the payments of dividends, the
incurrence of indebtedness or the issuance or repurchase of securities by
us or any of our subsidiaries. The indenture contains no covenants or other
provisions to afford protection to holders of the notes in the event of a
fundamental change involving Venator Group except to the extent described
under "Description of Notes -- Repurchase at Option of Holders."
We may be required to repurchase the notes upon a repurchase event.
You may require us to repurchase all or any portion of your notes upon a
repurchase event. We may not have sufficient cash funds to repurchase the
notes upon a repurchase event. We may elect, subject to certain conditions,
to pay the repurchase price in common stock. Although there are currently
no restrictions on our ability to pay the repurchase price, future debt
agreements may prohibit us from repaying the repurchase price in cash. If
we are prohibited from repurchasing the notes, we could seek consent from
the lenders under such debt agreements to repurchase the notes. If we were
unable to obtain their consent, we could attempt to refinance the notes. If
we were unable to obtain a consent or refinance, we would be prohibited
from repurchasing the notes other than for common stock. If we were unable
to repurchase the notes upon a repurchase event, it would result in an
event of default under the indenture. An event of default under the
indenture could result in an event of default under our other then-existing
debt. In addition, the occurrence of the repurchase event may be an event
of default under our other debt. As a result, we would be prohibited from
paying amounts due on the notes under the subordination provisions of the
indenture.
The trading price of our securities could be subject to significant
fluctuations.
The trading price of our common stock has been volatile, and the trading
price for the notes and the common stock may be volatile in the future.
Factors such as announcements of fluctuations in our or our competitors'
operating results, changes in our prospects and market conditions for
athletic footwear and apparel stocks in general could have a significant
impact on the future trading prices of our common stock and the notes. In
particular, the trading price of the common stock of many athletic footwear
and apparel companies, including us, has experienced extreme price and
volume fluctuations, which have at times been unrelated to the operating
performance of such companies whose stocks were affected. Some of the
factors that may cause volatility in the price of our securities include:
o customer demand and fashion trends;
o competitive market forces;
o uncertainties related to the effect of competitive products and
pricing;
o customer acceptance of our merchandise mix and retail store locations;
o economic conditions worldwide;
o effect of currency fluctuations; and
o ability to execute our business plans with regard to each of our
operating units.
The price of our securities may also be affected by the estimates and
projections of the investment community, general economic and market
conditions, and the cost of operations in our product markets. While we
cannot predict the individual effect that these factors may have on the
price of our securities, these factors, either individually or in the
aggregate, could result in significant variations in price during any given
period of time. We cannot assure you that these factors will not have an
adverse effect on the trading prices of our common stock and the notes.
Use of Proceeds
We will not receive any of the proceeds from the sale by any selling
securityholder of the notes or the shares of common stock offered under
this prospectus.
Price Range of Common Stock
Our common stock is quoted on the New York Stock Exchange under the symbol
"Z." The following table sets forth the range of high and low closing sale
prices for our common stock on the New York Stock Exchange for the fiscal
quarters indicated since January 31, 1999.
High Low
2001
First Quarter...................................... $13.83 $10.75
Second Quarter to July 10, 2001.................... $16.20 12.85
2000
First Quarter...................................... $12.25 $5.00
Second Quarter..................................... $14.75 $9.88
Third Quarter...................................... $16.50 $11.31
Fourth Quarter..................................... $16.75 $9.75
1999
First Quarter...................................... $11.50 $3.19
Second Quarter..................................... $12.00 $8.38
Third Quarter...................................... $10.75 $6.50
Fourth Quarter..................................... $8.19 $5.88
As of June 2, 2001, we had 31,807 shareholders of record of our common
stock. The closing sale price of our common stock on July 10, 2001 was
$14.65 per share.
Dividend Policy
We suspended payment of dividends in 1995. We do not expect to declare or
pay any dividends on our common stock in the foreseeable future. We intend
to retain all earnings, if any, to invest in our operations. The payment of
future dividends is within the discretion of our board of directors and
will depend upon our future earnings, if any, our capital requirements,
financial condition and other relevant factors. Our revolving credit
agreement requires that we meet certain financial tests before we may pay
dividends on our common stock. We do not meet those tests.
Ratio of Earnings to Fixed Charges
The ratios of earnings to fixed charges for the fiscal years indicated are
stated below. For purposes of computing the ratios, earnings represent
income from continuing operations before fixed charges and taxes, and fixed
charges represent gross interest expense, including capitalized interest,
and a portion of rental expense, which is deemed to be representative of
the interest factor. Earnings were not adequate to cover fixed charges by
$21 million for 1998.
Fiscal Year Ratio
- ----------- -----
2000 1.9x
1999 1.4x
1998 0.9x
1997 2.5x
1996 2.6x
For the first quarter ended May 5, 2001, the ratio of earnings to fixed
charges was 2.1x.
Business
We are a leading global specialty retailer of athletic footwear and apparel
offering high quality branded and private label products to men, women and
children through our retail stores and direct-to-customers business. We
currently operate approximately 3,600 stores through a network of
complementary retail store formats under the brand names Foot Locker, Lady
Foot Locker, Kids Foot Locker and Champs Sports. Our stores are primarily
mall-based and are located in 14 countries in North America, Europe and
Australia. Our direct-to-customers business, Footlocker.com, Inc., through
its affiliates, is the largest Internet and catalog retailer of athletic
footwear, apparel and equipment.
In 1997, we initiated a strategic plan aimed at building on the core
strengths of our Foot Locker business and divesting all non-athletic
footwear and apparel operations to establish a foundation for our future
growth. We believe that our 2000 financial results continue to affirm the
direction of our strategic initiatives. For the fiscal year ended February
3, 2001, sales from our ongoing core athletic businesses increased 11.1
percent, to $4,232 million, and comparable store sales increased by 11.5
percent. Operating profit from ongoing operations more than doubled to $270
million in 2000 from $111 million in 1999, increasing as a percentage of
sales to 6.4 percent from 2.9 percent, respectively. Our income from
continuing operations before the cumulative effect of accounting changes
increased to $0.77 per share on a diluted basis in 2000 from $0.43 on a
diluted basis in 1999.
We believe that our portfolio strategy is unique in the athletic industry,
with specialized retail store formats, catalogs and Internet websites
targeted specifically to the men's, women's and children's segments of the
market, allowing us to tailor our merchandise assortments more effectively
and enhance our customer service to appeal to a broad range of customers.
Our portfolio of operations is comprised of the following retail store
formats and our direct-to-customers businesses:
Foot Locker -- Our primary retail store format, Foot Locker, has
become the world's largest athletic specialty retailer, offering
an in-depth selection of footwear and apparel. Our target
customers at Foot Looker are primarily males between the ages of
12 to 19 years looking to find the latest styles and technologies
in the running, basketball, classic, tennis, walking and
cross-training categories.
Our 1,936 stores are located in 14 countries, including 1,453 in
the United States and Puerto Rico, 129 in Canada, 289 in Europe
and 65 in Australia. Our domestic Foot Locker stores have an
average of 2,300 selling square feet and our international stores
have an average of 1,600 selling square feet.
Lady Foot Locker -- Our Lady Foot Locker format is the only
national specialty store chain that specializes in women's
athletic footwear and apparel. Lady Foot Locker offers a large
selection of major athletic brands. Lady Foot Locker's exclusive
branded product assortments and our private label offerings under
the "Actra" and Lady Foot Locker Sport labels provide a key
strategic advantage over our competitors.
Lady Foot Locker's primary target customer is the 18 to
29-year-old woman who is active, fashion-conscious and
brand-aware. With 662 stores in the United States and Puerto Rico,
our Lady Foot Locker stores average 1,300 selling square feet and
are designed to facilitate a pleasant and effortless shopping
experience.
Kids Foot Locker -- Our Kids Foot Locker format has established a
tradition of fitting excellence and a reputation for outstanding
customer service. At Kids Foot Locker, parents will find a
complete collection of athletic footwear and apparel specifically
targeted for children from five to 11 years old. Our core Kids
Foot Locker customer is a mother of young children who is also
likely to be a primary customer of Lady Foot Locker. Our 398
stores are located in the United States and Puerto Rico and have
an average of 1,400 selling square feet.
Champs Sports -- Our Champs Sports format is one of the largest
mall-based retailers of sporting goods in the United States and
Canada. Each Champs Sports store is designed to provide an
in-depth array of products, one-on-one customer service, and a
high-end store environment appealing to a target customer ages 12
to 25 years old. Because of the breadth of its product offerings,
Champs Sports is able to meet customers' needs for a wide variety
of products suiting their active lifestyles. Apparel, equipment
and accessory categories provide Champs Sports with a significant
point of differentiation compared to other competitors. Our 586
stores are located throughout the United States and Canada and
have an average of 4,000 selling square feet.
Footlocker.com, Inc. -- Our direct-to-customers business consists
of Footlocker.com, Inc. which sells, through its affiliates,
directly to customers through catalogs and its Internet websites.
Eastbay, Inc., one of its affiliates, is one of the largest direct
marketers in the United States of athletic footwear, apparel and
equipment, including licensed and private-label merchandise,
through the Eastbay catalogs. In addition, it provides our
websites, Footlocker.com, Ladyfootlocker.com, Kidsfootlocker.com,
Champssports.com and Eastbay.com, with an integrated fulfillment
and distribution platform to conduct e-commerce. Through
Footlocker.com, Inc., we also have an agreement with the National
Football League to design, merchandise and fulfill the NFL's
official catalog (NFLShop) and e-commerce site linked to
www.NFLShop.com.
Competitive Strengths
Our market leadership position provides competitive advantages that we
strategically leverage across our operations, resulting in the following
key competitive strengths:
Strong Brand Recognition
The Foot Locker brand is one of the most widely recognized names in the
market segments in which we operate, epitomizing high quality for the
active lifestyle customer. This brand equity has aided our ability to
successfully develop and increase our portfolio of complementary retail
store formats, specifically, Lady Foot Locker and Kids Foot Locker, as well
as our Footlocker.com, Inc. direct-to-customers business. Through various
marketing channels, including television campaigns and sponsorships of
various sporting events, we reinforce our image with a consistent message,
namely, that we are the destination store for athletic apparel and footwear
with a wide selection of merchandise in a full-service environment.
Key Vendor Relationships
Our position as a leading global specialty retailer of athletic footwear
and apparel has enabled us to build strong relationships with key branded
vendors, including Nike, adidas, Reebok, Timberland, New Balance and
K-Swiss. We believe that our stores are one of the primary retail
distribution alternatives for brand name vendors of athletic footwear and
apparel. From these and other vendors, we enjoy significant allocations of
exclusive and limited distribution products.
We have worked together with many of our vendors to establish a variety of
favorable arrangements. Currently, we benefit from two key vendor
initiatives. The first enables us to receive a significant allocation of
"marquee" athletic footwear, consisting of limited distribution of higher
priced products available only in a small number of stores. Examples of
recent marquee products include Jordan Retro shoes from Nike and the Kobe
basketball shoe from adidas. The second vendor initiative grants us the
exclusive right to sell certain products. Recent examples of such exclusive
products include Nike Tuned Air, adidas SL, Reebok Pump and New Balance
Trail shoes. We believe these vendor initiatives have allowed us to keep
the most popular brands and styles of athletic footwear and apparel in
stock with greater frequency than most of our competitors.
Product Sourcing Strengths
Our size and purchasing power enable us to source private-label products at
competitive prices. We draw on two internal sources for our proprietary
offerings: (1) our Taiwan-based subsidiary, which we have owned and
operated since the 1960s, arranges and oversees third-party manufacturing
of private-label products, principally in Asia and Central America; and (2)
our U.S.-based manufacturing subsidiary, Team Edition, which we have owned
and operated since 1990, serves as our principal source of licensed
products. Our private-label program provides our customers with athletic
footwear and apparel at lower prices than branded products, driving
incremental customer traffic and sales to our retail stores and
direct-to-customers business.
International Expertise and Presence
We currently operate approximately 500 Foot Locker stores in markets
outside the United States with 289 in Europe, 129 in Canada and 65 in
Australia. Through our presence in international markets, we have
established strong brand recognition and an advantage over our domestic
competitors contemplating expansion into overseas markets. Operating
internationally allows our merchants to share product trend information
with our domestic operations. The sharing of information among our various
domestic and international businesses therefore enables us to anticipate
more rapidly new fashion trends that move from one market to another, often
allowing us to be trend-setters in the domestic market.
Three Synergistic Distribution Channels
We offer our products through three integrated channels of distribution:
our stores, catalogs and websites. We believe that our three sales channels
give us the following competitive strengths:
o our operations allow a customer to identify and purchase a product
over the Internet or in our catalog with the confidence of being able
to return it to a nearby store of the corresponding format for a
refund or credit if desired, and provide our customers with increased
breadth of merchandise selection, shopping flexibility and superior
customer service;
o our existing infrastructure and experience in order fulfillment and
customer service provide us with an advantage over many other online
athletic retailers; and
o our direct-to-customers operations increase the visibility and
exposure of our brands, generate store traffic and provide effective
product marketing for our stores.
Business Strategies
During the last five years, we have invested approximately $1 billion in
capital for store projects, information systems, logistics and facilities
to support our global athletic businesses. We intend to leverage these
prior investments to achieve growth and plan to increase profitability by
concentrating on the following priorities:
Improve Productivity of Existing Stores
We employ a variety of initiatives designed to increase the productivity of
our existing athletic store formats. We have renovated approximately
one-half of our existing store base over the past five years. Additionally,
we have increased the amount of selling space in our stores by eliminating
unnecessary backroom space and have reduced our stock keeping unit, or SKU,
counts in stores by approximately 50 percent, helping to provide better
in-stock positions. As a result, our comparable store sales increased by
11.5 percent and our stores generated sales of nearly $300 per gross square
foot in 2000, an improvement of approximately $20 from 1999. Our objective
is to increase sales productivity to greater than $350 per gross square
foot by continuing these initiatives across our entire store base.
Further Penetrate European Markets
We intend to significantly expand our presence in Europe, where the
athletic footwear retail market is fragmented and there is a strong
customer interest in American brands, such as Nike. Given our strong
representation of these brands, our Foot Locker International stores enjoy
strong performance and are destination locations for European customers
searching for American brands. We will continue to identify suitable retail
locations in this region and plan to double our current 289 store base in
Europe over the next few years. To support this growth, we recently
completed the construction of a new distribution center in the Netherlands.
We expect our newly constructed distribution center in the Netherlands to
have sufficient capacity to accommodate our planned expansion in Europe.
Increase our North American Store Base
We believe that we have a portfolio of retail store formats that can be
successfully implemented in multiple retail venues. Our plan is to open
approximately 300 Foot Locker stores in urban markets over the next several
years, with 50 scheduled to open in 2001. Since occupancy costs in urban
locations are often significantly lower than in mall-based stores,
resulting in considerably higher profit margins, we believe our expansion
in urban areas will reinforce our brands and continue to generate strong
financial performance. Similarly, we plan to seek expansion opportunities
in those Canadian provinces in which we currently have a small presence or
no presence at all.
Differentiated Merchandising Strategy
Our objective is to differentiate our merchandise assortments from those of
our competitors by offering trend-right products at competitive prices from
both branded manufacturers and our own private label program. We provide a
product assortment that emphasizes high, middle and entry level
merchandise. We have recently reduced the total SKU counts in our
assortments by 50 percent to focus on key items and product categories. We
believe this approach has resulted in superior customer service and higher
inventory turns.
In footwear, we maximize exclusive and marquee product offerings from
leading vendors as a means of differentiation from most smaller specialty
retail chains and department stores. Our focus in the apparel category is
to provide private label and licensed merchandise to complement our branded
assortments. These products provide a stylish, more affordable alternative
to our branded offering. We intend to increase our private label product
offering in apparel to increase customer traffic, generate incremental
sales and enhance our overall gross margins.
Capitalize on Profitable Direct-to-Customers Business
Our direct-to-customers business aims to offer our customers an integrated
shopping solution with unparalleled customer service. For example, if a
special size product is unavailable at the retail store, we are able to
meet the customer's needs by fulfilling orders online, thereby reducing our
store level inventory requirements while still capturing the sale. In
addition, any online or catalog purchase can be returned or exchanged at
one of the corresponding retail store formats. With this integrated
approach, our level of service is distinct from that of our online
competitors, which do not have an extensive offline presence. During 2000,
we enhanced our websites, which helped drive online sales volume to $58
million from $14 million in 1999, positioning us as a leading online
athletic footwear and apparel retailer. Our websites are profitable and
enjoy a purchase return rate that is lower than our physical stores. We
believe that our fully integrated operations will provide additional
cross-marketing opportunities across our three sales channels and, combined
with the strength of our Foot Locker brand, will allow us to further
develop our presence in this growing market segment. We also plan to
develop an international Internet strategy over the next several years.
Store Summary
The following table sets forth certain information regarding the 3,582
stores in our core athletic business as of February 3, 2001:
2001
January Remodeled/ February Planned
Store Summary 29, 2000 Opened Closed* Relocated 3, 2001 Openings
- ---------------------------- ------------ --------- --------- ------------ ------------ ----------
Foot Locker................. 1,507 3 57 62 1,453 58
Lady Foot Locker............ 690 2 30 14 662 1
Kids Foot Locker............ 403 1 6 4 398 1
Foot Locker International**. 482 22 21 40 483 35
Champs Sports............... 611 -- 25 7 586 5
------ ---- ---- ----- ------ -----
Total.................. 3,693 28 139 127 3,582 100
===== == === === ===== ===
* Includes 61 stores from the 1999 accelerated store closing program.
** Foot Locker International includes Foot Locker Canada, Foot Locker
Europe and Foot Locker Australia.
Substantially all merchandise decisions with respect to purchase, prices,
markdowns and advertising are controlled by management at division
headquarters. We have district managers who visit each of our stores on a
regular basis to review the implementation of our policies, monitor
operations and review inventories and the presentation of merchandise.
Accounting and general financial functions for our stores are conducted at
the corporate level.
Marketing
We attempt to price our merchandise to be competitive with athletic
specialty, sporting goods and other stores selling athletic footwear and
apparel. While the bulk of our merchandise is sold at our regular retail
prices, we also conduct promotions that generally revolve around themes
such as back-to-school, holiday seasons and vendor weeks. In addition, we
frequently promote individual items to increase store traffic.
We advertise through many different media, including television, radio,
newspaper and outdoor advertising. We also contribute to mall merchant
association funds that advertise a mall and individual stores within a
mall. In-store promotions with point-of-purchase materials are also an
important part of our marketing strategy.
We also take advantage of advertising and promotional assistance from many
of our suppliers. This assistance takes the form of cooperative advertising
programs, in-store sales incentives, point-of-purchase materials, product
training for employees and other programs. We believe that we benefit
significantly from the advertising campaigns of our key suppliers, such as
Nike, adidas, Reebok, Timberland, New Balance and K-Swiss. See "Risk
Factors -- A change in the relationship with any of our key vendors or the
unavailability of our key products at competitive prices could affect our
financial health."
Management Information Systems
We have a computerized management information system that includes a
network of computers at corporate and divisional headquarters to support
our decision-making processes. During the past four years, we have invested
approximately $200 million to upgrade and implement a new technology
platform to improve information flow and analysis using widely accepted
technologies.
We have installed assortment planning and decision support tools to support
our merchandising processes. The assortment planning and decision support
tools enhance our users' ability to query sales, inventory and on-order by
product classification and location, thereby enhancing our analytical
capability and improving decisions with respect to product purchases,
location and margin management.
We have also enhanced our financial reporting and human resources
management systems through the installation of software based on the
PeopleSoft platform, a widely recognized leader in enterprise systems. The
financial systems provide standard financial reporting and user query
capabilities while providing increased financial results accuracy for our
retail operations. The human resources system provides traditional payroll
and benefits administration functions as well as career planning, position
management and succession planning capabilities. Both the financial and
human resources systems are tightly integrated, providing a consistent look
and feel for all areas of the organization.
We are continuing to enhance our information systems architecture in
critical areas such as point of sale, logistics and distribution center
management working with leading vendors such as Manhattan Associates and
IBM to improve performance while reducing cost in these areas. See "Risk
Factors -- We may not be able to successfully expand and implement our
point of sale systems."
Logistics/Distribution
Our logistics department is responsible for planning, coordinating and
tracking product flow from our suppliers to the retail stores on a
worldwide basis. This includes direct management of all company-operated
distribution centers, as well as management of freight, transportation and
third-party service centers. Logistics also provides technical expertise
and direction for international trade and government compliance, as well as
the development and management of vendor compliance programs. We are
focused on continually improving flexibility, speed-to-market and
efficiencies by increasing the mix of floor-ready merchandise and expanding
cross-docking and shipping full caselot merchandise.
We currently operate four distribution facilities worldwide, occupying, in
the aggregate, approximately two million square feet. Our primary service
center, with an area of 1.3 million square feet, is located in Junction
City, Kansas and supports our U.S. store operations. Our facility in
Wausau, Wisconsin, with an area of 240,000 square feet, supports our
Footlocker.com/Eastbay e-commerce and catalog operations.
In February 1999, we opened a new distribution center in the Netherlands to
service Foot Locker's operations across 11 European countries. This center
incorporates advanced warehouse management software and new material
handling equipment, including mechanized conveyor systems, bar code
scanning and radio frequency technology. This warehouse management system
allows us to receive and immediately ship full caselot merchandise and has
reduced in-transit time in Europe by approximately five days on new product
launches. This capability will allow us to speed goods to our stores in a
cost-effective manner, thereby ensuring a continuous flow of fresh
merchandise to our retail stores.
We believe that our strong distribution support for our domestic and
international stores is a critical element of our business strategy and is
central to our ability to maintain a low cost operating structure.
Vendors
Although we purchase merchandise and supplies from hundreds of vendors
worldwide, for the year ended February 3, 2001, approximately 71 percent of
our merchandise was purchased from five principal vendors, including
approximately 49 percent purchased from Nike. We believe our relationships
with our key vendors are satisfactory. We have no long-term supply
contracts with any of our key vendors. See "Risk Factors -- A change in the
relationship with any of our key vendors or the unavailability of our key
products at competitive prices could affect our financial health."
Properties
Our properties consist of stores and administrative and distribution
facilities, the vast majority of which are leased. Total selling area at
the end of 2000 was approximately 9.4 million square feet, of which
approximately 7.9 million square feet related to our core athletic
business, approximately 1.3 million square feet related to the Northern
Group and approximately 200,000 square feet related to other businesses.
These properties are located in the United States, Canada, Australia and
Europe.
Virtually all of our store properties are held under operating leases. Some
of our store leases contain renewal options with varying terms and
conditions. We expect that in the normal course of business, expiring
leases will generally be renewed or, upon making a decision to relocate,
replaced by leases on other premises. New operating lease periods generally
range from five to ten years. Certain leases provide for additional rent
payments based on a percentage of store sales.
In determining new store locations, we evaluate, among other things, market
areas, mall locations, anchor stores, customer traffic, mall sales per
square foot, competition and occupancy, construction and other costs
associated with opening a store. See "Risk Factors -- We depend on mall
traffic and our ability to identify suitable store locations."
Intellectual Property and Other Property Rights
We own many trademarks and service marks that are used in our businesses.
Our principal marks include Foot Locker, Lady Foot Locker, Kids Foot
Locker, Champs Sports and Eastbay. We maintain and enforce appropriate
federal and international registrations for our marks. However, effective
intellectual property protection may not be available in certain countries
in which we currently operate. Our principal trademarks and service marks
are pledged as collateral to our banks under our amended revolving credit
agreement.
Employees
We had approximately 17,000 full-time employees and 32,000 part-time
employees at February 3, 2001. We consider employee relations to be
satisfactory.
Legal Proceedings
From time to time, we are involved in routine litigation incident to the
conduct of our business, as well as litigation incident to the sale and
disposition of businesses that have occurred in the past several years,
none of which, we believe, will have a material adverse effect on our
financial position or results of operations.
Management
Executive Officers and Directors
Set forth below is certain information regarding our executive officers and
directors:
Name Age Position
J. Carter Bacot(1),(4),(6)............ 68 Chairman of the Board and Director
Matthew D. Serra(1),(5)............... 57 President and Chief Executive
Officer and Director
Gary M. Bahler........................ 49 Senior Vice President, General
Counsel and Secretary
Jeffrey L. Berk....................... 45 Senior Vice President -- Real
Estate
Bruce L. Hartman(5)................... 47 Senior Vice President and Chief
Financial Officer
Laurie Petrucci(5).................... 42 Senior Vice President -- Human
Resources
John H. Cannon........................ 59 Vice President and Treasurer
Robert W. McHugh...................... 43 Vice President and Chief
Accounting Officer
Purdy Crawford(1),(2),(3)............. 69 Director
Philip H. Geier Jr.(3)................ 66 Director
Jarobin Gilbert Jr.(1),(2),(4)........ 55 Director
James E. Preston(1),(3),(4),(6)....... 68 Director
David Y. Schwartz(2),(6).............. 60 Director
Christopher A. Sinclair(1),(3),(6).... 50 Director
Cheryl Turpin(3),(4).................. 53 Director
Dona D. Young(2),(4).................. 47 Director
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation and Management Resources Committee
(4) Member of Nominating and Corporate Governance Committee
(5) Member of Retirement Plan Committee
(6) Member of Finance and Strategic Planning Committee
J. Carter Bacot has served as the non-executive Chairman of the Board since
March 4, 2001 and as a director of Venator since 1993. He was Chairman of
the Board of The Bank of New York Company, Inc. (bank holding company) and
The Bank of New York, its wholly owned subsidiary, from 1982 to February 7,
1998, and Chief Executive Officer of The Bank of New York Company, Inc. and
The Bank of New York from 1982 to July 1, 1997. He is a director of The
Bank of New York Company, Inc. and Phoenix Home Life Mutual Insurance
Company. He is a trustee of Atlantic Mutual Insurance Company and a
director of its subsidiaries, Atlantic Specialty Insurance Company and
Centennial Insurance Company.
Matthew D. Serra has served as President since April 12, 2000 and Chief
Executive Officer since March 4, 2001. He served as Chief Operating Officer
from February 2000 to March 3, 2001 and as President and Chief Executive
Officer of the Foot Locker Worldwide division from September 1998 to
February 2000. He previously served as Chairman and Chief Executive Officer
of Stern's, a division of Federated Department Stores, Inc., from March
1993 to September 1998.
Gary M. Bahler has served as Senior Vice President since August 1998,
General Counsel since February 1993 and Secretary since February 1990. He
served as Vice President from February 1993 to August 1998.
Jeffrey L. Berk has served as Senior Vice President-Real Estate since
February 2000. He was President of Venator Group Realty, North America from
January 1997 to February 2000. He previously served as Vice President-Real
Estate for Barnes & Noble, Inc. from 1994 to 1997.
Bruce L. Hartman has served as Senior Vice President and Chief Financial
Officer since February 1999. Mr. Hartman served as Vice President-Corporate
Shared Services from September 1998 to February 1999 and as Vice President
and Controller from November 1996 to September 1998. He served as the Chief
Financial Officer of various divisions of the May Department Stores Company
from March 1993 to October 1996.
Laurie Petrucci has served as Senior Vice President-Human Resources since
May 2001. She served as Senior Vice President-Human Resources of the Foot
Locker Worldwide division from February 2000 to May 2001, as Vice
President-Organizational Development and Training of Foot Locker Worldwide
from February 1999 to February 2000, and as Vice President-Human
Resources-Apparel Group from February 1997 to February 1999. From June 1995
to February 1997, she served as a human resources consultant with Global HR
Solutions.
John H. Cannon has served as Vice President and Treasurer since October
1983.
Robert W. McHugh has served as Vice President and Chief Accounting Officer
since January 2000 and Vice President-Taxation from November 1997 to
January 2000. He was a partner at KPMG LLP from July 1990 to October 1997.
Purdy Crawford has served as a Director since 1995. He has been Chairman of
the Board of AT&T Canada since June 1999. From 1987 to February 2000, he
served as Chairman of the Board of Imasco Limited (Canada), a consumer
products and services company, and was its Chief Executive Officer from
1987 to 1995. Mr. Crawford is a director of Camco Inc., Canadian National
Railway Company, Inco Limited, Maple Leaf Foods, Ltd., Petro-Canada and
Nova Scotia Power Inc. He is Counsel to the Canadian law firm of Osler,
Hoskin & Harcourt.
Philip H. Geier, Jr. has served as a Director since 1994. He was Chairman
of the Board and Chief Executive Officer of Interpublic Group of Companies,
Inc., an advertising and marketing communications services company, from
1980 to January 2001. He is a director of Fiduciary Trust Company
International and AEA Investors, Inc. and the International Tennis Hall of
Fame.
Jarobin Gilbert, Jr. has served as a Director since 1981. Mr. Gilbert has
been President and Chief Executive Officer of DBSS Group, Inc., a
management, planning and trade consulting services company, since 1992. He
is a director of PepsiAmericas, Inc. and Midas, Inc. He is also a trustee
of Atlantic Mutual Insurance Company and a director of Harlem Partnership,
Inc.
James E. Preston has served as a Director since 1983. He was Chairman of
the Board of Avon Products, Inc. from 1989 to May 1999 and Chief Executive
Officer from 1989 to June 1998. He is a director of ARAMARK Corporation,
Reader's Digest Association, Project Hope, The Edna McConnell Clarke
Foundation, The New Milford Hospital and the Kent Land Trust.
David Y. Schwartz has been a Director since 2000. He has been an
independent business adviser and consultant since July 1997. He was a
partner with Arthur Andersen LLP from 1972 until his retirement in 1997.
Mr. Schwartz is a director of Walgreen Co.
Christopher A. Sinclair has served as a Director since 1995. Mr. Sinclair
has been a Managing Director of Manticore Group, LLC, a venture capital and
advisory firm, since February 1, 2001 and Operating Partner of Pegasus
Capital Advisors, a private equity firm, since June 1, 2000. He was
Chairman of the Board of Caribiner International, a business communications
company, from May 1999 to May 2000, Chief Executive Officer from December
1998 to May 2000, and President from December 1998 to May 1999. He was
President and Chief Executive Officer of Quality Food Centers, Inc., a
supermarket chain, from September 1996 to March 1998. He served as Chairman
and Chief Executive Officer of Pepsi-Cola Company, a division of PepsiCo,
Inc. from April 1996 to July 1996. He was President and Chief Executive
Officer of PepsiCo Foods and Beverages International, a division of
PepsiCo, from 1993 to April 1996. He is a director of Mattel, Inc.,
Merisant, Inc. and the Amos Tuck School of Business Administration at
Dartmouth College.
Cheryl Turpin has served as a Director since January 1, 2001. She served as
President and Chief Executive Officer of The Limited Stores, Inc. from June
1994 to August 1997. She was President and Chief Executive Officer of Lane
Bryant, a subsidiary of The Limited, Inc., from January 1990 to June 1994.
Ms. Turpin is a member of the Board of Trustees of the Columbus School for
Girls.
Dona D. Young has served as a Director since January 1, 2001. She has been
President since February 2000 and Chief Operating Officer since February
2001 of Phoenix Home Life Mutual Insurance Company. She joined Phoenix Home
Life Mutual Insurance Company in 1980 and served in various management and
legal positions, including Executive Vice President and General Counsel
from 1995 to 2000. Ms. Young is a director of Phoenix Home Life Insurance
Company, Sonoco Products Company and Wachovia Corporation. She is also a
director of Hartford Hospital and The Children's Fund.
Description of Notes
We issued the notes under an indenture dated as of June 8, 2001 between
Venator Group, Inc. and The Bank of New York, as trustee. The terms of the
notes include those provided in the indenture, the notes and the
registration rights agreement dated as of June 8, 2001 between us and J.P.
Morgan Securities Inc. The following description is only a summary of the
material provisions of the indenture, the notes and the registration rights
agreement and is not complete. We urge you to read the indenture, the notes
and the registration rights agreement in their entirety because they, and
not this description, define your rights as a holder of the notes. A copy
of the form of indenture, the form of certificate evidencing the notes and
the form of registration rights agreement is available to you upon request.
As used in this section, the words "we," "us," "our" or "Venator" refer to
Venator Group, Inc. and its successors under the indenture and do not
include any current or future subsidiary of Venator Group, Inc.
General
The notes are unsecured general obligations of Venator and are subordinate
in right of payment as described under "-- Subordination of the Notes." The
notes will be convertible into common stock of Venator as described under
"-- Conversion of the Notes." The notes are limited to $150,000,000
aggregate principal amount at maturity. The notes were issued only in
denominations of $1,000 or in integral multiples of $1,000.
The notes will bear interest at the annual rate of 5.50%. Interest will be
payable semi-annually in arrears on June 1 and December 1, commencing on
December 1, 2001, to holders of record at the close of business on the
preceding May 15 and November 15, respectively, except:
o that the interest payable upon redemption or repurchase,
unless the date of redemption or repurchase is an interest
payment date, will be payable to the person to whom principal
is payable; and
o as set forth in the next succeeding paragraph.
In the case of any note, or portion of any note, that is converted into
common stock of Venator during the period from, but excluding, a record
date for any interest payment date to, but excluding, that interest payment
date, either:
o if the note, or portion of the note, has been called for
redemption on a redemption date that occurs during that
period, or is to be repurchased on a repurchase date, as
defined below, that occurs during that period, then Venator
will not be required to pay interest on that interest payment
date in respect of any note, or portion of any note, that is
so redeemed or repurchased; or
o if otherwise, any note or portion of any note that is not
called for redemption that is submitted for conversion during
that period must be accompanied by funds equal to the interest
payable on that interest payment date on the principal amount
so converted.
See "-- Conversion of the Notes."
Interest will be paid, at Venator's option, either:
o by check mailed to the address of the person entitled to the
interest as it appears in the note register; provided that a
holder of notes with an aggregate principal amount in excess
of $10 million will, at the written election of the holder, be
paid by wire transfer in immediately available funds; or
o by transfer to an account maintained by that person located in
the United States.
Payments to The Depository Trust Company, New York, New York, or DTC, will
be made by wire transfer of immediately available funds to the account of
DTC or its nominee. Interest will be computed on the basis of a 360-day
year composed of twelve 30-day months.
The notes will mature on June 1, 2008 unless earlier converted, redeemed or
repurchased as described below. The indenture does not contain any
financial covenants or restrictions on the payment of dividends, the
incurrence of indebtedness or the issuance or repurchase of securities by
Venator or any of its subsidiaries. The indenture contains no covenants or
other provisions to protect holders of the notes in the event of a highly
leveraged transaction or a change in control of Venator except to the
extent described below under "-- Repurchase at Option of Holders."
Conversion of the Notes
Any registered holder of notes may, at any time prior to close of business
on the business day prior to the date of repurchase, redemption or final
maturity of the notes, as appropriate, convert the principal amount of any
notes or portions thereof, in denominations of $1,000 or integral multiples
of $1,000, into common stock of Venator, at a conversion price of $15.806
per share, subject to adjustment as described below.
Except as described below, no payment or adjustment will be made on
conversion of any notes for interest accrued thereon or for dividends on
any common stock issued upon conversion. If any notes not called for
redemption are converted between a record date and the next interest
payment date, those notes must be accompanied by funds equal to the
interest payable on the next interest payment date on the principal amount
so converted. Venator is not required to issue fractional shares of common
stock upon conversion of the notes and, instead, will pay a cash adjustment
based upon the market price of common stock on the last trading day prior
to the date of conversion. In the case of notes called for redemption or
tendered for repurchase, conversion rights will expire at the close of
business on the business day preceding the day fixed for redemption or
repurchase unless Venator defaults in the payment of the redemption or
repurchase price. A note that the holder has elected to be repurchased may
be converted only if the holder withdraws its election to have its notes
repurchased in accordance with the terms of the indenture.
The initial conversion price of $15.806 per share is subject to adjustment
upon specified events, including:
(1) the issuance of common stock of Venator as a dividend or
distribution on the common stock;
(2) the issuance to all holders of common stock of rights or warrants
to purchase common stock;
(3) specified subdivisions and combinations of the common stock;
(4) the distribution to all holders of common stock of capital stock,
other than common stock, or evidences of indebtedness of Venator
or of assets, including securities, but excluding those rights,
warrants, dividends and distributions referred to above or paid in
cash;
(5) a dividend or distribution consisting exclusively of cash to all
holders of common stock if the aggregate amount of these
distributions combined together with (A) all other all-cash
distributions made within the preceding 12 months in respect of
which no adjustment has been made plus (B) any cash and the fair
market value of other consideration payable in any tender offers
by Venator or any of its subsidiaries for common stock concluded
within the preceding 12 months in respect of which no adjustment
has been made, exceeds 10% of Venator's market capitalization; or
(6) the purchase of common stock pursuant to a tender offer made by
Venator or any of its subsidiaries to the extent that the same
involves an aggregate consideration that, together with (A) any
cash and the fair market value of any other consideration payable
in any other tender offer by Venator or any of its subsidiaries
for common stock expiring within the 12 months preceding such
tender offer in respect of which no adjustment has been made plus
(B) the aggregate amount of any such all-cash distributions
referred to in (5) above to all holders of common stock within the
12 months preceding the expiration of the tender offer for which
no adjustment has been made, exceeds 10% of Venator's market
capitalization on the expiration of such tender offer.
In the case of:
o any reclassification or change of the outstanding shares of the
common stock; or
o a consolidation, merger or combination involving Venator; or
o a sale or conveyance to another person of the property and assets of
Venator as an entirety or substantially as an entirety;
in such case as a result of which holders of common stock would be entitled
to receive stock, other securities, other property or assets, including
cash, in respect of or in exchange for all shares of common stock, then the
holders of the notes then outstanding will generally be entitled thereafter
to convert the notes into the same type of consideration that they would
have owned or been entitled to receive upon such event had the notes been
converted into common stock immediately prior to that event, assuming that
a holder of notes would not have exercised any rights of election as to the
consideration receivable in connection with that transaction.
If Venator makes a taxable distribution to holders of common stock or in
specified other circumstances requiring an adjustment to the conversion
price, the holders of notes may, in some circumstances, be deemed to have
received a distribution subject to U.S. income tax as a dividend. In some
other circumstances, the absence of an adjustment to the conversion price
may result in a taxable dividend to the holders of common stock. See
"Certain United States Federal Income Tax Consequences."
Venator may from time to time, to the extent permitted by law, reduce the
conversion price by any amount for any period of at least 20 days, in which
case Venator will give at least 15 days' notice of the reduction. Venator
may, at its option, make reductions in the conversion price, in addition to
those described above, as Venator's board of directors deems advisable to
avoid or diminish any income tax to holders of common stock resulting from
any dividend or distribution of stock, or rights to acquire stock, or from
any event treated as dividends or distributions of, or rights to acquire,
stock for income tax purposes.
No adjustment in the conversion price will be required unless that
adjustment would require an increase or decrease of at least 1% in the
conversion price then in effect; however, any adjustment that would
otherwise be required to be made will be carried forward and taken into
account in any subsequent adjustment. Except as stated above, the
conversion price will not be adjusted for the issuance of common stock or
any securities convertible into or exchangeable for common stock or
carrying the right to purchase any of the foregoing.
Optional Redemption by Venator
The notes are not entitled to any sinking fund.
At any time on or after June 4, 2004, Venator may redeem the notes on at
least 20 days' notice as a whole or, from time to time, in part at the
following prices, expressed as a percentage of the principal amount,
together with accrued interest to, but excluding, the date fixed for
redemption:
Redemption
Period Price
Beginning June 4, 2004 and ending on May 31, 2005............. 103.1%
Beginning June 1, 2005 and ending on May 31, 2006............. 102.4%
Beginning June 1, 2006 and ending on May 31, 2007............. 101.6%
Beginning June 1, 2007 and ending on May 31, 2008............. 100.8%
Any accrued interest becoming due on the date fixed for redemption will be
payable to the holders of record on the relevant record date of the notes
being redeemed.
If less than all of the outstanding notes are to be redeemed, the trustee
will select the notes to be redeemed in principal amounts of $1,000 or
integral multiples of $1,000 on a pro rata basis or by lot or such other
method as the Trustee shall deem fair and equitable. If a portion of a
holder's notes is selected for partial redemption and that holder converts
a portion of that holder's notes, the converted portion will be deemed to
be of the portion selected for redemption.
Repurchase at Option of Holders
You will have the right, at your option, to require us to repurchase all or
any portion of your notes 30 business days after the occurrence of a
repurchase event.
The repurchase price will be 100% of the principal amount of the notes
submitted for repurchase, plus accrued and unpaid interest to, but
excluding, the repurchase date. If a repurchase date is an interest payment
date, then the interest payable on that date will be paid to the holder of
record on the preceding record date.
At our option, instead of paying the repurchase price in cash, we may pay
the repurchase price in common stock, valued at 95% of the average of the
closing prices for the five trading days immediately before and including
the third trading day preceding the repurchase date. The repurchase price
may be paid in shares of common stock only if the following conditions are
satisfied:
o such shares have been registered under the Securities Act of 1933 or
are freely transferable without such registration;
o the issuance of such common stock does not require registration with
or approval of any governmental authority under any state law or any
other federal law, which registration or approval has not been made
or obtained;
o such shares have been approved for quotation on the New York Stock
Exchange or listing on a national securities exchange; and
o such shares will be issued out of our authorized but unissued common
stock and, upon issuance, will be duly and validly issued and fully
paid and non-assessable and free of any preemptive rights.
A repurchase event will be considered to have occurred if one of the
following "change in control" events occurs:
o any person or group is or becomes the beneficial owner of more than
50% of the voting power of our outstanding securities entitled to
generally vote for directors;
o we consolidate with or merge into any other person or any other
person merges into Venator or we convey, transfer or lease all or
substantially all of our assets to any person other than our
subsidiaries and, as a result, our outstanding common stock is
changed or exchanged for other assets or securities, unless our
shareholders immediately before the transaction own, directly or
indirectly, immediately following the transaction more than 50% of
the combined voting power of the person resulting from the
transaction or the transferee person; or
o our liquidation or dissolution.
However, a change in control will not be deemed to have occurred if either:
o the last sale price of our common stock for any five trading days
within
o the period of ten consecutive trading days immediately after
the later of the change in control or the public announcement
of the change in control, in the case of a change in control
resulting solely from a change in control under the first
bullet point above, or
o the period of ten consecutive trading days immediately
preceding the change in control, in the case of a change in
control under the second and third bullet points above
is at least equal to 105% of the conversion price in effect on such day; or
o in the case of a merger or consolidation, all of the
consideration excluding cash payments for fractional shares in
the merger or consolidation constituting the change in control
consists of common stock traded on a United States national
securities exchange or quoted on the Nasdaq National Market
(or which will be so traded or quoted when issued or exchanged
in connection with such change in control) and as a result of
such transaction or transactions the notes become convertible
solely into such common stock.
We will be required to mail you a notice within 10 business days after the
occurrence of a repurchase event. The notice must describe, among other
things, the repurchase event, your right to elect repurchase of the notes
and the repurchase date. We must deliver a copy of the notice to the
trustee. You may exercise your repurchase rights by delivering written
notice to us and the trustee. The notice must be accompanied by the notes
duly endorsed for transfer to Venator. You must deliver the exercise notice
on or before the close of business on the business day prior to the
repurchase date.
The interpretation of the phrase "all or substantially all" used in the
definition of change in control would likely depend on the facts and
circumstances existing at such time. As a result, there may be uncertainty
as to whether or not a sale or transfer of "all or substantially all"
assets has occurred. As a result, we cannot assure you how a court would
interpret this phrase under applicable law if you elect to exercise your
rights following the occurrence of a transaction which you believe
constitutes a transfer of "all or substantially all" of our assets."
We may not have sufficient cash funds to repurchase the notes upon a
repurchase event. We may elect, subject to certain conditions, to pay the
repurchase price in common stock. Future debt agreements may prohibit us
from paying the repurchase price in either cash or common stock. If we are
prohibited from repurchasing the notes, we could seek consent from our
lenders to repurchase the notes. If we are unable to obtain their consent,
we could attempt to refinance the notes. If we were unable to obtain a
consent or refinance, we would be prohibited from repurchasing the notes.
If we were unable to repurchase the notes upon a repurchase event, it would
result in an event of default under the indenture. An event of default
under the indenture could result in a further event of default under our
other then-existing debt. In addition, the occurrence of the repurchase
event may be an event of default under our other debt. As a result, we
could be prohibited from paying amounts due on the notes under the
subordination provisions of the indenture.
The change in control feature may not necessarily afford you protection in
the event of a highly leveraged transaction, a change in control or similar
transactions involving Venator. We could, in the future, enter into
transactions, including recapitalizations, that would not constitute a
change in control but that would increase the amount of our senior
indebtedness or other debt. We are not prohibited from incurring senior
indebtedness or debt under the indenture. If we incur significant amounts
of additional debt, this could have an adverse effect on our ability to
make payments on the notes. In addition, our management could undertake
leveraged transactions that could constitute a change in control. The board
of directors does not have the right under the indenture to limit or waive
the repurchase right in the event of these types of leveraged transaction.
The requirement to repurchase notes upon a repurchase event could delay,
defer or prevent a change of control. As a result, the repurchase right may
discourage:
o a merger, consolidation or tender offer;
o the assumption of control by a holder of a large block of our
shares; and
o the removal of incumbent management.
The repurchase feature was a result of negotiations between Venator and the
initial purchasers of the notes. The repurchase feature is not the result
of any specific effort to accumulate shares of common stock or to obtain
control of Venator by means of a merger, tender offer or solicitation, or
part of a plan by Venator to adopt a series of anti-takeover provisions. We
have no present intention to engage in a transaction involving a change of
control, although it is possible that we may decide to do so in the future.
The Securities Exchange Act of 1934, as amended, and the rules thereunder
require the distribution of specific types of information to security
holders in the event of issuer tender offers. These rules may apply in the
event of a repurchase. We will comply with these rules to the extent
applicable.
Subordination of the Notes
The indebtedness evidenced by the notes is subordinated to the extent
provided in the indenture to the prior payment in full, in cash or other
payment satisfactory to holders of senior indebtedness, of all of our
existing and future senior indebtedness. Upon any distribution of our
assets upon any dissolution, winding-up, liquidation or reorganization, or
in bankruptcy, insolvency, receivership or similar proceedings, payment of
the principal of, premium, if any, interest and all other obligations in
respect of the notes, including by way of redemption, acquisition or other
purchase thereof, on the notes is to be subordinated in right of payment to
the prior payment in full, in cash or other payment satisfactory to holders
of senior indebtedness, of all of our existing and future senior
indebtedness. In addition, the notes are also effectively subordinated to
all indebtedness and other liabilities, including trade payables and lease
obligations and preferred stock, if any, of our subsidiaries.
In the event of any acceleration of the notes because of an event of
default, the holders of any senior indebtedness then outstanding would be
entitled to payment in full, in cash or other payment satisfactory to
holders of senior indebtedness, of all obligations in respect to such
senior indebtedness before the holders of notes are entitled to receive any
payment or other distribution. We are required to promptly notify holders
of senior indebtedness if payment of the notes is accelerated because of an
event of default.
We also may not make any payment upon or redemption of or purchase or
otherwise acquire the notes if:
o a default in the payment of principal, premium, if any, interest or
other obligations in respect of designated senior indebtedness
occurs and is continuing beyond any applicable period of grace, or
o any other default occurs and is continuing with respect to
designated senior indebtedness that permits holders of the
designated senior indebtedness to which such default relates to
accelerate its maturity and the trustee receives a notice of such
default, which we refer to as a payment blockage notice, from us or
any other person permitted to give this notice under the indenture.
Unless the holders of any senior indebtedness have accelerated its
maturity, we may and shall resume making payments on the notes:
o in the case of a payment default, when the default is cured or
waived or ceases to exist, and
o in the case of a nonpayment default, the earlier of when such
nonpayment default is cured or waived or ceases to exist or 179 days
after receipt of the payment blockage notice.
No new period of payment blockage may be commenced pursuant to a payment
blockage notice unless and until 360 days have elapsed since the initial
effectiveness of the prior payment blockage notice.
No default that existed or was continuing on the date of delivery of any
payment blockage notice to the trustee shall be the basis for a subsequent
payment blockage notice, unless the default has been cured or waived for a
period of not less than 90 consecutive days.
In the event of our bankruptcy, dissolution or reorganization, holders of
senior indebtedness may receive more, ratably, and holders of the notes may
receive less, ratably, than our other creditors. Such subordination will
not prevent the occurrence of any event of default under the indenture.
A substantial portion of our operations are conducted through our
subsidiaries. As a result, our cash flow and or ability to service our
debt, including the notes, is dependent upon the earnings of our
subsidiaries. In addition, we are dependent on the distribution of
earnings, loans or other payments by our subsidiaries to us. See "Risk
Factors -- If our subsidiaries do not make sufficient distributions to us,
we will not be able to make payment on our debt, including the notes."
Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the notes or to provide us
with funds for our payment obligations, whether by dividends,
distributions, loans or other payments. In addition, any payment of
dividends, distributions, loans or advances by our subsidiaries to us could
be subject to statutory or contractual restrictions. Payments to us by our
subsidiaries will also be contingent upon our subsidiaries' earnings and
business consideration. There can be no assurance that we will receive
adequate funds from our subsidiaries to pay interest due on the notes or to
repay the notes when redeemed or upon maturity.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of
the notes to participate in those assets, will be effectively subordinated
to the claims of that subsidiary's creditors, including trade creditors. In
addition, even if we were a creditor of any of our subsidiaries, our rights
as a creditor would be subordinate to any security interest in the assets
of our subsidiaries and any indebtedness of our subsidiaries senior to that
held by us.
As of February 3, 2001, we had approximately $290 million of senior
indebtedness and we and our subsidiaries had approximately $929 million of
other liabilities reflected on our consolidated balance sheet. In addition,
with respect to our continuing operations, we and our subsidiaries had
total operating lease commitments of $1,907 million as of February 3, 2001.
Other liabilities on our consolidated balance sheet include our estimate of
costs to exit leases of our discontinued operations.
Neither we nor our subsidiaries are limited in or prohibited from incurring
senior indebtedness or any other indebtedness or liabilities under the
indenture.
Certain Definitions
"credit facility" means the credit agreement dated as of April 9, 1997, as
amended and restated as of June 8, 2001 among Venator Group, Inc., the
lenders and co-agents party thereto and The Bank of New York, as
administrative agent, together with any related documents (including any
security documents and guarantee agreements), as such agreement may be
amended, modified, supplemented, extended, renewed, refinanced or replaced
or substituted from time to time.
"designated senior indebtedness" means (i) all indebtedness under the
credit facility, and (ii) after payment in full in cash of all senior
indebtedness under the credit facility, any particular senior indebtedness
in which the instrument creating or evidencing the senior indebtedness or
the assumption of guarantee thereof (or related documents or agreements to
which we are a party) expressly provides that such indebtedness shall be
"designated senior indebtedness" (provided that such instrument may place
limitations and conditions on the right of such senior indebtedness to
exercise the rights of designated senior indebtedness), the aggregate
principal amount of which is equal to or greater than $50 million.
"indebtedness" means:
(1) all of our indebtedness, obligations and other liabilities,
contingent or otherwise, for borrowed money, including obligations:
o in respect of overdrafts, foreign exchange contracts, currency
exchange agreements, interest rate protection agreements and any
loans or advance from banks, whether or not evidenced by notes or
similar instruments, or
o evidenced by bonds, debentures, notes or similar instruments,
whether or not the recourse of the lender is to all of our assets
or to only a portion thereof, other than any account payable or
other secured current liability or obligation incurred in the
ordinary course of business in connection with the obtaining of
materials or services,
(2) all of our reimbursement obligations and other liabilities,
contingent or otherwise, with respect to letters of credit, bank
guarantees or bankers' acceptances,
(3) all of our obligations and liabilities, contingent or otherwise, in
respect of leases required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease
obligations on our balance sheet,
(4) all of our obligations and other liabilities, contingent or
otherwise, under any lease or related document, including a
purchase agreement, in connection with the lease of real property
or improvements thereon (or any personal property included as part
of any such lease) which provides that we are contractually
obligated to purchase or cause a third party to purchase the leased
property and thereby guarantee a residual value of leased property
to the lessor and all of our obligations under such lease or
related documents to purchase the leased property (whether or not
such lease transaction is characterized as an operating lease or a
capitalized lease in accordance with generally accepted accounting
principles),
(5) all of our obligations, contingent or otherwise, with respect to an
interest rate, currency or other swap, cap, floor or collar
agreement, hedge agreement, forward contract, or other similar
instrument or agreement or foreign currency hedge, exchange,
purchase or similar instrument or agreement,
(6) all of our direct or indirect guarantees or similar agreements to
purchase or otherwise acquire or otherwise assure a creditor
against loss in respect of indebtedness, obligations or liabilities
of another person of the kind described in clauses (1) through (5)
above,
(7) any indebtedness or other obligations described in clauses (1)
through (6) above secured by any mortgage, pledge, lien or other
encumbrance existing on property which owned or held by us,
regardless of whether the indebtedness or other obligation secured
thereby has been assumed by us, and
(8) any and all deferrals, renewals, extensions and refundings of, or
amendments, modifications supplements to, any indebtedness,
obligation or liability of the kind described in clauses (1)
through (7) above.
"obligations" means with respect to any indebtedness, all obligations
(whether in existence on June 8, 2001 or arising afterwards, absolute or
contingent, direct or indirect) for or in respect of principal (when due,
upon acceleration, upon redemption, upon mandatory repayment or repurchase
pursuant to a mandatory offer to purchase, or otherwise), premium,
interest, penalties, fees, indemnification, reimbursement and other amounts
payable and liabilities with respect to such indebtedness, including,
without limitation, all interest accrued or accruing after, or which would
accrue but for, the commencement of any bankruptcy, insolvency or
reorganization or similar case or proceeding at the contract rate
(including, without limitation, any contract rate applicable upon default)
specified in the relevant documentation, whether or not the claim for such
interest is allowed as a claim in such case or proceeding.
"senior indebtedness" means all obligations with respect to indebtedness of
Venator whether outstanding on the date of the indenture or thereafter
created, incurred, assumed guaranteed, or in effect guaranteed, by Venator,
including, without limitation, all deferrals, renewals, extensions or
refundings of, or amendments, modifications or supplements to, the
foregoing, unless in the case of any particular indebtedness the instrument
creating or evidencing the same or the assumption or guarantee thereof
expressly provides that such indebtedness shall not be senior in right of
payment to the notes or expressly provides that such indebtedness ranks
equally in right of payment or junior to the notes.
Senior indebtedness does not include any indebtedness of Venator to any
subsidiary of Venator, any obligation for federal, state, local or other
taxes or any trade accounts payable arising in the ordinary course of
business.
We are obligated to pay compensation to the trustee and to indemnify the
trustee against certain losses, liabilities or expenses incurred by it in
connection with its duties relating to the notes. The trustee's claims for
such payments will generally be senior to those of the holders of the notes
in respect to all funds collected and held by the trustee.
Satisfaction and Discharge
We may be discharged from our obligations on the notes if they mature
within one year or will be redeemed within one year and we deposit with the
trustee enough cash and/or U.S. government obligations to pay all the
principal, premium, if any, and interest due to the stated maturity date or
redemption date of the notes.
Defeasance
The indenture also contains a provision that permits us to elect:
o to be discharged from all of our obligations, subject to
limited exceptions, with respect to the notes then
outstanding; and/or
o to be released from our obligations under the covenants
relating to the required offer to repurchase upon a repurchase
event, maintenance of our corporate existence and reports to
holders.
To make either of the above elections, we must deposit in trust with the
trustee enough money to pay in full the principal, premium, if any, and
interest on the notes. This amount may be made in cash and/or U.S.
government obligations. As a condition to either of the above elections, we
must deliver to the trustee an opinion of counsel that the holders of the
notes will not recognize income, gain or loss for Federal income tax
purposes as a result of the action. If we elect to be discharged from all
of our obligations as outlined above in the first bullet point in this
section, the holders of the notes will not be entitled to the benefits of
the indenture, except for registration of transfer and exchange of notes
and replacement of lost, stolen or mutilated notes.
Exchange and Transfer
Notes may be transferred or exchanged at the office of the security
registrar. We will not impose a service charge for any transfer or
exchange, but we may require holders to pay any tax or other governmental
charges associated with any transfer or exchange. In the event of any
potential redemption of the notes, we will not be required to:
o issue, authenticate or register the transfer of or exchange
any note during a period beginning at the opening of business
10 business days before the mailing of a notice of redemption
and ending at the close of business on the day of the mailing,
or
o register the transfer of or exchange any note selected for
redemption, in whole or in part, except the unredeemed portion
of notes being redeemed in part.
We have initially appointed the trustee as the security registrar, paying
agent and conversion agent. We may designate additional registrars, paying
or conversion agents or change registrars, paying or conversion agents.
However, we will be required to maintain a paying agent in the place of
payment for the notes.
Consolidation, Merger and Sale of Assets
We may not consolidate with or merge into any other person, in a
transaction in which we are not the surviving corporation, or convey,
transfer or lease our properties and assets substantially as an entirety
to, any person, unless:
o the successor, if any, is a U.S. or a District of Columbia
corporation, limited liability company, partnership, trust or
other business entity,
o the successor assumes our obligations under the notes, the
indenture and the registration rights agreement, and
o immediately after giving effect to the transaction, no default
or event of default shall have occurred and be continuing, and
certain other conditions are met.
Events of Default
The indenture defines an event of default with respect to the notes as one
or more of the following events:
(1) our failure to pay principal of or any premium on the notes when due
(whether or not prohibited by the subordination provisions of the
indenture),
(2) our failure to pay any interest on the notes when due, if such failure
continues for 30 days (whether or not prohibited by the subordination
provisions of the indenture),
(3) our failure to perform any other covenant in the indenture, if such
failure continues for 90 days after the notice required in the
indenture, and
(4) our bankruptcy, insolvency or reorganization.
If an event of default, other than an event of default described in clause
(4) above, occurs and continues, either the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding notes may
declare the principal amount including any accrued and unpaid interest on
the notes to be due and payable upon the earlier to occur of (x) the 5th
day after notice thereof has been given to holders of designated senior
indebtedness and (y) the date on which all of the designated senior
indebtedness has been accelerated. If an event of default described in
clause (4) above occurs, the principal amount of all the notes will
automatically become immediately due and payable. Any payment by us on the
notes following any acceleration will be subject to the subordination
provisions described above under "-- Subordination of the Notes."
After acceleration but before a judgment or decree of the money due in
respect of the notes has been obtained, the holders of a majority in
aggregate principal amount of the outstanding notes may rescind such
acceleration and its consequences if all events of default, other than the
non-payment of accelerated principal, or other specified amount, have been
cured or waived.
Other than the duty to act with the required care during an event of
default, the trustee will not be obligated to exercise any of its rights or
powers at the request of the holders unless the holders offer the trustee
reasonable indemnity. Generally, the holders of a majority in aggregate
principal amount of the notes will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to
the trustee or exercising any trust or power conferred on the trustee.
A holder will have the right to begin a proceeding under the indenture, or
for the appointment of a receiver or a trustee, or for any other remedy
under the indenture only if:
(1) the holder gives to the trustee written notice of a continuing
event of default, (2) holders of at least 25% in aggregate
principal amount of notes then outstanding made a written request
to the trustee to pursue the remedy, (3) such holder or holders
offer to the trustee indemnity satisfactory to the trustee against
any loss, liability or expense, (4) the trustee does not comply
with the request within 60 days after receipt of the request and
the offer of indemnity and (5) during such 60-day period the
holders of a majority in aggregate principal amount of the notes
then outstanding do not give the trustee a direction inconsistent
with the request. Holders may, however, sue to enforce the payment
of principal, premium or interest on or after the due date or
their right to convert without following the procedures listed in
(1) through (5) above.
We will furnish the trustee an annual statement by our officers as to
whether or not, to the officer's knowledge, we are in default in the
performance of the indenture and, if so, specifying all known defaults.
Modification and Waiver
We may make modifications and amendments to the indenture with the consent
of the holders of a majority in aggregate principal amount of the
outstanding notes affected by the modification or amendment. However, we
may not make any modification or amendment without the consent of the
holder of each outstanding note affected by the modification or amendment
if such modification or amendment would:
o change the stated maturity of the notes,
o reduce the principal, premium, if any, or interest on the
notes,
o change the place of payment from New York, New York or the
currency in which the notes are payable, o waive a default in
payment of the principal of or interest on any note,
o impair the right to sue for any payment after the stated
maturity or redemption date,
o modify the subordination provisions in a materially adverse
manner to the holders,
o adversely affect the right to convert the notes other than as
provided in or under the indenture, or
o change the provisions in the indenture that relate to
modifying or amending the indenture.
Holders of a majority in aggregate principal amount of the outstanding
notes may waive, on behalf of the holders of all of the notes, compliance
by us with respect to certain restrictive provisions of the indenture.
Generally, the holders of not less than a majority of the aggregate
principal amount of the outstanding notes may, on behalf of all holders of
the notes, waive any past default or event of default unless:
o we fail to pay principal, premium or interest on any note when
due;
o we fail to convert any note into common stock; or
o we fail to comply with any of the provisions of the indenture
that would require the consent of the holder of each
outstanding note affected.
An amendment may not effect any change that adversely affects the rights of
any holder of senior indebtedness then outstanding under the subordination
provisions unless such holder of senior indebtedness, or a representative
for such holder, consents to such change.
Any notes held by us or by any persons directly or indirectly controlling
or controlled by or under direct or indirect common control with us shall
be disregarded (from both the numerator and denominator) for purposes of
determining whether the holders of a majority in principal amount of the
outstanding notes have consented to a modification, amendment or waiver of
the terms of the indenture.
Notices
Notices to holders will be given by mail to the addresses of the holders in
the security register.
Governing Law
The indenture and the notes will be governed by, and construed under, the
law of the State of New York, without regard to conflicts of laws
principles.
Regarding the Trustee
The Bank of New York has agreed to serve as the trustee under the
indenture. The trustee will be permitted to deal with us and any affiliate
of ours with the same rights as if it were not trustee. However, under the
Trust Indenture Act, if the trustee acquires any conflicting interest and
there exists a default with respect to the notes, the trustee must
eliminate such conflicts or resign.
The holders of a majority in principal amount of all outstanding notes will
have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy or power available to the trustee.
However, any such direction may not conflict with any law or the indenture,
may not be unduly prejudicial to the rights of another holder or the
trustee and may not involve the trustee in personal liability.
J. Carter Bacot, Chairman of the Board and a director of Venator, is a
director of The Bank of New York Company, Inc., parent of the trustee under
the indenture.
Registration Rights
We entered into a registration rights agreement with the initial purchasers
of the notes. If you sell the notes or shares of common stock issued upon
conversion of the notes under this registration statement, you generally
will be required to be named as a selling securityholder in this
prospectus, deliver this prospectus to purchasers and be bound by
applicable provisions of the registration rights agreement, including some
indemnification provisions.
In the registration rights agreement, we agreed to file a registration
statement that includes this prospectus with the SEC by September 6, 2001.
We agreed to use all reasonable best efforts to cause this registration
statement to become effective as promptly as practicable, but before
December 5, 2001. We agreed to keep this registration statement effective
until the earliest of (i) June 8, 2003, (ii) the date when all registrable
securities shall have been registered under the Securities Act of 1933 and
disposed of or (iii) the date on which all registrable securities are
eligible to be sold to the public pursuant to Rule 144(k) under the
Securities Act of 1933 (such shortest time period referred to as the
effectiveness period). We may suspend the use of this prospectus under
limited circumstances, including pending corporate developments or public
filings with the SEC, for a period not to exceed 45 days in any 90-day
period and 90 days in any 360-day period. We also agreed to pay liquidated
damages to holders of the notes and shares of common stock issued upon
conversion of the notes if the registration statement is not timely filed
or made effective or if the prospectus is unavailable for periods in excess
of those permitted above. You should refer to the registration rights
agreement for a description of these liquidated damages.
Book-Entry System
The notes were originally issued in the form of a global security issued in
reliance on Rule 144A and a global security issued in reliance on
Regulation S. Upon the issuance of a global security, DTC (referred to as
the depository) or its nominee credited the accounts of persons holding
through it with the respective principal amounts of the notes represented
by such global security. Such accounts were designated by the initial
purchasers with respect to notes placed by the initial purchasers for us.
The notes that are sold under this prospectus will be represented by a new
unrestricted global security. Upon issuance of this new global security,
the depository or its nominee will credit the accounts of persons holding
through it with the respective principal amounts of the notes represented
by the new unrestricted global security. Ownership of beneficial interests
in a global security is limited to persons that have accounts with the
depository ("participants") or persons that may hold interests through
participants. Ownership of beneficial interests by participants in a global
security is shown on, and the transfer of that ownership interest will be
effected only through, records maintained by the depository for such global
security. Ownership of beneficial interests in such global security by
persons that hold through participants will be shown on, and the transfer
of those ownership interests through such participant will be effected only
through, records maintained by such participant. The foregoing may impair
the ability to transfer beneficial interests in a global security.
We will make payment of principal, premium, if any, and interest on notes
represented by any such global security to the depository or its nominee,
as the case may be, as the sole holder of the notes represented thereby for
all purposes under the indenture. None of Venator, the trustee, any agent
of Venator, or the trustee or the initial purchasers will have any
responsibility or liability for any aspect of the depository's records
relating to or payments made on account of beneficial ownership interests
in global security representing any notes or for maintaining, supervising
or reviewing any of the depository's records relating to such beneficial
ownership interests. We have been advised by the depository that, upon
receipt of any payment of principal, premium, if any, or interest on any
global security, the depository will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with
payments in amounts proportionate to their respective beneficial interests
in the principal amount of such global security as shown on the records of
the depository. Payments by participants to owners of beneficial interests
in a global security held through such participants will be governed by
standing instructions and customary practices as is now the case with
securities held for customer accounts registered in "street name," and will
be the sole responsibility of such participants.
A global security may not be transferred except as a whole by the
depository for such global security to a nominee of such depository or by a
nominee of such depository to such depository or another nominee of such
depository or by such depository or any such nominee to a successor of such
depository or a nominee of such successor. If the depository is at any time
unwilling or unable to continue as depository and a successor depository is
not appointed by us or the depository within 90 days, we will issue notes
in definitive form in exchange for the global security. In either instance,
an owner of a beneficial interest in the global security will be entitled
to have notes equal in principal amount to such beneficial interest
registered in its name and will be entitled to physical delivery of such
notes in definitive form. Notes so issued in definitive form will be issued
in denominations of $1,000 and integral multiples thereof and will be
issued in registered form only, without coupons. We will pay principal,
premium, if any, and interest on the notes and the notes may be presented
for registration of transfer or exchange, at the offices of the trustee.
So long as the depository for a global security, or its nominee, is the
registered owner of such global security, such depository or such nominee,
as the case may be, will be considered the sole holder of the notes
represented by such global security for the purposes of receiving payment
on the notes, receiving notices and for all other purposes under the
indenture and the notes. Beneficial interests in notes will be evidenced
only by, and transfers thereof will be effected only through, records
maintained by the depository and its participants. The depository has
nominated Cede & Co. as the nominee. Except as provided above, owners of
beneficial interests in a global security will not be entitled to have the
notes represented by the global security registered in their name, will not
be entitled to receive physical delivery of certificated notes and will not
be considered the holders thereof for any purposes under the indenture.
Accordingly any such person owning a beneficial interest in such a global
security must rely on the procedures of the depository, and, if any such
person is not a participant, on the procedures the participant through
which such person owns its interest, to exercise any rights of a holder
under the indenture. The indenture provides that the depository may grant
proxies and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
which a holder is entitled to give or take under the indenture. We
understand that under existing industry practices, in the event that we
request any action of holders or that an owner of a beneficial interest in
such a global security desires to give or take any action which a holder is
entitled to give or take under the indenture, the depository would
authorize the participants holding the relevant beneficial interest to give
or take such action and such participants would authorize beneficial owners
owning through such participants to give or take such action or would
otherwise act upon the instructions of beneficial owners owning through
them.
The depository has advised us that the depository is a limited-purpose
trust company organized under the laws of the State of New York, a member
of the Federal Reserve System, a "clearing corporation" within the meaning
of the New York Uniform Commercial Code, and a "clearing agency" registered
under the Exchange Act. The depository was created to hold the securities
of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
depository's participants include securities brokers and dealers (including
the initial purchasers), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives)
own the depository. Access to the depository's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies,
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly.
Description of Revolving Credit Facility
On June 8, 2001, Venator Group, Inc. and certain of our wholly owned
subsidiaries, collectively, the Borrowers, entered into an amended and
restated senior secured credit facility, amending and restating the
existing senior secured credit facility dated as of April 9, 1997, as
amended and restated, with a syndicate of banks and other lenders arranged
by J.P. Morgan Securities Inc. and BNY Capital Markets, Inc., providing for
$190 million of revolving credit facilities. The senior credit facility
shall mature in June 2004 and may be used to finance capital expenditures,
to provide working capital and for other general corporate purposes of the
borrowers. Below is a summary of certain terms and provisions of the senior
secured credit facility:
Interest Rates. The loans under the senior credit facility bear
interest at a rate equal to a base rate, either LIBOR or prime, at
the Borrowers' option, plus a margin specified in the senior
credit facility. The margins for each interest rate are determined
by reference to a pricing schedule set forth in the senior credit
facility, which is based upon a fixed charge coverage ratio test.
When, on any date of determination, we use more than 50 percent of
the commitments under the senior credit facility, the margins
shall be adjusted upwards as set forth on the pricing schedule.
Guaranty. Each Borrower is severally obligated with respect to all
amounts owing under the senior credit facility. In addition, all
obligations under the senior credit facility are jointly and
severally guaranteed by each material domestic subsidiary of
Venator Group, Inc.
Security. The senior credit facility is secured by a lien on
certain real property held by the Borrowers and the subsidiary
guarantors valued in excess of $2 million and, subject to certain
exceptions, all patents, trademarks and other intellectual
property owned by the Borrowers and the subsidiary guarantors and
65 percent of the shares of stock of all first-tier foreign
subsidiaries, excluding those in Germany and Canada.
Financial Covenants. The senior credit facility requires the
Borrowers to meet certain financial tests, including without
limitation, maximum leverage ratio, minimum consolidated tangible
net worth and minimum fixed charge coverage ratio tests, and
limitations on capital expenditures. There is also a limit on
subsidiary debt.
Other Covenants. The senior credit facility contains certain other
negative covenants that limit, among other things, additional
liens, indebtedness, transactions with affiliates, mergers and
consolidations, liquidations and dissolutions, sales of assets,
dividends, stock repurchases, investments, loans and advances,
prepayments and modifications of debt instruments and other
matters customarily restricted in such agreements.
Events of Default. The senior credit facility contains events of
default typical for these types of facilities, subject in each
case to mutually agreeable grace periods and materiality
thresholds, including, without limitation, (i) non-payment amounts
under the senior credit facility, (ii) material
misrepresentations, (iii) covenant defaults, (iv) cross-defaults
to other indebtedness, (v) judgment defaults, (vi) bankruptcy and
(vii) change of control.
Description of Capital Stock
Our authorized capital stock consists of 500,000,000 shares of common
stock, $0.01 par value, and 7,000,000 shares of preferred stock, par value
$1.00 per share. As of June 2, 2001, there were:
o 139,471,607 shares of our common stock outstanding;
o no shares of preferred stock issued or outstanding; and
o options to purchase 8,656,018 shares of common stock.
Common Stock
The holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote by shareholders. Subject
to preferences that may be applicable to any holders of outstanding
preferred stock, holders of common stock are entitled to receive ratably
such dividends as may be declared by our board of directors out of funds
legally available therefor. In the event of a liquidation or dissolution of
Venator, holders of common stock are entitled to share ratably in all
assets remaining after payment of liabilities and the liquidation
preference of any outstanding preferred stock.
Holders of common stock have no preemptive rights and have no rights to
convert their common stock into any other securities. All of the
outstanding shares of common stock are, and the shares of common stock to
be issued upon conversion of the notes will be, duly authorized, validly
issued, fully paid and nonassessable.
Preferred Stock
Our board of directors is authorized to designate any series of preferred
stock and the powers, preferences and rights of the shares of such series
and the qualifications, limitations or restrictions thereof without further
action by the holders of common stock. As of the record date, no shares of
preferred stock were issued or outstanding.
Anti-Takeover Provisions
We have adopted certain anti-takeover provisions, which may have the effect
of discouraging, delaying or preventing a merger or acquisition of the
company.
Authorized Shares
Our shareholders have currently authorized the issuance of 500 million
shares of common stock. As of June 2, 2001, 139,471,607 shares of common
stock were outstanding and 45,771,428 shares were reserved for issuance. In
addition, our board of directors may create and issue series of preferred
stock with rights, privileges or restrictions, having the effect of
discriminating against an existing or prospective holder of such securities
as a result of such security holder beneficially owning or commencing a
tender offer for a substantial amount of common stock. One of the effects
of authorized but unissued and unreserved shares of capital stock may be to
render more difficult or discourage an attempt by a potential acquiror to
obtain control of Venator by means of a merger, tender offer, proxy contest
or otherwise, and thereby protect the continuity of Venator's management.
Shareholder Rights Plan
Effective April 14, 1998, our board of directors adopted a shareholder
rights plan under which we issued one right for each outstanding share of
common stock. Each right entitles a shareholder to purchase one
two-hundredth of a share of Series B Participating Preferred Stock at an
exercise price of $100, subject to adjustment. Generally, the rights become
exercisable only if a person or group of affiliated or associated persons
(i) becomes an "Interested Shareholder" as defined in Section 912 of the
New York Business Corporation Law (an "Acquiring Person") or (ii) announces
a tender or exchange offer that results in that person or group becoming an
Acquiring Person, other than pursuant to an offer for all of our
outstanding shares of common stock which the board of directors determines
not to be inadequate and to otherwise be in our best interests and in the
best interests for our shareholders. We will be able to redeem the rights
at $0.01 per right at any time during the period prior to the 10th business
day following the date a person or group becomes an Acquiring Person. The
plan is subject to a qualifying offer provision, which makes the Rights
Plan inapplicable to certain kinds of offers to purchase all of our common
stock.
Upon exercise of the right, each holder of a right will be entitled to
receive common stock (or, in certain circumstances, cash, property or other
securities of Venator) having a value equal to two times the exercise price
of the right. The rights, which cannot vote and cannot be transferred
separately from the shares of common stock to which they are presently
attached, expire on April 14, 2008 unless extended prior thereto by the
board, or earlier redeemed or exchanged by us.
Other Provisions of the Certificate of Incorporation and By-laws
Set forth below is a description of certain present provisions of our
certificate of incorporation and by-laws and New York law, which may be
deemed to have an anti-takeover effect.
Classified Board
Our certificate of incorporation provides for a "classified" board of
directors pursuant to which the composition of the board of directors is
divided into three classes of directors serving staggered three-year terms.
Only one class is elected each year, and it is elected for a three-year
term. The provision for a classified board could prevent a party who
acquires control of a majority of the outstanding voting stock from
obtaining control of the board until the second annual shareholders meeting
following the date the acquiror obtains the controlling stock interest.
Anti-greenmail
Our certificate of incorporation includes an "anti-greenmail" provision
that prohibits us from repurchasing any shares of our capital stock at a
price above the fair market value of such shares at the time of such
repurchase from an Interested Shareholder (any person, with certain
exceptions, who is or who has announced or publicly disclosed a plan or
intention to become, a beneficial owner of five percent or more of our
voting stock) or certain related parties who have not beneficially owned
all of their shares for at least two years, unless such repurchase is
approved by a majority vote of shareholders other than such Interested
Shareholder and related parties.
Power of Shareholders to Call Special Shareholders' Meeting
Our by-laws provide that special meetings of shareholders may be called
only by the Chairman of our board of directors, the Chief Executive
Officer, a Vice Chairman of the board, the president, or our board of
directors pursuant to a resolution adopted by a majority of the total
number of authorized directors.
Advance Notice By-Law
Our by-laws establish an advance notice procedure for shareholder proposals
to be brought before an annual meeting of our shareholders, including
proposed nominations of persons for election to the board. Shareholders at
an annual meeting may only consider proposals or nominations specified in
the notice of meeting or brought before the meeting by or at the direction
of the board or by a shareholder who was a shareholder of record on the
record date for the meeting, who is entitled to vote at the meeting and who
has given to our secretary timely written notice, in proper form, of such
shareholder's intention to bring that business before the meeting. Although
our by-laws do not give our board the power to approve or disapprove
shareholder nominations of candidates or proposals regarding other business
to be conducted at a special or annual meeting, our by-laws may have the
effect of precluding the conduct of business at a meeting if the proper
procedures are not followed or may discourage or defer a potential acquiror
from conducting a solicitation of proxies to elect its own slate of
directors or otherwise attempting to obtain control of us.
Provisions of New York Law Governing Business Combinations
Pursuant to Section 912 of the New York Business Corporation Law (the
"BCL"), a New York "domestic corporation" may not engage in certain
business combinations (including among other things, mergers and
consolidations, certain sales or dispositions of assets, liquidations and
recapitalizations) with interested shareholders (beneficial owners of 20
percent or more of the corporation's voting power). We believe that we are
a domestic corporation within the meaning of the BCL. Section 912 would
prohibit an interested shareholder from effecting any business combination
with us for a period of five years following the date that such person
first becomes an interested shareholder, unless there was approval by the
board of directors of either the purchase of the 20 percent or greater
interest or of the proposed business combination prior to the 20 percent
acquisition. Section 912 further provides that, at the expiration of the
five-year period the interested shareholder could engage in a business
combination with us only if such transaction is approved by a majority of
the disinterested shareholders or if the price paid meets a statutory
formula.
Section 513(c) of the BCL prohibits a domestic corporation from purchasing
more than 10 percent of its stock from a shareholder for more than market
value, unless the transaction is approved by a majority of the
shareholders, the offer is made to all shareholders or the selling
shareholder has been the beneficial owner of the stock for more than two
years.
Section 717(b) of the BCL entitles a director in taking action, including
which may involve potential change in control of the corporation to
consider both the long-term and the short-term interests of the corporation
and its shareholders, and the effects of the corporation's actions on
prospects for potential growth, current and retired employees, customers
and creditors, and the communities in which the corporation does business.
Transfer Agent and Registrar
The transfer agent and registrar for common stock is EquiServe Trust
Company N.A.
Selling Securityholders
The notes were originally issued by us and sold by J.P. Morgan Securities
Inc., Banc of America Securities LLC, BNY Capital Markets, Inc., First
Union Securities, Inc., Scotia Capital (USA) Inc. and Fleet Securities,
Inc. (the "initial purchasers") in transactions exempt from the
registration requirements of the Securities Act to persons reasonably
believed by the initial purchasers to be "qualified institutional buyers"
as defined by Rule 144A under the Securities Act. The selling
securityholders may from time to time offer and sell pursuant to this
prospectus any or all of the notes listed below and the shares of common
stock issued upon conversion of such notes. When we refer to the "selling
securityholders" in this prospectus, we mean those persons listed in the
table below, as well as the pledgees, donees, assignees, transferees,
successors and others who later hold any of the selling securityholders'
interests.
The table below sets forth the name of each selling securityholder, the
principal amount at maturity of notes that each selling securityholder may
offer pursuant to this prospectus and the number of shares of common stock
into which such notes are convertible. Unless set forth below, to our
knowledge, none of the selling securityholders has, or within the past
three years has had, any material relationship with us or any of our
predecessors or affiliates or beneficially owns in excess of 1% of the
outstanding common stock.
The principal amounts of the notes provided in the table below is based on
information provided to us by each of the selling securityholders as of
July __, 2001, and the percentages are based on $150,000,000 principal
amount at maturity of notes outstanding. The number of shares of common
stock that may be sold is calculated based on the current conversion price
of $15.806 per share.
Since the date on which each selling securityholder provided this
information, each selling securityholder identified below may have sold,
transferred or otherwise disposed of all or a portion of its notes in a
transaction exempt from the registration requirements of the Securities
Act. Information concerning the selling securityholders may change from
time to time and any changed information will be set forth in supplements
to this prospectus to the extent required. In addition, the conversion
ratio, and therefore the number of shares of our common stock issuable upon
conversion of the notes, is subject to adjustment. Accordingly, the number
of shares of common stock issuable upon conversion of the notes may
increase or decrease.
The selling securityholders may from time to time offer and sell any or all
of the securities under this prospectus. Because the selling
securityholders are not obligated to sell the notes or the shares of common
stock issuable upon conversion of the notes, we cannot estimate the amount
of the notes or how many shares of common stock that the selling
securityholders will hold upon consummation of any such sales.
AGGREGATE NUMBER OF PERCENTAGE
PRINCIPAL SHARES OF
AMOUNT AT MATURITY OF COMMON STOCK SHARES OF COMMON
OF NOTES PERCENTAGE OF NOTES THAT MAY STOCK OUTSTANDING
NAME THAT MAY BE SOLD OUTSTANDING BE SOLD (1) (2)
- ---- ---------------- ------------------- ----------------- -----------------
* Less than one percent (1%).
Plan of Distribution
The selling securityholders will be offering and selling all of the
securities offered and sold under this prospectus. We will not receive any
of the proceeds from the offering of the notes or the shares of common
stock by the selling securityholders. In connection with the initial
offering of the notes, we entered into a registration rights agreement
dated June 8, 2001 with the initial purchasers of the notes. Securities may
only be offered or sold under this prospectus pursuant to the terms of the
registration rights agreement. However, selling securityholders may resell
all or a portion of the securities in open market transactions in reliance
upon Rule 144 or Rule 144A under the Securities Act, provided they meet the
criteria and conform to the requirements of one of these rules. We are
registering the notes and shares of common stock covered by this prospectus
to permit holders to conduct public secondary trading of these securities
from time to time after the date of this prospectus. We have agreed, among
other things, to bear all expenses, other than underwriting discounts and
selling commissions, in connection with the registration and sale of the
notes and the shares of common stock covered by this prospectus.
The selling securityholders may sell all or a portion of the notes and
shares of common stock beneficially owned by them and offered hereby from
time to time:
o directly; or
o through underwriters, broker-dealers or agents, who may
receive compensation in the form of discounts, commissions or
concessions from the selling securityholders and/or from the
purchasers of the notes and shares of common stock for whom
they may act as agent.
The notes and the shares of common stock may be sold from time to time in
one or more transactions at:
o fixed prices, which may be changed;
o prevailing market prices at the time of sale;
o varying prices determined at the time of sale; or
o negotiated prices.
These prices will be determined by the holders of the securities or by
agreement between these holders and underwriters or dealers who may receive
fees or commissions in connection with the sale. The aggregate proceeds to
the selling securityholders from the sale of the notes or shares of common
stock offered by them hereby will be the purchase price of the notes or
shares of common stock less discounts and commissions, if any.
The sales described in the preceding paragraph may be effected in
transactions:
o on any national securities exchange or quotation service on
which the notes or shares of common stock may be listed or
quoted at the time of sale, including the Nasdaq National
Market in the case of the shares of common stock;
o in the over-the counter market;
o in transactions otherwise than on such exchanges or services
or in the over-the-counter market; or
o through the writing of options.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the notes and shares of common stock or
otherwise, the selling securityholders may enter into hedging transactions
with broker-dealers. These broker-dealers may in turn engage in short sales
of the notes and shares of common stock in the course of hedging their
positions. The selling securityholders may also sell the notes and shares
of common stock short and deliver the notes and shares of common stock to
close out short positions, or loan or pledge notes and shares of common
stock to broker-dealers that in turn may sell the notes and shares of
common stock.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the notes and the shares of
common stock by the selling securityholders. Selling securityholders may
not sell any, or may not sell all, of the notes and the shares of common
stock offered by them pursuant to this prospectus. In addition, we cannot
assure you that a selling securityholder will not transfer, devise or gift
the notes and the shares of common stock by other means not described in
this prospectus. In addition, any securities covered by this prospectus
which qualify for sale pursuant to Rule 144 or Rule 144A of the Securities
Act may be sold under Rule 144 or Rule 144A rather than pursuant to this
prospectus.
The notes were issued and sold in June 2001 in transactions exempt from the
registration requirements of the Securities Act to persons reasonably
believed by the initial purchasers to be "qualified institutional buyers,"
as defined in Rule 144A under the Securities Act. Pursuant to the
registration rights agreement, we have agreed to indemnify the initial
purchasers and each selling securityholder, and each selling securityholder
has agreed to indemnify us against specified liabilities arising under the
Securities Act. The selling securityholders may also agree to indemnify any
broker-dealer or agent that participates in transactions involving sales of
the securities against some liabilities, including liabilities that arise
under the Securities Act.
The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the notes and the underlying shares of common
stock by the selling securityholders and any such other person. In
addition, Regulation M of the Exchange Act may restrict the ability of any
person engaged in the distribution of the notes and the underlying shares
of common stock to engage in market-making activities with respect to the
particular notes and the underlying shares of common stock being
distributed for a period of up to five business days prior to the
commencement of distribution. This may affect the marketability of the
notes and the underlying shares of common stock and the ability of any
person or entity to engage in market-making activities with respect to the
notes and the underlying shares of common stock.
Under the registration rights agreement, we are obligated to use our
reasonable best efforts to keep the registration statement of which this
prospectus is a part effective until the earlier of:
o two years after the last date of original issuance of any of
the notes;
o the date when the notes and the shares of common stock
issuable upon conversion of the notes (i) may be resold
immediately without restriction pursuant to the volume
limitation provisions of Rule 144(k) under the Securities Act
or (ii) cease to be outstanding; and
o the sale, pursuant to the registration statement to which
this prospectus relates, of all the securities registered
thereunder.
Our obligation to keep the registration statement to which this prospectus
relates effective is subject to specified, permitted exceptions set forth
in the registration rights agreement. In these cases, we may prohibit
offers and sales of the notes and shares of common stock pursuant to the
registration statement to which this prospectus relates.
We may suspend the use of this prospectus if we learn of any event that
causes this prospectus to include an untrue statement of a material fact
required to be stated in the prospectus or necessary to make the statements
in the prospectus not misleading in light of the circumstances then
existing. If this type of event occurs, a prospectus supplement or
post-effective amendment, if required, will be distributed to each selling
securityholder. Each selling securityholder has agreed not to trade
securities from the time the selling securityholder receives notice from us
of this type of event until the selling securityholder receives a
prospectus supplement or amendment. This time period will not exceed 45
days in any 90-day period or 90 days in a 360-day period.
Legal Matters
Certain legal matters in connection with the notes offered hereby and the
shares of our common stock into which those notes are convertible will be
passed upon for us by our counsel Skadden, Arps, Slate, Meagher & Flom LLP,
New York, New York.
Experts
Our consolidated financial statements, as of February 3, 2001 and January
29, 2000 and for each of the years in the three-year period ended February
3, 2001 included in our annual report on Form 10-K for the year ended
February 3, 2001 have been incorporated by reference herein in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG LLP refers to
changes in the method of accounting for sales under our layaway program in
2000 and in the method of calculating the market-related value of our U.S.
pension plan assets in 1999.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or
other information filed by us at the SEC's public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. Our
filings with the SEC are also available to the public from commercial
document retrieval services and at the SEC's website at www.sec.gov.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We are paying all of the selling securityholders' expenses related to this
offering, except the selling securityholders will pay any applicable
broker's commissions and expenses. The following table sets forth the
approximate amount of fees and expenses payable by us in connection with
this Registration Statement and the distribution of the notes and the
shares of common stock registered hereby. All of the amounts shown are
estimates except the Securities and Exchange Commission registration fee.
Securities and Exchange Commission Registration Fee......... $43,125
Transfer Agent's, Trustees' and Depositary's Fees and
Expenses.................................................. **
Printing and Engraving Fees and Expenses.................... **
Accounting Fees and Expenses................................ **
Legal Fees.................................................. **
Miscellaneous Expenses...................................... **
-------
Total.................................................. $ **
=======
- ---------------
** To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 722 through 726 of the New York Business Corporation Law (the
"BCL") grant New York corporations broad powers to indemnify their present
and former directors and officers and those of affiliated corporations
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred in connection with
threatened, pending or completed actions, suits or proceedings to which
they are parties or are threatened to be made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; give a director or officer who successfully defends an action
the right to be so indemnified; and permit a corporation to buy directors'
and officers' liability insurance. Such indemnification is not exclusive of
any other rights to which those indemnified may be entitled under any
by-laws, agreement, vote of shareholders or otherwise.
Section 402(b) of the BCL permits a New York corporation to include in its
certificate of incorporation a provision eliminating the potential monetary
liability of a director to the corporation or its stockholders for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate the liability of a director (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for improper payment of dividends, improper
purchase of the shares of the corporation, improper distribution of assets
to shareholders after dissolution of the corporation and improper making of
any loan, or (iv) for any transaction from which the director receives an
improper personal benefit or other advantage.
Our Certificate of Incorporation, as amended, includes the provision
permitted by Section 402(b) of the BCL.
Our By-laws provide that we shall indemnify our present or future directors
and officers from and against any and all liabilities and expenses to the
maximum extent permitted by the BCL as the same presently exists or to the
greater extent permitted by any amendment hereafter adopted.
We have entered into indemnification agreements with each of our officers
and directors. The indemnification agreements provide for indemnification
of our directors and officers to the fullest extent permitted by the BCL.
ITEM 16. EXHIBITS
The following is a list of all exhibits filed as a part of this
registration statement on Form S-3, including those incorporated in this
registration statement by reference.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
3.1(a) Certificate of Incorporation of the Registrant, as
filed by the Department of State of the State of New
York on April 7, 1989 (incorporated by reference to
the Registrant's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997, Commission File No.
001-10299).
3.1(b) Certificates of Amendment of the Certificate of
Incorporation of the Registrant, as filed by the
Department of State of the State of New York on (a)
July 20, 1989, (b) July 24, 1990, (c) July 9, 1997
(incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended June 30,
1997, Commission File No. 001-10299).
3.2 By-laws of the Registrant, as amended (incorporated by
reference to the Registrant's Quarterly Report on Form
10-Q for the quarter ended May 5, 2001, Commission
File No. 001-10299).
3.3 Specimen of Common Stock Certificate.
4.1 Indenture dated as of June 8, 2001 between Venator
Group, Inc. and The Bank of New York, as trustee.
4.2 Form of 5.50% Convertible Subordinated Note (included
in Exhibit 4.1).
4.3 Registration Rights Agreement dated as of June 8,
2001, between Venator Group, Inc. J.P. Morgan
Securities Inc., Banc of America Securities LLC, BNY
Capital Markets, Inc., First Union Securities, Inc.,
Scotia Capital (USA) Inc. and Fleet Securities, Inc.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
12.1 Statement re: Computation of Ratio of Earnings to
Fixed Charges.
15.1 Accountants' Acknowledgement.
23.1 Consent of KPMG LLP, Independent Accountants.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1).
24.1 Powers of Attorney (included in signature page to this
Registration Statement)
25.1 A Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of The Bank of New
York, trustee under the Indenture.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended;
(b) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in
the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement; and
(c) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (1)(a) and (1)(b) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been informed that in the opinion of the
Commission, such indemnification is against public policy as expressed in
the Securities Act of 1933, as amended, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933, as
amended, and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Venator Group, Inc., certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of
New York, on July 11, 2001.
VENATOR GROUP, INC.
By /s/ Bruce L. Hartman
------------------------------------
Bruce L. Hartman
Senior Vice President and Chief Financial
Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
each of Matthew D. Serra, Gary M. Bahler and Bruce L. Hartman his true and
lawful attorneys-in-fact with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement as well as any new registration
statement filed to register additional securities pursuant to Rule 462(b)
under the Securities Act of 1933, as amended, and to cause the same to be
filed, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby granting to
said attorneys-in-fact and agent, full power and authority to do and
perform each and every act and thing whatsoever requisite or desirable to
be done in and about the premises, as fully to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all acts and things that said attorneys-in-fact and agents, or
their substitutes or substitute, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Matthew D. Serra President, Chief Executive July 11, 2001
- --------------------------- Officer and Director
Matthew D. Serra (Principal Executive Officer)
/s/ Bruce L. Hartman Senior Vice President and July 11, 2001
- --------------------------- Chief Financial Officer
Bruce L. Hartman (Principal Financial Officer)
/s/ Robert W. McHugh Vice President and July 11, 2001
- --------------------------- Chief Accounting Officer
Robert W. McHugh (Principal Accounting Officer)
/s/ J. Carter Bacot Chairman of the Board July 11, 2001
- ---------------------------
J. Carter Bacot
/s/ Purdy Crawford Director July 11, 2001
- ---------------------------
Purdy Crawford
/s/ Phillip H. Geier, Jr. Director July 11, 2001
- ---------------------------
Philip H. Geier, Jr.
/s/ Jarobin Gilbert, Jr. Director July 11, 2001
- ---------------------------
Jarobin Gilbert, Jr.
/s/ James E. Preston Director July 11, 2001
- ---------------------------
James E. Preston
/s/ David Y. Schwartz Director July 11, 2001
- ---------------------------
David Y. Schwartz
/s/ Christopher A. Sinclair Director July 11, 2001
- ---------------------------
Christopher A. Sinclair
/s/ Cheryl Turpin Director July 11, 2001
- ---------------------------
Cheryl Turpin
/s/ Dona D. Young Director July 11, 2001
- ---------------------------
Dona D. Young
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
3.1(a) Certificate of Incorporation of the Registrant, as
filed by the Department of State of the State of New
York on April 7, 1989 (incorporated by reference to
the Registrant's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997, Commission File No.
001-10299).
3.1(b) Certificates of Amendment of the Certificate of
Incorporation of the Registrant, as filed by the
Department of State of the State of New York on (a)
July 20, 1989, (b) July 24, 1990, (c) July 9, 1997
(incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended June 30,
1997, Commission File No. 001-10299).
3.2 By-laws of the Registrant, as amended (incorporated by
reference to the Registrant's Quarterly Report on Form
10-Q for the quarter ended May 5, 2001, Commission
File No. 001-10299).
3.3 Specimen of Common Stock Certificate.
4.1 Indenture dated as of June 8, 2001 between Venator
Group, Inc. and The Bank of New York, as trustee.
4.2 Form of 5.50% Convertible Subordinated Note (included
in Exhibit 4.1).
4.3 Registration Rights Agreement dated as of June 8,
2001, between Venator Group, Inc. J.P. Morgan
Securities Inc., Banc of America Securities LLC, BNY
Capital Markets, Inc., First Union Securities, Inc.,
Scotia Capital (USA) Inc. and Fleet Securities, Inc.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
12.1 Statement re: Computation of Ratio of Earnings to
Fixed Charges.
15.1 Accountants' Acknowledgement.
23.1 Consent of KPMG LLP, Independent Accountants.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1).
24.1 Powers of Attorney (included in signature page to this
Registration Statement)
25.1 A Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of The Bank of New
York, trustee under the Indenture.
Exhibit 3.3
Venator Group, Inc.
THIS CERTIFICATE IS TRANSFERABLE COMMON STOCK CUSIP 922944 10 3
IN NEW YORK, NEW YORK INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK SEE REVERSE FOR CERTAIN DEFINITIONS
This certifies that
Is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK OF
Venator Group, Inc. transferable in person or by attorney, and in the
manner provided by law and in the by-laws of Venator Group, Inc., upon
surrender of this certificate properly endorsed. This certificate is not
valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the seal of Venator Group, Inc. and the signatures of
its duly authorized officers.
Dated:
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
SECRETARY
Countersigned and Registered:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: Transfer Agent
and Registrar
Authorized Signature
VENATOR GROUP, INC.
- -------------------------------------------------------------------------------
Authorized Shares
Venator Group, Inc. (the "Corporation") will furnish to any shareholder,
without charge, upon request addressed to the Corporate Secretary, at the
headquarters of the Corporation, a full statement of the designation,
relative rights, preferences and limitations of the shares of each
authorized class and of each series of preferred shares authorized to be
issued, so far as the same may have been fixed, and a statement of the
authority of the board of directors to designate and fix the relative
rights, preferences and limitations of other series.
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between the Corporation and
First Chicago Trust Company of New York (the "Rights Agent") dated as of
March 11, 1998 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal office of the Corporation. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Corporation will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge,
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person or any Affiliate
or Associate thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.
- -------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-________Custodian, ________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of
survivorship and not as tenants in under Uniform Gifts/Transfers to Minors
common
Act _______________________________
(State)
Additional abbreviations may also be used though not in the above list
- -------------------------------------------------------------------------------
For value received, __________________ hereby sell, assign and transfer
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------------
- -----------------------------------
- -------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Shares of the capital stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
- -------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated, _______________
-----------------------------------------------------
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST
CORRESPOND WITH THE
NAME AS WRITTEN UPON
THE FACE OF THIS
CERTIFICATE IN EVERY
PARTICULAR, WITHOUT
ALTERATION OR
ENLARGEMENT OR ANY
CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
- ----------------------------------------------------- THE SIGNATURE(S)
SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
Exhibit 4.1
===============================================================================
VENATOR GROUP, INC.
and
THE BANK OF NEW YORK
as
Trustee
INDENTURE
Dated as of June 8, 2001
$125,000,000 Principal Amount(1)
5.50% CONVERTIBLE SUBORDINATED NOTES DUE 2008
===============================================================================
(1) Plus an additional $25,000,000 issuable at the option of the Initial
Purchasers as described herein.
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1)............................................. 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A.
(a)(5).......................................... N.A.
(b)............................................. 7.08; 7.10; 13.02
(c)............................................. N.A.
311(a)................................................ 7.11
(b)............................................. 7.11
(c)............................................. N.A.
312(a)................................................ 2.05
(b)............................................. 13.03
(c)............................................. 13.03
313(a)................................................ 7.06
(b)(1).......................................... N.A.
(b)(2).......................................... 7.06
(c)............................................. 7.06; 13.02
(d)............................................. 7.06
314(a)................................................ 4.02
(b)............................................. N.A.
(c)(1).......................................... 13.04
(c)(2).......................................... 13.04
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e)............................................. 13.05
(f)............................................. N.A.
315(a)................................................ 7.01(b)
(b)............................................. 7.05; 13.02
(c)............................................. 7.01(a)
(d)............................................. 7.01(c)
(e)............................................. 6.11
316(a)(last sentence)................................. 2.09
(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)................................................ 13.01
__________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to
be a part of the Indenture
TABLE OF CONTENTS
Page
ARTICLE ONE
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........6
-------------------------------------------------
SECTION 1.04. Rules of Construction....................................7
---------------------
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating..........................................7
---------------
SECTION 2.02. Execution and Authentication.............................8
----------------------------
SECTION 2.03. Registrar, Paying Agent and Conversion Agent.............9
--------------------------------------------
SECTION 2.04. Paying Agent to Hold Money in Trust......................9
-----------------------------------
SECTION 2.05. Securityholder Lists.....................................9
--------------------
SECTION 2.06. Transfer and Exchange...................................10
---------------------
SECTION 2.07. Replacement Securities..................................10
----------------------
SECTION 2.08. Outstanding Securities..................................10
----------------------
SECTION 2.09. Securities Held by the Company or an Affiliate..........11
----------------------------------------------
SECTION 2.10. Temporary Securities....................................11
--------------------
SECTION 2.11. Cancellation............................................11
------------
SECTION 2.12. Defaulted Interest......................................11
------------------
SECTION 2.13. CUSIP Numbers...........................................12
-------------
SECTION 2.14. Deposit of Moneys.......................................12
-----------------
SECTION 2.15. Book-Entry Provisions for Global Securities.............12
-------------------------------------------
SECTION 2.16. Special Transfer Provisions.............................13
---------------------------
SECTION 2.17. Restrictive Legends.....................................16
-------------------
ARTICLE THREE
REDEMPTION; REPURCHASE
SECTION 3.01. Notices to Trustee......................................16
------------------
SECTION 3.02. Selection of Securities to Be Redeemed..................16
--------------------------------------
SECTION 3.03. Notice of Redemption....................................17
--------------------
SECTION 3.04. Effect of Notice of Redemption..........................18
------------------------------
SECTION 3.05. Deposit of Redemption Price.............................18
---------------------------
SECTION 3.06. Securities Redeemed in Part.............................18
---------------------------
SECTION 3.07. Repurchase at Option of Holder upon a Repurchase Event..18
------------------------------------------------------
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities...................................23
---------------------
SECTION 4.02. Maintenance of Office or Agency.........................23
-------------------------------
SECTION 4.03. Reports to Holders......................................23
------------------
SECTION 4.04. Compliance Certificate..................................24
----------------------
SECTION 4.05. Stay, Extension and Usury Laws..........................24
------------------------------
SECTION 4.06. Corporate Existence.....................................24
-------------------
SECTION 4.07. Notice of Default.......................................25
-----------------
ARTICLE FIVE
CONSOLIDATION, MERGER AND SALE OF ASSETS
SECTION 5.01. When Company May Merge, etc.............................25
---------------------------
SECTION 5.02. Successor Substituted...................................25
---------------------
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.......................................26
-----------------
SECTION 6.02. Acceleration............................................27
------------
SECTION 6.03. Other Remedies..........................................27
--------------
SECTION 6.04. Waiver of Past Defaults.................................28
-----------------------
SECTION 6.05. Control by Majority.....................................28
-------------------
SECTION 6.06. Limitation on Suits.....................................28
-------------------
SECTION 6.07. Rights of Holders to Receive Payment or Convert.........29
-----------------------------------------------
SECTION 6.08. Collection Suit by Trustee..............................29
--------------------------
SECTION 6.09. Trustee May File Proofs of Claim........................29
--------------------------------
SECTION 6.10. Priorities..............................................29
----------
SECTION 6.11. Undertaking for Costs...................................30
---------------------
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.......................................30
-----------------
SECTION 7.02. Rights of Trustee.......................................31
-----------------
SECTION 7.03. Individual Rights of Trustee............................32
----------------------------
SECTION 7.04. Trustee's Disclaimer....................................32
--------------------
SECTION 7.05. Notice of Defaults......................................32
------------------
SECTION 7.06. Reports by Trustee to Holders...........................33
-----------------------------
SECTION 7.07. Compensation and Indemnity..............................33
--------------------------
SECTION 7.08. Replacement of Trustee..................................33
----------------------
SECTION 7.09. Successor Trustee by Merger, etc........................34
--------------------------------
SECTION 7.10. Eligibility; Disqualification...........................34
-----------------------------
SECTION 7.11. Preferential Collection of Claims Against Company.......35
-------------------------------------------------
ARTICLE EIGHT
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 8.01. Termination of Company's Obligations....................35
------------------------------------
SECTION 8.02. Application of Trust Money..............................36
--------------------------
SECTION 8.03. Repayment to Company....................................36
--------------------
SECTION 8.04. Reinstatement...........................................37
-------------
ARTICLE NINE
AMENDMENTS
SECTION 9.01. Without Consent of Holders..............................37
--------------------------
SECTION 9.02. With Consent of Holders.................................37
-----------------------
SECTION 9.03. Compliance with Trust Indenture Act.....................38
-----------------------------------
SECTION 9.04. Revocation and Effect of Consents.......................38
---------------------------------
SECTION 9.05. Notation on or Exchange of Securities...................39
-------------------------------------
SECTION 9.06. Trustee Protected.......................................39
-----------------
ARTICLE TEN
CONVERSION
SECTION 10.01 Conversion Privilege; Restrictive Legends...............39
-----------------------------------------
SECTION 10.02 Conversion Procedure....................................40
--------------------
SECTION 10.03 Fractional Shares.......................................40
-----------------
SECTION 10.04 Taxes on Conversion.....................................41
-------------------
SECTION 10.05 Company to Provide Stock................................41
------------------------
SECTION 10.06 Adjustment of Conversion Price..........................41
------------------------------
SECTION 10.07 Effect of Reclassification, Consolidation, Merger
or Sale.................................................49
------------------------------------------------
SECTION 10.08 Notice of Certain Transactions..........................50
------------------------------
SECTION 10.09 Company Determination Final.............................50
---------------------------
SECTION 10.10 Trustee's Disclaimer....................................50
--------------------
ARTICLE ELEVEN
[RESERVED]
ARTICLE TWELVE
SUBORDINATION
SECTION 12.01 Securities Subordinated to Senior Indebtedness..........51
----------------------------------------------
SECTION 12.02 Subrogation.............................................53
-----------
SECTION 12.03 Obligation of Company Unconditional.....................53
-----------------------------------
SECTION 12.04 Modification of Terms of Senior Indebtedness............54
--------------------------------------------
SECTION 12.05 [Reserved]..............................................54
---------
SECTION 12.06 Effectuation of Subordination by Trustee................54
----------------------------------------
SECTION 12.07 Knowledge of Trustee....................................54
--------------------
SECTION 12.08 Trustee's Relation to Senior Indebtedness...............55
-----------------------------------------
SECTION 12.09 Rights of Holders of Senior Indebtedness Not Impaired...55
-----------------------------------------------------
SECTION 12.10 Certain Conversions Not Deemed Payment..................55
--------------------------------------
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls............................56
----------------------------
SECTION 13.02 Notices.................................................56
-------
SECTION 13.03 Communication by Holders with Other Holders.............57
-------------------------------------------
SECTION 13.04 Certificate and Opinion as to Conditions Precedent......57
--------------------------------------------------
SECTION 13.05 Statements Required in Certificate or Opinion...........57
---------------------------------------------
SECTION 13.06 Rules by Trustee and Agents.............................58
---------------------------
SECTION 13.07 Legal Holidays..........................................58
--------------
SECTION 13.08 No Recourse Against Others..............................58
--------------------------
SECTION 13.09 Duplicate Originals.....................................58
-------------------
SECTION 13.10 Governing Law...........................................58
-------------
SECTION 13.11 No Adverse Interpretation of Other Agreements...........58
---------------------------------------------
SECTION 13.12 Successors..............................................58
----------
SECTION 13.13 Separability............................................59
------------
SECTION 13.14 Table of Contents, Headings, etc........................59
--------------------------------
SIGNATURES............................................................S-1
EXHIBITS
Exhibit A - Form of Security
Exhibit B - Form of Legends
Exhibit C - Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S
Exhibit D - Form of Notice of Transfer Pursuant to Registration Statement
Exhibit E - Form of Opinion of Counsel in Connection with Registration
of Securities
INDENTURE dated as of June 8, 2001 between VENATOR GROUP,
INC., a New York corporation (the "Company"), and THE BANK OF NEW YORK, a
New York banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's
5.50% Convertible Subordinated Notes Due 2008:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
-----------
"Affiliate" means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control
with the Company. For this purpose, "control" shall mean the power to
direct the management and policies of a Person through the ownership of
securities, by contract or otherwise.
"Agent" means any Registrar, Paying Agent, Conversion
Agent or co-registrar.
"Board of Directors" means the Board of Directors of the
Company or any committee of the Board authorized to act for it hereunder.
"Board Resolution" means a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of capital stock
of the Company and all warrants or options to acquire such capital stock.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Company" means the party named as such above until a
successor replaces it pursuant to the applicable provision hereof and
thereafter means the successor.
"Company Request" or "Company Order" means a written
request or order signed on behalf of the Company by its Chairman of the
Board, its President or any Senior Vice President or Vice President and by
its Treasurer or an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Conversion Price" means $15.806per share of Common
Stock, as adjusted pursuant to Article Ten.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 13.02 or such other address as
the Trustee may give notice of to the Company.
"Credit Facility" means the credit agreement dated as of
April 9, 1997, as amended and restated on or about the date hereof among
the Company, the lenders and co-agents party thereto and The Bank of New
York, as administrative agent, together with any related documents
(including any security documents and guarantee agreements), as such
agreement may be amended, modified, supplemented, extended, renewed,
refinanced or replaced or substituted from time to time.
"Default" means any event which is, or after notice or
passage of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its
nominees and successors.
"Designated Senior Indebtedness" means (i) all
Indebtedness under the Credit Facility, and (ii) after payment in full in
cash of all Senior Indebtedness under the Credit Facility, any particular
Senior Indebtedness in which the instrument creating or evidencing the
Senior Indebtedness or the assumption or guarantee thereof (or related
documents or agreements to which the Company is a party) expressly provides
that such Indebtedness shall be "Designated Senior Indebtedness" (provided
that such instrument may place limitations and conditions on the right of
such Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness), the aggregate principal amount of which is equal to or
greater than $50.0 million.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Holder" means a Person in whose name a Security is
registered on the Registrar's books.
"Indebtedness" means, with respect to the Company:
(1) all indebtedness, obligations and other liabilities,
contingent or otherwise, for borrowed money,
including obligations
(a) in respect of overdrafts , foreign exchange
contracts, currency exchange agreements,
interest rate protection agreements and any
loans or advance from banks, whether or not
evidenced by notes or similar instruments,
or
(b) evidenced by bonds, debentures, notes or
similar instruments, whether or not the
recourse of the lender is to all assets or
to only a portion thereof, other than any
account payable or other secured current
liability or obligation incurred in the
ordinary course of business in connection
with the obtaining of materials or services,
(2) all reimbursement obligations and other liabilities,
contingent or otherwise, with respect to letters of
credit, bank guarantees or bankers' acceptances,
(3) all obligations and liabilities, contingent or
otherwise, in respect of leases required, in
conformity with generally accepted accounting
principles, to be accounted for as capitalized lease
obligations on the balance sheet,
(4) all obligations and other liabilities, contingent or
otherwise, under any lease or related document,
including a purchase agreement, in connection with
the lease of real property or improvements thereon
(or any personal property included as part of any
such lease) which provides for a contractual
obligation to purchase or cause a third party to
purchase the leased property and thereby guarantee
the residual value of leased property to the lessor
and all of the obligations under such lease or
related documents to purchase the leased property
(whether or not such lease transaction is
characterized as an operating lease or a capitalized
lease in accordance with generally accepted
accounting principles),
(5) all obligations, contingent or otherwise, with
respect to an interest rate, currency or other swap,
cap, floor or collar agreement, hedge agreement,
forward contract, or other similar instrument or
agreement or foreign currency hedge, exchange,
purchase or similar instrument or agreement,
(6) all direct or indirect guarantees or similar
agreements to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect
of indebtedness, obligations or liabilities or
another person of the kind described in clauses (1)
through (5) above,
(7) any indebtedness or other obligations described in
clauses (1) through (6) above secured by any
mortgage, pledge, lien or other encumbrance existing
on property which owned or held, regardless of
whether the indebtedness or other obligation secured
thereby has been assumed, and
(8) any and all deferrals, renewals, extensions and
refundings of, or amendments, modifications
supplements to, any indebtedness, obligation or
liability of the kind described in clauses (1)
through (7) above.
"Indenture" means this Indenture as amended or
supplemented from time to time.
"interest" means, with respect to any Security, interest
on the Security plus liquidated damages, if any.
"Issue Date" means (i) June 8, 2001 with respect to the
$125,000,000 aggregate principal amount of Securities issued on such date,
and (ii) with respect to any of up to $25,000,000 aggregate principal
amount of Securities that may be issued after June [ ], 2001 pursuant to
the option described in Section 2.02, the respective issue date of such
Securities.
"liquidated damages" has the meaning provided in the
Registration Rights Agreement.
"Maturity Date" means June 1, 2008.
"Non-U.S. Person" means a Person who is not a U.S.
Person, as defined in Regulation S under the Securities Act.
"obligations" means with respect to any Indebtedness, all
obligations (whether in existence on the date hereof or arising afterwards,
absolute or contingent, direct or indirect) for or in respect of principal
(when due, upon acceleration, upon redemption, upon mandatory repayment or
repurchase pursuant to a mandatory offer to purchase, or otherwise),
premium, interest, penalties, fees, indemnification, reimbursement and
other amounts payable and liabilities with respect to such Indebtedness,
including, without limitation, all interest accrued or accruing after, or
which would accrue but for, the commencement of any bankruptcy, insolvency
or reorganization or similar case or proceeding at the contract rate
(including, without limitation, any contract rate applicable upon default)
specified in the relevant documentation, whether or not the claim for such
interest is allowed as a claim in such case or proceeding.
"Officer" means the Chairman of the Board, the President,
any Senior Vice President, any Vice President, the Chief Financial Officer,
the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer or an Assistant
Secretary of the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who may be an employee of or counsel for the Company.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or other agency or
political subdivision thereof.
"principal" of a debt security means the principal of the
security plus the premium, if any, on the security.
"QIB" means a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act.
"Registration Rights Agreement" means the Registration
Rights Agreement dated as of June 8, 2001 by and among the Company and the
Initial Purchasers.
"Regulation S" means Regulation S under the Securities
Act.
"Regulation S Global Security" means a permanent Global
Security in registered form representing the aggregate principal amount of
Securities sold in reliance on Regulation S.
"Restricted Security" means a Security that constitutes a
"Restricted Security" within the meaning of Rule 144(a)(3) under the
Securities Act; provided, however, that the Trustee shall be entitled to
request and conclusively rely on an Opinion of Counsel with respect to
whether any Security constitutes a Restricted Security.
"Rule 144A Global Security" means a permanent Global
Security in registered form representing the aggregate principal amount of
Securities sold in reliance on Rule 144A.
"SEC" means the Securities and Exchange Commission.
"Securities" means the 5.50% Convertible Subordinated
Notes Due 2008 issued by the Company pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Senior Indebtedness" means all obligations with respect
to Indebtedness of the Company whether outstanding on the date hereof or
thereafter created, incurred, assumed guaranteed, or in effect guaranteed,
by the Company, including, without limitation, all deferrals, renewals,
extensions or refundings of, or amendments, modifications or supplements
to, the foregoing, unless in the case of any particular Indebtedness the
instrument creating or evidencing the same or the assumption or guarantee
thereof expressly provides that such Indebtedness shall not be senior in
right of payment to the Securities or expressly provides that such
Indebtedness ranks equal in right of payment or junior to, the Securities;
provided, however, that Senior Indebtedness does not include (i)
Indebtedness evidenced by the Securities, (ii) Indebtedness of the Company
to any subsidiary of the Company, (iii) any obligations for federal, state,
local or other taxes and (iv) accounts payable of the Company to trade
creditors arising in the ordinary course of business.
"subsidiary" means (i) a corporation a majority of whose
capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by the Company, by
one or more subsidiaries of the Company or by the Company and one or more
subsidiaries thereof or (ii) any other Person (other than a corporation) in
which the Company, one or more subsidiaries thereof or the Company and one
or more subsidiaries thereof, directly or indirectly, at the date of
determination thereof, have at least majority ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) as in effect on the date of this Indenture, except as
provided in Section 9.03.
"Trust Officer" means any officer of the Trustee assigned
by the Trustee to administer this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions hereof and
thereafter means the successor.
SECTION 1.02. Other Definitions.
-----------------
Term Defined in Section
---- ------------------
"Bankruptcy Law".............................................. 6.01
"Business Day"................................................ 13.07
"Change in Control"........................................... 3.07(l)
"Closing Price"............................................... 10.06(g)
"Common Dividend Amount"...................................... 10.06(e)
"Company Notice".............................................. 3.07(b)
"Conversion Agent"............................................ 2.03
"Current Market Price"........................................ 10.06(g)
"Custodian"................................................... 6.01
"Event of Default"............................................ 6.01
"fair market value"........................................... 10.06(g)
"Global Security"............................................. 2.01
"Initial Purchasers".......................................... 2.02
"Legal Holiday"............................................... 13.07
"Market Capitalization"....................................... 10.06(e)
"Participants"................................................ 2.15(a)
"Paying Agent"................................................ 2.03
"Payment Blockage Notice"..................................... 12.01(b)
"Payment Blockage Period"..................................... 12.01(b)
"Payment Default"............................................. 12.01(b)
"Physical Securities"......................................... 2.15(b)
"Private Placement Legend".................................... 2.17
"Record Date"................................................. 10.06(g)
"Registrar"................................................... 2.03
"Repurchase Date"............................................. 3.07(a)
"Repurchase Event"............................................ 3.07(l)
"Repurchase Price"............................................ 3.07(a)
"Subject Securities".......................................... 10.06(d)
"Trading Day"................................................. 10.06(g)
"Trigger Event"............................................... 10.06(d)
"U.S. Government Obligations"................................. 8.01
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 Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company.
All other terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or defined by SEC
rule under the TIA and not otherwise defined herein have the meanings so
assigned to them.
SECTION 1.04. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with
generally accepted accounting principles in
effect on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural and in
the plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) "herein", "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
---------------
The Securities and the Trustee's certificate of
authentication shall be substantially in the form set forth in Exhibit A,
which is incorporated in and forms a part of this Indenture. The Securities
may have notations, legends or endorsements required by law, stock exchange
rule or usage. Each Security shall be dated the date of its authentication.
Securities offered and sold in reliance on Rule 144A,
Securities offered and sold in reliance on Regulation S and Securities
subsequently transferred to Institutional Accredited Investors shall be
issued initially in the form of one or more Global Securities,
substantially in the form set forth in Exhibit A (the "Global Security").
The aggregate principal amount of the Global Security may from time to time
be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary, as hereinafter provided.
SECTION 2.02. Execution and Authentication.
----------------------------
Two Officers shall sign the Securities for the Company by
manual or facsimile signature.
If an Officer whose signature is on a Security no longer
holds that office at the time the Security is authenticated, the Security
shall nevertheless be valid.
A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture.
Upon a written order of the Company signed by two
Officers or by an Officer and an Assistant Treasurer of the Company, the
Trustee shall authenticate Securities for original issue in the principal
amount of $125,000,000 and such additional principal amounts, if any, as
shall be determined pursuant to the next sentence of this Section 2.02.
Upon receipt by the Trustee of an Officers' Certificate stating that the
Initial Purchasers have elected to purchase from the Company a specified
principal amount of additional Securities, not to exceed $25,000,000,
pursuant to Section l of the Purchase Agreement dated June 4, 2001 by and
among the Company, as issuer, and J.P. Morgan Securities Inc., Banc of
America Securities LLC, BNY Capital Markets, Inc., First Union Securities,
Inc., Fleet Securities, Inc. and Scotia Capital (USA) Inc., as initial
purchasers (the "Initial Purchasers"), the Trustee shall authenticate and
deliver such specified principal amount of additional Securities to or upon
the written order of the Company signed as provided in the immediately
preceding sentence. Such Officers' Certificate must be received by the
Trustee at least two full Business Days prior to the proposed date for
delivery of such additional Securities, but, in any case, not later than
July [ ], 2001. The aggregate principal amount of Securities outstanding at
any time may not exceed $150,000,000 except as provided in Section 2.07.
Upon a written order of the Company signed by two
Officers or by an Officer and an Assistant Treasurer of the Company, the
Trustee shall authenticate Securities not bearing the Private Placement
Legend to be issued to the transferee when sold pursuant to an effective
registration statement under the Securities Act.
The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Securities. An authenticating
agent may authenticate Securities whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such Agent. An authenticating agent has the same rights
as an Agent to deal with the Company or an Affiliate.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 principal amount and
any integral multiple thereof. The Securities shall bear interest at the
rate, calculated and paid, as provided in the form of Security set forth in
Exhibit A.
SECTION 2.03. Registrar, Paying Agent and Conversion Agent.
--------------------------------------------
The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be presented for
payment ("Paying Agent") and an office or agency where Securities may be
presented for conversion ("Conversion Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company
may appoint or change one or more co-registrars, one or more additional
paying agents and one or more additional conversion agents without notice
and may act in any such capacity on its own behalf. The term "Registrar"
includes any co-registrar; the term "Paying Agent" includes any additional
paying agent; the term "Conversion Agent" includes any additional
conversion agent.
The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. If the Company fails to maintain a Registrar,
Paying Agent or Conversion Agent, the Trustee shall act as such.
The Company initially appoints the Trustee as Paying
Agent, Registrar and Conversion Agent.
SECTION 2.04. Paying Agent to Hold Money in Trust.
-----------------------------------
Each Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all moneys held by the Paying Agent for the
payment of principal of or interest on the Securities, and shall notify the
Trustee of any default by the Company in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all
money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over
to the Trustee, the Paying Agent shall have no further liability for the
money. If the Company acts as Paying Agent, it shall segregate and hold as
a separate trust fund all money held by it as Paying Agent.
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 Holders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee on or before each interest payment date and at
such other times as the Trustee may request in writing a list, in such form
and as of such date as the Trustee may reasonably require, of the names and
addresses of Holders.
SECTION 2.06. Transfer and Exchange.
---------------------
Where Securities are presented to the Registrar with a
request to register their transfer or to exchange them for an equal
principal amount of Securities of other authorized denominations, the
Registrar shall register the transfer or make the exchange if its
requirements for such transaction are met. To permit registrations of
transfer and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's request. The Company or the
Trustee, as the case may be, shall not be required (a) to issue or
authenticate, register the transfer of or exchange any Security during a
period beginning at the opening of business 10 Business Days before the
mailing of a notice of redemption of the Securities selected for redemption
under Section 3.03 and ending at the close of business on the day of such
mailing, or (b) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion
of Securities being redeemed in part.
No service charge shall be made for any registration of
transfer, exchange or conversion of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any transfer, registration of
transfer or exchange of Securities, other than exchanges pursuant to
Sections 2.10, 3.06, 9.05 or 10.02 not involving any transfer.
SECTION 2.07. Replacement Securities.
----------------------
If the Holder of a Security claims that the Security has
been mutilated, lost, destroyed or wrongfully taken, the Company shall
issue and the Trustee shall authenticate a replacement Security if the
Trustee's requirements are met and, in the case of a mutilated Security,
such mutilated Security is surrendered to the Trustee. In the case of lost,
destroyed or wrongfully taken Securities, if required by the Trustee or the
Company, an indemnity bond must be provided by the Holder that is
sufficient in the judgment of both to protect the Company, the Trustee or
any Agent from any loss that any of them may suffer if a Security is
replaced. The Company or the Trustee may charge for its expenses in
replacing a Security.
In case any such mutilated, lost, destroyed or wrongfully
taken Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Security, pay such
Security when due.
Every replacement Security is an additional obligation of
the Company.
SECTION 2.08. Outstanding Securities.
----------------------
Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those converted, those cancelled by
it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security does not cease to be outstanding
because the Company or one of its subsidiaries or Affiliates holds the
Security.
If a Security is replaced pursuant to Section 2.07, it
ceases to be outstanding unless the Trustee receives proof satisfactory to
it, or a court holds, that the replaced Security is held by a protected
purchaser.
If the Paying Agent (other than the Company) holds on a
redemption date or the Maturity Date money sufficient to pay Securities
payable on that date, then on and after that date, such Securities shall be
deemed to be no longer outstanding and interest on them shall cease to
accrue.
SECTION 2.09. Securities Held by the Company or an Affiliate.
----------------------------------------------
In determining whether the Holders of the required
aggregate principal amount of Securities have concurred in any direction,
waiver or consent, Securities owned by the Company or a subsidiary or an
Affiliate shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
waiver or consent, only Securities that a Trust Officer actually knows are
so owned shall be so disregarded.
SECTION 2.10. Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities.
SECTION 2.11. Cancellation.
------------
The Company at any time may deliver Securities to the
Trustee for cancellation. The Registrar, Paying Agent and Conversion Agent
shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange, payment or conversion. The Trustee
shall cancel all Securities surrendered for registration of transfer,
exchange, payment, conversion or cancellation and the Trustee shall dispose
of such cancelled Securities in its customary manner. The Company may not
issue new Securities to replace Securities that it has paid or delivered to
the Trustee for cancellation or that any Holder has converted pursuant to
Article Ten.
SECTION 2.12. Defaulted Interest.
------------------
If and to the extent the Company defaults in a payment of
interest on the Securities, it shall pay the defaulted interest in any
lawful manner plus, to the extent not prohibited by applicable statute or
case law, interest payable on the defaulted interest. It may pay the
defaulted interest to the Persons who are Holders on a subsequent special
record date. The Company shall fix such record date and payment date. At
least 15 days before a special record date, the Company shall mail to
Holders a notice that states the record date, payment date and amount of
interest to be paid.
SECTION 2.13. CUSIP Numbers.
-------------
The Company in issuing the Securities may use one or more
"CUSIP" numbers, and if so, the Trustee shall use the CUSIP numbers in
notices of redemption or exchange as a convenience to Holders; provided,
however, that no representation is hereby deemed to be made by the Trustee
as to the correctness or accuracy of the CUSIP numbers printed in the
notice or on the Securities, and that reliance may be placed only on the
other identification numbers printed on the Securities. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14. Deposit of Moneys.
-----------------
Prior to 10:00 a.m., New York City time, on each interest
payment date, redemption date, Repurchase Date and the Maturity Date, the
Company shall have deposited with the Paying Agent in immediately available
funds money sufficient to make cash payments, if any, due on such interest
payment date, redemption date, Repurchase Date and the Maturity Date, as
the case may be, in a timely manner which permits the Paying Agent to remit
payment to the Holders on such interest payment date, maturity date,
redemption date and Repurchase Date, as the case may be.
SECTION 2.15. Book-Entry Provisions for Global Securities.
-------------------------------------------
(a) The Global Securities initially shall (i) be
registered in the name of the Depositary or the nominee of such Depositary,
(ii) be delivered to the Trustee as custodian for such Depositary and (iii)
bear the legend for Global Securities as set forth in Exhibit B(II).
Members of, or participants in, the Depositary
("Participants") shall have no rights under this Indenture with respect to
any Global Security held on their behalf by the Depositary, or the Trustee
as its custodian, or under the Global Security, and the Depositary may be
treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of the 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 impair, as between the Depositary and Participants,
the operation of customary practices governing the exercise of the rights
of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to
transfers in whole, but not in part, to the Depositary, its successors or
their respective nominees. In addition, permanent certificated Securities
in registered form, in the form set forth in Exhibit A (the "Physical
Securities"), shall be transferred to all beneficial owners in exchange for
their beneficial interests in Global Securities if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as
Depositary for any Global Security and a successor Depositary is not
appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a
written request from the Depositary to issue Physical Securities.
(c) In connection with any transfer or exchange of a
portion of the beneficial interest in a Global Security to beneficial
owners pursuant to paragraph (b), the Registrar shall (if one or more
Physical Securities are to be issued) reflect on its books and records the
date and a decrease in the aggregate principal amount of such Global
Security in an amount equal to the aggregate initial aggregate principal
amount of the beneficial interest in the Global Security to be transferred,
and the Company shall execute and the Trustee shall authenticate and
deliver one or more Physical Securities of authorized denominations in an
aggregate principal amount equal to the aggregate principal amount of the
beneficial interest in the Global Security so transferred.
(d) In connection with the transfer of a Global Security
in its entirety to beneficial owners pursuant to paragraph (b) of this
Section 2.15, such Global Security shall be deemed to be surrendered to the
Trustee for cancellation, and the Company shall execute, and the Trustee
shall upon written instructions from the Company authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in such Global Security, an equal aggregate principal
amount of Physical Securities of authorized denominations.
(e) Any Physical Security constituting a Restricted
Security delivered in exchange for an interest in a Global Security
pursuant to paragraph (b) or (c) of this Section 2.15 shall, except as
otherwise provided by Section 2.16, bear the Private Placement Legend.
(f) The Holder of any Global Security may grant proxies
and otherwise authorize any Person, including Participants and Persons that
may hold interests through Participants, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
SECTION 2.16. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-U.S. Persons. The following
provisions shall apply with respect to the registration of any
proposed transfer of a Restricted Security to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any
Restricted Security, whether or not such Security bears the
Private Placement Legend, if (x) the requested transfer is after
the second anniversary of the Issue Date for such Security;
provided, however, that the transferor shall represent to the
Registrar that, to the transferor's knowledge, neither the Company
nor any Affiliate of the Company has held any beneficial interest
in such Security, or portion thereof, at any time on or prior to
the second anniversary of the Issue Date for such Security or (y)
in the case of a transfer to a Non-U.S. Person, the proposed
transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit C hereto;
(ii) if the proposed transferee is a Participant and the
Securities to be transferred consist of Physical Securities that
after transfer are to be evidenced by an interest in the Global
Security, upon receipt by the Registrar of (x) written
instructions given in accordance with the Depositary's and the
Registrar's procedures and (y) the appropriate certificate, if
any, required by clause (y) of paragraph (i) above, the Registrar
shall register the transfer and reflect on its books and records
the date and an increase in the aggregate principal amount of the
Global Security in an amount equal to the aggregate principal
amount of Physical Securities to be transferred, and the Trustee
shall cancel the Physical Securities so transferred; and
(iii) if the proposed transferor is a Participant seeking
to transfer an interest in the Rule 144A Global Security, upon
receipt by the Registrar of (x) written instructions given in
accordance with the Depositary's and the Registrar's procedures
and (y) the appropriate certificate, if any, required by clause
(y) of paragraph (i) above, the Registrar shall register the
transfer and reflect on its books and records the date and (A) a
decrease in the aggregate principal amount of the Rule 144A Global
Security in an amount equal to the aggregate principal amount of
the Securities to be transferred and (B) an increase in the
aggregate principal amount of the Regulation S Global Security, in
an amount equal to the aggregate principal amount of the
Securities to be transferred.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of a
Restricted Security to a QIB:
(i) the Registrar shall register the transfer of any
Restricted Security, whether or not such Security bears the
Private Placement Legend, if (x) the requested transfer is after
the second anniversary of the Issue Date for such Security;
provided, however, that the transferor shall represent to the
Registrar that, to the transferor's knowledge, neither the Company
nor any Affiliate of the Company has held any beneficial interest
in such Security, or portion thereof, at any time on or prior to
the second anniversary of the Issue Date for such Security or (y)
such transfer is being made by a proposed transferor who has
checked the box provided for on the form of Security stating, or
has otherwise advised the Company and the Registrar in writing,
that the sale has been made in compliance with the provisions of
Rule 144A to a transferee who has signed the certification
provided for on the form of Security stating, or has otherwise
advised the Company and the Registrar in writing, that it is
purchasing the Security for its own account or an account with
respect to which it exercises sole investment discretion and that
it and any such account is a QIB within the meaning of Rule 144A,
and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule 144A or
has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A;
(ii) if the proposed transferee is a Participant and the
Securities to be transferred consist of Physical Securities which
after transfer are to be evidenced by an interest in the Global
Security, upon receipt by the Registrar of written instructions
given in accordance with the Depositary's and Registrar's
procedures, the Registrar shall register the transfer and reflect
on its books and records the date and an increase in the principal
amount of the Global Security in an amount equal to the principal
amount of Physical Securities to be transferred, and the Trustee
shall cancel the Physical Security so transferred; and
(iii) if the proposed transferor is a Participant seeking
to transfer an interest in the Regulation S Global Security upon
receipt by the Registrar of written instructions given in
accordance with the Depositary's and the Registrar's procedures,
the Registrar shall register the transfer and reflect on its books
and records the date and (A) a decrease in the aggregate principal
amount of the Regulation S Global Security in an amount equal to
the aggregate principal amount of the Securities to be transferred
and (B) an increase in the aggregate principal amount of the Rule
144A Global Security in an amount equal to the aggregate principal
amount of the Securities to be transferred.
(c) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture, a
Global Security may not be transferred as a whole except by the Depositary
to a nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
(d) Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Securities not bearing the Private
Placement Legend, the Registrar or co-Registrar shall deliver Securities
that do not bear the Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Securities bearing the Private
Placement Legend, the Registrar or co-Registrar shall deliver only
Securities that bear the Private Placement Legend unless (i) the requested
transfer is after the second anniversary of the Issue Date for such
Security (provided, however, that neither the Company nor any Affiliate of
the Company has held any beneficial interest in such Security, or portion
thereof, at any time prior to or on the second anniversary of the Issue
Date for such Security), (ii) there is delivered to the Trustee an Opinion
of Counsel reasonably satisfactory to the Company to the effect that
neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act
or (iii) such Security has been sold pursuant to an effective registration
statement under the Securities Act and the Holder selling such Securities
has delivered to the Registrar or co-Registrar a notice in the form of
Exhibit D hereto. Upon the effectiveness of the Shelf Registration
Statement (as defined in the Registration Rights Agreement) the Company
shall deliver to the Trustee a notice of effectiveness, a Security or
Securities, an authentication order in accordance with Section 2.02 and an
Opinion of Counsel in the form of Exhibit E hereto and, if required by the
Depositary, the Company shall deliver to the Depositary a letter of
representations in a form reasonably acceptable to the Depositary.
(e) General. By its acceptance of any Security bearing
the Private Placement Legend, each Holder of such a Security acknowledges
the restrictions on transfer of such Security set forth in this Indenture
and in the Private Placement Legend and agrees that it will transfer such
Security only as provided in this Indenture.
The Registrar shall retain, in accordance with its
customary procedures, copies of all letters, notices and other written
communications received pursuant to Section 2.15 or this Section 2.16. The
Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time
upon the giving of reasonable notice to the Registrar.
(f) Transfers of Securities Held by Affiliates. Any
certificate (i) evidencing a Security that has been transferred to an
Affiliate of the Company within two years after the Issue Date for such
Security, as evidenced by a notation on the Assignment Form for such
transfer or in the representation letter delivered in respect thereof or
(ii) evidencing a Security that has been acquired from an Affiliate (other
than by an Affiliate) in a transaction or a chain of transactions not
involving any public offering, shall, until two years after the last date
on which either the Company or any Affiliate of the Company was an owner of
such Security, in each case, bear the Private Placement Legend, unless
otherwise agreed by the Company (with written notice thereof to the
Trustee).
SECTION 2.17. Restrictive Legends.
-------------------
Each Global Security and Physical Security that
constitutes a Restricted Security shall bear the private placement legend
(the "Private Placement Legend") as set forth in Exhibit B(I) on the face
thereof until after the second anniversary of the later of the Issue Date
for such Securities and the last date on which the Company or any Affiliate
of the Company was the owner of such Security (or any predecessor security)
(or such shorter period of time as permitted by Rule 144(k) under the
Securities Act or any successor provision thereunder) (or such longer
period of time as may be required under the Securities Act or applicable
state securities laws in the opinion of counsel for the Company, unless
otherwise agreed by the Company and the Holder thereof).
ARTICLE THREE
REDEMPTION; REPURCHASE
SECTION 3.01. Notices to Trustee.
------------------
If the Company wants to redeem Securities pursuant to
paragraph 6 of the Securities, it shall notify the Trustee at least 45 days
prior to the redemption date (unless a shorter notice period shall be
satisfactory to the Trustee) of the redemption date and the aggregate
principal amount of Securities to be redeemed. If the Company wants to
credit against any such redemption Securities it has not previously
delivered to the Trustee for cancellation (other than Securities
repurchased pursuant to Section 3.07), it shall deliver the Securities with
the notice.
SECTION 3.02. Selection of Securities to Be Redeemed.
--------------------------------------
If less than all the outstanding Securities are to be
redeemed, the Trustee shall select the Securities to be redeemed on either
a pro rata basis or by lot or such other method as the Trustee shall deem
fair and equitable. The Trustee shall make the selection from Securities
outstanding not previously called for redemption. The Trustee may select
for redemption portions of the principal of Securities that have
denominations larger than $1,000 principal amount. Securities and portions
of them it selects shall be in amounts of $1,000 principal amount or
integral multiples of $1,000 principal amount. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption.
The Registrar need not register the transfer of or
exchange any Securities selected for redemption. Also, the Registrar need
not transfer or exchange any Securities for a period of 10 days before
selecting Securities to be redeemed.
SECTION 3.03. Notice of Redemption.
--------------------
At least 20 days but not more than 60 days before a
redemption date, the Company shall mail by first-class mail or cause to be
mailed a notice of redemption to each Holder whose Securities are to be
redeemed.
The notice shall identify the Securities and the
aggregate principal amount thereof to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price, plus the amount of accrued and
unpaid interest to be paid on the Securities called for
redemption;
(3) the then current conversion rate;
(4) the name and address of the Paying Agent and
Conversion Agent;
(5) the date on which the right to convert the principal
of the Securities called for redemption will terminate and the
place or places where such Securities may be surrendered for
conversion;
(6) that Holders who want to convert Securities must
satisfy the requirements in Article Ten;
(7) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(8) that interest on Securities called for redemption
ceases to accrue on and after the redemption date; and
(9) the CUSIP number of the Securities.
The date on which the right to convert the principal of
the Securities called for redemption will terminate shall be at the close
of business on the date prior to the redemption date, or, if the day before
the redemption date is a Legal Holiday, the close of business on the next
preceding day which is not a Legal Holiday.
At the Company's request (which request shall be
furnished to the Trustee at least 40 days prior to the redemption date
(unless a shorter period shall be acceptable to the Trustee)), the Trustee
shall give the notice of redemption in the Company's name and at the
Company's expense; provided that the form and content of such notice shall
be prepared by the Company.
SECTION 3.04. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed, Securities called
for redemption become due and payable on the redemption date at the
redemption price plus accrued and unpaid interest to, but excluding, the
date of redemption, and, on and after such date (unless the Company shall
default in the payment of the redemption price), such Securities shall
cease to bear interest. Upon surrender to the Paying Agent, such Securities
shall be paid at the redemption price plus accrued interest to the
redemption date, unless the redemption date is an interest payment date, in
which case the accrued interest will be paid in the ordinary course.
SECTION 3.05. Deposit of Redemption Price.
---------------------------
On or before the redemption date, the Company shall
deposit with the Paying Agent pursuant to Section 2.14 money in funds
immediately available on the redemption date sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed
on that date. The Paying Agent shall return to the Company, as soon as
practicable, any money not required for that purpose because of conversion
of Securities.
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 for the Holder
a new Security equal in principal amount to the unredeemed portion of the
Security surrendered.
If a portion of a Holder's Securities is selected for
partial redemption and that Holder converts a portion of that Holder's
Securities, the converted portion shall be deemed (as far as may be) to be
the portion selected for redemption.
SECTION 3.07. Repurchase at Option of Holder upon a Repurchase Event.
------------------------------------------------------
(a) If there shall occur a Repurchase Event, then each
Holder shall have the right, at such Holder's option, to require the
Company to repurchase all of such Holder's Securities, or any portion
thereof (in principal amounts of $1,000 or integral multiples thereof), on
the date (the "Repurchase Date") that is thirty (30) Business Days after
the date of such Repurchase Event. Such repurchase shall be made in cash at
a price equal to 100% of the principal amount of Securities such Holder
elects to require the Company to repurchase, together with accrued
interest, if any, to but excluding the Repurchase Date (the "Repurchase
Price") (or, at the option of the Company, by delivery of Common Stock in
accordance with the provisions of Section 3.07(k)); provided, however, that
if such Repurchase Date is an interest payment date, then the interest
payable on such date shall be paid to the holder of record of the Security
on the preceding record date for the payment of interest. No Securities may
be repurchased at the option of Holders upon a Repurchase Event if there
has occurred and is continuing an Event of Default, other than a default in
the payment of the Repurchase Price with respect to such Securities on the
Repurchase Date.
(b) Unless the Company shall have theretofore called for
redemption all of the outstanding Securities, on or before the tenth (10th)
Business Day after the occurrence of a Repurchase Event, the Company or, at
the written request of the Company, the Trustee shall mail to all holders
of record of the Securities a notice (the "Company Notice") in the form
prepared by the Company of the occurrence of the Repurchase Event and of
the repurchase right set forth herein arising as a result thereof. The
Company shall also deliver a copy of such Company Notice to the Trustee.
The Company Notice shall contain the following information:
(1) the Repurchase Date;
(2) the date by which the repurchase right must be
exercised;
(3) the last date by which the election to require
repurchase, if submitted, must be revoked;
(4) the Repurchase Price and whether the Repurchase Price
shall be payable in cash or Common Stock and, if payable in Common
Stock, the method of calculating the amount of the Common Stock to
be delivered upon the repurchase as provided in Section 3.07(k);
(5) a description of the procedure that a Holder must
follow to exercise a repurchase right;
(6) the Conversion Price then in effect, the date on
which the right to convert the principal amount of the Securities
to be repurchased will terminate and the place or places where
Securities may be surrendered for conversion; and
(7) the CUSIP numbers of the Securities.
No failure of the Company to give the foregoing notices
or defect therein shall limit any Holder's right to exercise a repurchase
right or affect the validity of the proceedings for the repurchase of
Securities.
If any of the foregoing provisions are inconsistent with
applicable law, such law shall govern.
(c) To exercise a repurchase right, a Holder shall
deliver to the Trustee on or before the close of business on the Business
Day preceding the Repurchase Date (i) written notice to the Company (or
agent designated by the Company for such purpose) of the Holder's exercise
of such right, which notice shall set forth the name of the Holder, the
principal amount of the Securities to be repurchased, a statement that an
election to exercise the repurchase right is being made thereby, and, in
the event that the Repurchase Price shall be paid in shares of Common
Stock, the name or names (with addresses) in which the certificate or
certificates for shares of Common Stock shall be issued, and (ii) the
Securities with respect to which the repurchase right is being exercised,
duly endorsed for transfer to the Company. Election of repurchase by a
Holder shall be revocable at any time prior to, but excluding, the
Repurchase Date, by delivering written notice to that effect to the Trustee
prior to the close of business on the Business Day prior to the Repurchase
Date.
(d) If the Company fails to repurchase on the Repurchase
Date any Securities (or portions thereof) as to which the repurchase right
has been properly exercised, then the principal of such Securities shall,
until paid, bear interest to the extent permitted by applicable law from
the Repurchase Date at the rate borne by the Securities and each such
Security shall be convertible into Common Stock in accordance with this
Indenture until the principal of such Security shall have been paid or duly
provided for.
(e) Any Security that is to be repurchased only in part
shall be surrendered to the Trustee duly endorsed for transfer to the
Company and accompanied by appropriate evidence of genuineness and
authority satisfactory to the Company and the Trustee duly executed by the
Holder thereof (or his 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, containing identical terms and conditions, of any authorized
denomination as requested by such Holder in aggregate principal amount
equal to and in exchange for the unrepurchased portion of the principal of
the Security so surrendered.
(f) On or prior to the Repurchase Date, the Company shall
deposit with the Trustee or with a Paying Agent, pursuant to Section 2.14,
the Repurchase Price in cash for payment to the Holder on the Repurchase
Date; provided that if payment is to be made in cash and such cash payment
is made on the Repurchase Date it must be received by the Trustee or paying
agent, as the case may be, by 10:00 a.m., New York City time, on such date;
provided, further, that if the Repurchase Price is to be paid in shares of
Common Stock, such shares of Common Stock are to be paid as promptly after
the Repurchase Date as practicable.
(g) Any issuance of shares of Common Stock in respect of
the Repurchase Price shall be deemed to have been effected immediately
prior to the close of business on the Repurchase Date and the Person or
Persons in whose name or names any certificate or certificates for shares
of Common Stock shall be issuable upon such repurchase shall be deemed to
have become on the Repurchase Date the holder or holders of record of the
shares represented thereby; provided, however, that any surrender for
repurchase on a date when the stock transfer books of the Company shall be
closed shall constitute the Person or Persons in whose name or names the
certificate or certificates for such shares are to be issued as the record
holder or holders thereof for all purposes at the opening of business on
the next succeeding day on which such stock transfer books are open. No
payment or adjustment shall be made for dividends or distributions on any
Common Stock issued upon repurchase of any Security declared prior to the
Repurchase Date.
(h) No fractions of shares shall be issued upon
repurchase of Securities. If more than one Security shall be repurchased
from the same Holder and the Repurchase Price shall be payable in shares of
Common Stock, the number of full shares which shall be issuable upon such
repurchase shall be computed on the basis of the aggregate principal amount
of the Securities so repurchased. Instead of any fractional share of Common
Stock otherwise issuable on the repurchase of any Security or Securities,
the Company will deliver to the applicable Holder its check for the current
market value of such fractional share. The current market value of a
fraction of a share is determined by multiplying the current market price
of a full share by the fraction, and rounding the result to the nearest
cent. For purposes of this Section, the current market price of a share of
Common Stock is the Closing Price of the Common Stock on the Trading Day
immediately preceding the Repurchase Date.
(i) Any issuance and delivery of certificates for shares
of Common Stock on repurchase of Securities shall be made without charge to
the Holder of Securities being repurchased for such certificates or for any
tax or duty in respect of the issuance or delivery of such certificates or
the securities represented thereby; provided, however, that the Company
shall not be required to pay any tax or duty which may be payable in
respect of (i) income of the Holder or (ii) any transfer involved in the
issuance or delivery of certificates for shares of Common Stock in a name
other than that of the Holder of the Securities being repurchased, and no
such issuance or delivery shall be made unless and until the Person
requesting such issuance or delivery has paid to the Company the amount of
any such tax or duty or has established, to the satisfaction of the
Company, that such tax or duty has been paid.
(j) All Securities delivered for repurchase shall be
delivered to the Trustee to be canceled in accordance with the provisions
of Section 2.11.
(k) The Company may elect to pay the Repurchase Price by
delivery of shares of Common Stock if and only if the following conditions
shall have been satisfied:
(i) the shares of Common Stock deliverable in payment of
the Repurchase Price shall have a fair market value as of the
Repurchase Date of not less than the Repurchase Price. For
purposes of this Section 3.07, the fair market value of shares of
Common Stock shall be determined by the Company and shall be equal
to 95% of the average of the Closing Prices of the Common Stock
for the five consecutive Trading Days immediately preceding and
including the third Trading Day prior to the Repurchase Date;
(ii) such shares have been registered under the Securities
Act or are freely transferable without such registration;
(iii) the issuance of such Common Stock does not require
registration with or approval of any governmental authority under
any state law or any other federal law, which registration or
approval has not been made or obtained;
(iv) such shares have been approved for quotation on the
New York Stock Exchange or listing on a national securities
exchange; and
(v) such shares will be issued out of the Company's
authorized but unissued stock and, upon issuance, will be duly and
validly and fully paid and non-assessable and free of any
preemptive rights.
(l) For purposes of this Section 3.07:
(i) the term "beneficial owner" shall be determined in
accordance with Rule 13d-3 and 13d-5, as in effect on the date of
the original execution of this Indenture, promulgated by the SEC
pursuant to the Exchange Act;
(ii) the term "Person" or "group" shall include any
syndicate or group which would be deemed to be a "person" under
Section 13(d) and 14(d) of the Exchange Act as in effect on the
date of this Indenture;
(iii) the term "Repurchase Event" means a Change in
Control defined as follows:
A "Change in Control" shall be deemed to have
occurred when (i) any "person" or "group" is or becomes
the "beneficial owner" of shares representing more than
50% of the combined voting power of the then outstanding
securities entitled to vote generally in elections of
directors of the Company (the "Voting Stock"); (ii) there
shall occur the liquidation or dissolution of the
Company; or (iii) the Company consolidates with or merges
into any other Person or any other Person merges into the
Company or conveys, transfers or leases all or
substantially all of its assets to any Person other than
a subsidiary or subsidiaries, and in the case of any such
transaction, the outstanding Common Stock of the Company
is changed or exchanged into other assets or securities
as a result, unless the shareholders of the Company
immediately before such transaction own, directly or
indirectly immediately following such transaction, more
than 50% of the combined voting power of the outstanding
voting securities of the Person resulting from such
transaction or the transferee Person; provided that a
Change in Control shall not be deemed to have occurred if
either (x) the Closing Price of the Common Stock for any
five (5) Trading Days (1) in the case of a Change in
Control described in clause (i) above, during the ten
(10) consecutive Trading Days after the later of the
Change in Control or the public announcement of the
Change in Control or (2) in the case of a Change of
Control described in clause (ii) or (iii) above, during
the ten (10) Trading Days immediately preceding the
Change in Control, in each such case, is at least equal
to 105% of the Conversion Price in effect on the date on
which the Change in Control occurs or (y) in the case of
a merger or consolidation otherwise constituting a Change
in Control, all of the consideration (excluding cash
payments for fractional shares) in such merger or
consolidation constituting the Change in Control consists
of common stock traded on a United States national
securities exchange or quoted on the Nasdaq National
Market (or which will be so traded or quoted when issued
or exchanged in connection with such Change in Control)
and as a result of such transaction or transactions the
Securities become convertible solely into such common
stock.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
---------------------
The Company shall pay the principal amount, premium, if
any, of and any accrued and unpaid interest on the Securities on the dates
and in the manner provided in the Securities. The principal, premium, if
any, and any accrued and unpaid interest thereon shall be considered paid
on the date due if the Paying Agent holds (or, if the Company is acting as
Paying Agent, if the Company has segregated and holds in trust in
accordance with Section 2.04) on that date money sufficient to pay the
principal, premium, if any, and any accrued and unpaid interest thereon.
The Company shall pay interest on any overdue principal
at the rate borne by the Securities. The Company shall pay interest on
overdue installments of interest at the same rate to the extent not
prohibited by applicable law.
SECTION 4.02. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in the Borough of Manhattan,
The City of New York, an office or agency where Securities may be
surrendered for registration of transfer or exchange or conversion and
where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the
location, of such office or agency. 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 Corporate Trust Office of the
Trustee.
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. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Company hereby designates the Corporate Trust Office
of the Trustee as an agency of the Company in accordance with Section 2.03.
The Company also shall comply with the provisions of TIA
ss. 314(a).
SECTION 4.03. Reports to Holders.
------------------
(a) The Company (at its own expense) will deliver to the
Trustee within 15 days after the filing of the same with the SEC, copies of
the quarterly and annual reports and of the information, documents and
other reports, if any, the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act.
(b) Notwithstanding that the Company may not be subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act,
the Company will promptly provide the information required by Rule
144A(d)(4) to any Holder that so requests.
(c) In addition, if and when this Indenture becomes
subject to the TIA, the Company will file a copy of all such information
with the SEC for public availability (unless the Commission will not accept
such a filing) and make such information available to investors who request
it in writing. The Company will also comply with the other provisions of
TIA ss. 314(a).
Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of
such 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 4.04. Compliance Certificate.
----------------------
The Company shall deliver to the Trustee within 120 days
after the end of each fiscal year of the Company an Officers' Certificate
stating whether or not the signers know of any Default or Event of Default
by the Company in performing any of its obligations under this Indenture or
the Securities. If they do know of any such Default or Event of Default,
the certificate shall describe the Default or Event of Default and its
status.
SECTION 4.05. Stay, Extension and Usury Laws.
------------------------------
The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, which
may affect the covenants 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,
by resort to any such law, hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has been enacted.
SECTION 4.06. Corporate Existence.
-------------------
Subject to Article Five, the Company will do or cause to
be done all things necessary to preserve and keep in full force and effect
its corporate existence and the corporate existence of each subsidiary in
accordance with the respective organizational documents of each subsidiary
and the rights (charter and statutory), licenses and franchises of the
Company and its subsidiaries; provided, however, that the Company shall not
be required to preserve any such right, license or franchise, or the
corporate existence of any subsidiary, if in the judgment of the Company,
(i) such preservation or existence is not material to the conduct of
business of the Company and (ii) the loss of such right, license or
franchise or the dissolution of such subsidiary does not have a material
adverse impact on the Holders.
SECTION 4.07. Notice of Default.
-----------------
In the event that any Default under Section 6.01 hereof
shall occur the Company will give prompt written notice of such Default to
the Trustee.
ARTICLE FIVE
CONSOLIDATION, MERGER AND SALE OF ASSETS
SECTION 5.01. When Company May Merge, etc.
---------------------------
The Company shall not consolidate with or merge into, or
transfer or lease all or substantially all of its assets to, another Person
unless such other Person is a corporation, limited liability company,
partnership, trust or other business entity organized under the laws of the
United States, any State thereof or the District of Columbia and such
Person assumes by supplemental indenture all the obligations of the Company
under the Securities, this Indenture and the Registration Rights Agreement,
and immediately after giving effect to the transaction, no Default or Event
of Default has occurred and is continuing.
The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed
transaction and such supplemental indenture will, upon consummation of the
proposed transaction, comply with this Indenture.
Notwithstanding the foregoing, any subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company or any other subsidiary or subsidiaries.
SECTION 5.02. Successor Substituted.
---------------------
Upon any consolidation or merger or transfer or lease of
all or substantially all of the assets of the Company in accordance with
Section 5.01, the successor Person formed by such consolidation or into
which the Company is merged or to which such transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, and shall assume every duty and obligation of, the Company under
this Indenture with the same effect as if such successor corporation had
been named as the Company herein. When the successor corporation assumes
all obligations of the Company hereunder, all obligations of the
predecessor corporation shall terminate.
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
-----------------
An "Event of Default" occurs if:
(1) the Company fails to pay the principal of or any
premium on the Securities when due (whether or not prohibited by
the provisions set forth in Article Twelve hereof);
(2) the Company fails to pay any interest on the
Securities when due, if such failure continues for 30 days
(whether or not prohibited by the provisions set forth in Article
Twelve hereof);
(3) the Company fails to perform any other covenant in
this Indenture for the period and after the notice specified in
the last paragraph of this Section 6.01;
(4) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian
of it or for all or substantially all of its property, or
(D) makes a general assignment for the benefit
of its creditors; or
(5) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case,
(B) appoints a Custodian of the Company for
all or substantially all of its property, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 90
consecutive days.
The term "Bankruptcy Law" means Title 11, U.S. Code or
any similar Federal or State law for the relief of debtors. The term
"Custodian" means any receiver trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
A default under clause (3) is not an Event of Default
until the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding notify the Company and the Trustee of the
default and the Company does not cure the default within 90 days after
receipt of the notice of such default. The notice must specify the default,
demand that it be remedied and state that the notice is a "Notice of
Default." If the Holders of 25% in aggregate principal amount of the
outstanding Securities request the Trustee to give such notice on their
behalf, the Trustee shall do so. When a default is cured, it ceases.
SECTION 6.02. Acceleration.
------------
If an Event of Default (other than an Event of Default
specified in Section 6.01(4) or (5)) occurs and is continuing, the Trustee
by notice to the Company, or the Holders of at least 25% in principal
amount of the Securities then outstanding by notice to the Company and the
Trustee, may declare the principal amount including any accrued and unpaid
interest on the Securities due and payable upon the earlier to occur of (x)
the fifth (5th) day after notice thereof has been give to holders of
Designated Senior Indebtedness and (y) the date on which all of the
Designated Senior Indebtedness has been accelerated. If an Event of Default
under clause Section 6.01(4) or (5) occurs, the principal amount of all the
Securities will automatically become due and payable without any
declaration or other act on the part of the Trustee or any Holder.
The Company shall promptly notify holders of Designated
Senior Indebtedness if payment of the Securities is accelerated because of
an Event of Default.
After a declaration of acceleration, but before a
judgment or decree of the money due in respect of the Securities has been
obtained, the Holders of not less than a majority in aggregate principal
amount of the Securities then outstanding by written notice to the Trustee
may rescind an acceleration and its consequences if (i) all existing Events
of Default (other than the nonpayment of principal of and interest on the
Securities which has become due solely by virtue of such acceleration) have
been cured or waived, (ii) the rescission would not conflict with any
judgment or decree and (iii) the Company shall have paid all amounts due
pursuant to Section 7.07.
SECTION 6.03. Other Remedies.
--------------
Notwithstanding any other provision of this Indenture, if
an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment
of the principal of, premium, if any, and interest on the Securities or to
enforce the performance of any provision of the Securities or this
Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder in exercising
any right or remedy accruing upon an Event of Default shall not impair the
right or remedy or constitute a waiver of or acquiescence in the Event of
Default. All remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults.
-----------------------
Subject to Sections 6.02, 6.07 and 9.02, the Holders of a
majority in aggregate principal amount of the Securities then outstanding
by notice to the Trustee may waive any past Default or Event of Default and
its consequences, except a Default or Event of Default in the payment of
the principal of or interest on any Security, a failure by the Company to
convert any Securities into Common Stock or any Default or Event of Default
in respect of any provision of this Indenture or the Securities that, under
Section 9.02, cannot be modified or amended without the consent of the
Holder of each Security affected. When a Default or an Event of Default is
waived, it is cured and ceases.
SECTION 6.05. Control by Majority.
-------------------
The Holders of a majority in aggregate principal amount
of the Securities then outstanding may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture,
is unduly prejudicial to the rights of other Holders or would involve the
Trustee in personal liability; provided that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction.
SECTION 6.06. Limitation on Suits.
-------------------
Except as provided in Section 6.07, a Holder may pursue a
remedy with respect to this Indenture or the Securities only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal
amount of the Securities then outstanding make a written request
to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of indemnity;
and
(5) during such 60-day period the Holders of a majority
in aggregate principal amount of the Securities then outstanding
do not give the Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the
rights of another Holder or to obtain a preference or priority over another
Holder.
SECTION 6.07. Rights of Holders to Receive Payment or Convert.
-----------------------------------------------
Notwithstanding any other provision of this Indenture,
(i) the right of any Holder to receive payment of the principal of and
interest on the Security, on or after the respective due dates expressed in
the Security, or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without
the consent of the Holder and (ii) the right of any Holder to bring suit
for the enforcement of the right to convert the Security shall not be
impaired or affected without the consent of the Holder.
SECTION 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default specified in Section 6.01(l) or
(2) occurs and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against the Company for the whole
amount of principal and interest remaining unpaid and amounts due to the
Trustee under Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee, any predecessor Trustee and the Holders allowed in
any judicial proceedings relative to the Company, its creditors or its
property.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 6.10. Priorities.
----------
If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to holders of Senior Indebtedness to the extent
required by Article Twelve;
Third: to Holders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably,
without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal, premium,
if any, and interest, respectively, and
Fourth: to the Company.
The Trustee, upon prior written notice to the Company,
may fix a record date and payment date for any payment by it to Holders
pursuant to this Section 6.10.
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 in the suit other than the Trustee 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 shall not apply to a suit by the Trustee, a suit by a
Holder or group of Holders of more than 10% in aggregate principal amount
of the outstanding Securities, or to any suit instituted by any Holder for
the enforcement or the payment of the principal or interest on any
Securities on or after the respective due dates for such Securities.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances
in the conduct of his or her 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 shall be
inferred or implied; 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 the 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 any mathematical
calculations or other facts stated therein).
(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 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 Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.05.
(d) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity satisfactory to it
against any loss, liability or expense.
(e) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
SECTION 7.02. Rights of Trustee.
-----------------
(a) The Trustee may conclusively rely on any document
believed by it to be genuine and to have been signed or presented by the
proper person. The Trustee need not investigate any fact or matter stated
in the document; if, however, 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 expense of the Company and shall incur no liability or
additional liability of any kind by reason of such inquiry or
investigation.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate and/or an Opinion of Counsel. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of Counsel.
(c) 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 shall be sufficiently
evidenced by a Board Resolution.
(d) The Trustee may consult with counsel of its own
selection and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(e) The Trustee may act through agents or attorneys and
shall not be responsible for the misconduct or negligence of any agent or
attorney appointed with due care.
(f) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its discretion, rights or powers hereunder.
(g) 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
may, in absence of bad faith on its part, rely upon an Officers'
Certificate.
(h) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders, unless such Holders shall have offered
to the Trustee reasonable security or indemnity satisfactory to it against
costs, expenses and liabilities that might be incurred by it in compliance
with such request or direction.
(i) The Trustee shall not be charged with knowledge of
any Default or Event of Default with respect to the Securities unless
either (1) a Trust Officer shall have actual knowledge of such Default or
Event of Default or (2) written notice of such Default or Event of Default
shall have been given to the Trustee by the Company or by any Holder.
(j) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers.
(k) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to
be indemnified, are extended to, and shall be enforceable by, the Trustee
in each of its capacities hereunder, and each agent, custodian and other
Person employed to act hereunder.
SECTION 7.03. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the
Company or an Affiliate thereof with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights. The Trustee,
however, 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 of the proceeds from the Securities; and it shall not
be responsible for any statement in the Securities other than its
certificate of authentication.
SECTION 7.05. Notice of Defaults.
------------------
If a Default or Event of Default occurs and is continuing
and if it is actually known to a Trust Officer of the Trustee, the Trustee
shall mail to each Holder a notice of the Default or Event of Default
within 30 days after it occurs unless such Default or Event of Default has
been cured or waived. Except in the case of a Default or Event of Default
in payment of the principal of, premium, if any, and interest on any
Security, the Trustee may withhold the notice if and so long as it in good
faith determines that withholding the notice is in the interests of
Holders.
SECTION 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after each May 1 beginning with May 1,
2002, the Trustee shall mail to each Holder, to the extent required by TIA
ss. 313(c), a brief report dated as of such reporting date that complies
with TIA ss. 313(a). In such event, the Trustee also shall comply with TIA
ss. 313(b).
A copy of each report at the time of its mailing to
Holders shall be mailed to the Company and filed by the Trustee with the
SEC and each stock exchange, if any, on which the Securities are listed.
The Company shall promptly notify the Trustee when the Securities are
listed on any stock exchange or delisted therefrom.
SECTION 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time
such compensation for its services as shall be agreed upon in writing from
time to time. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse
the Trustee upon request for all out-of-pocket expenses incurred by it.
Such expenses shall include the reasonable compensation and out-of-pocket
expenses of the Trustee's agents and counsel.
The Company shall fully indemnify the Trustee against any
and all loss, claim, damage or liability or expense (including the
reasonable fees and expenses of counsel) incurred by it in connection with
the acceptance or administration of this trust and the performance of its
duties hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers and duties hereunder. The Company need not
pay for any settlement made without its consent. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnification.
The Company need not reimburse any expense or indemnify against any loss or
liability determined by a court of competent jurisdiction to have been
caused by the Trustee's own negligence or bad faith.
To secure the Company's payment obligations in this
Section 7.07, the Trustee shall have a lien prior to the Securities on all
money or property held or collected by the Trustee, except that held in
trust to pay the principal of, premium, if any, and interest on particular
Securities.
The indemnity obligations of the Company with respect to
the Trustee provided for in this Section 7.07 shall survive any resignation
or removal of the Trustee and the termination of this Indenture.
When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.01(4) or (5) occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
----------------------
A resignation or removal of the Trustee and appointment
of a successor Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Section 7.08.
The Trustee may resign by so notifying the Company in
writing 30 days prior to such resignation. The Holders of a majority in
aggregate principal amount of the Securities then outstanding may remove
the Trustee by so notifying the Trustee and the Company in writing and may
appoint a successor Trustee with the Company's consent. The Company may
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee. Within one year after the successor Trustee
takes office, the Holders of a majority in aggregate principal amount of
the Securities then outstanding may appoint a successor Trustee to replace
the successor Trustee appointed by the Company.
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 at least 10% in aggregate principal
amount of the outstanding Securities may petition at the expense of the
company any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Holder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders. The retiring Trustee shall upon payment of all
amounts due it hereunder promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided for in
Section 7.07.
SECTION 7.09. Successor Trustee by Merger, etc.
--------------------------------
If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all of its corporate trust business
to, another corporation, the successor corporation without any further act
shall be the successor Trustee, if such successor corporation is otherwise
eligible hereunder.
SECTION 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies
the requirements of TIA ss. 310(a)(1). The Trustee shall always have a
combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply
with TIA ss. 310(b).
SECTION 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA ss. 311(a), excluding
any creditor relationship listed in TIA ss. 311(b). A Trustee who has
resigned or been removed shall be subject to TIA ss. 311(a) to the extent
indicated.
ARTICLE EIGHT
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 8.01. Termination of Company's Obligations.
------------------------------------
The Company may terminate its substantive obligations in
respect of the Securities if the Securities mature within one (1) year, or
all of them are to be called for redemption within one year under
arrangements satisfactory to the Trustee for giving notice of redemption,
by delivering all outstanding Securities to the Trustee for cancellation
and paying all sums payable by it on account of principal of, premium, if
any, and interest on all Securities or otherwise. In addition to the
foregoing, the Company may terminate its obligations under Sections 3.07,
4.03 and 4.06 (other than with respect to the corporate existence of the
Company), and no Default or Event of Default under Section 6.01(3) shall
thereafter apply, by (i) depositing with the Trustee, under the terms of an
irrevocable trust agreement, money or direct non-callable obligations of
the United States of America for the payment of which the full faith and
credit of the United States is pledged ("U. S. Government Obligations")
sufficient (without reinvestment), in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay the principal of,
premium, if any, and interest on the Securities at maturity or an earlier
redemption, (ii) delivering to the Trustee either an Opinion of Counsel or
a ruling directed to the Trustee from the Internal Revenue Service to the
effect that the Holders of the Securities will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit and
termination of obligations and (iii) delivering to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating compliance with all
conditions precedent provided for herein. In addition, the Company may,
provided that no Default or Event of Default has occurred and is continuing
or would arise therefrom (or, with respect to a Default or Event of Default
specified in Section 6.01(4), occurs at any time on or prior to the 91st
calendar day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until after such 91st day)),
terminate all of its substantive obligations in respect of the Securities
(including its obligations to pay the principal of, premium, if any, and
interest on the Securities) by (i) depositing with the Trustee, under the
terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay the principal of,
premium, if any, and interest on the Securities at maturity or on earlier
redemption, (ii) delivering to the Trustee either a ruling directed to the
Trustee from the Internal Revenue Service to the effect that the Holders of
the Securities will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit and termination of obligations or
an Opinion of Counsel addressed to the Trustee based upon such a ruling or
based on a change in the applicable Federal tax law since the date of this
Indenture to such effect and (iii) delivering to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating compliance with all
conditions precedent provided for herein.
Notwithstanding the foregoing paragraph, the Company's
obligations in Article Ten and Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07,
2.10, 2.12, 2.13 and 4.01 (but not with respect to termination of
substantive obligations pursuant to the third sentence of the foregoing
paragraph), 4.02, 7.07, 7.08, 8.03 and 8.04 shall survive until the
Securities are no longer outstanding. Thereafter the Company's obligations
in Sections 7.07, 8.03 and 8.04 shall survive such satisfaction and
disharge.
After such delivery or irrevocable deposit and delivery
of an Officers' Certificate and Opinion of Counsel, the Trustee upon
request shall acknowledge in writing the discharge of the Company's
obligations under the Securities and this Indenture except for those
surviving obligations specified above.
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the United
States Government Obligations deposited pursuant to this Section 8.01 or
the principal and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders of
outstanding Securities.
SECTION 8.02. Application of Trust Money.
--------------------------
Subject to the provisions of Section 8.03, the Trustee
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to Section 8.01. It shall apply the deposited money and the money
from U.S. Government obligations through the Paying Agent and in accordance
with this Indenture to the payment of the principal of, premium, if any,
and interest on the Securities. Money and securities so held in trust are
not subject to the subordination provisions of Article Twelve.
SECTION 8.03. Repayment to Company.
--------------------
The Trustee and the Paying Agent shall promptly pay to
the Company upon request any excess money or securities held by them at any
time. The Trustee and the Paying Agent shall pay to the Company upon
request any money held by them for the payment of the principal of,
premium, if any, and interest that remains unclaimed for two years;
provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may, at the expense of the Company,
cause to be mailed to each Holder, notice stating that such money remains
and that, after a date specified therein, which shall not be less than 30
days from the date of such mailing, any unclaimed balance of such money
then remaining will be repaid to the Company. After payment to the Company,
Holders entitled to the money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates
another Person.
SECTION 8.04. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section 8.01 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01 until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 8.01; provided, however,
that to the extent the Company makes any payment of the principal of,
premium, if any, and interest on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS
SECTION 9.01. Without Consent of Holders.
--------------------------
The Company, when authorized by a Board Resolution, may
modify, amend or supplement this Indenture or the Securities without notice
to or the consent of any Holder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Sections 5.01 and 10.07;
(3) to provide for uncertificated Securities in addition
to certificated Securities; or
(4) to make any change that does not adversely affect the
rights of any Holder.
SECTION 9.02. With Consent of Holders.
-----------------------
The Company, when authorized by a Board Resolution, may
modify, amend or supplement this Indenture or the Securities without notice
to any Holder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities.
Subject to Section 6.07, the Holders of a majority in aggregate principal
amount of the outstanding Securities may waive compliance by the Company
with any provision of this Indenture or the Securities without notice to
any other Holder. However, without the consent of each Holder affected, an
amendment, supplement or waiver, including a waiver pursuant to Section
6.04, may not:
(1) change the stated maturity of the Securities;
(2) reduce the principal, premium, if any, or interest on
the Securities;
(3) change the place of payment from New York, New York
or change the currency in which the Securities are payable;
(4) waive a default in the payment of the principal of,
premium, if any, or interest on any Security;
(5) make any change in Section 6.04, Section 6.07 or this
Section 9.02;
(6) modify the provisions of Article Twelve in a
materially adverse manner to the Holders; or
(7) make any change that adversely affects the right to
convert any Security.
Furthermore, an amendment under this Article Nine may not
make any change that adversely affects the rights of any holder of Senior
Indebtedness under Article Twelve unless the holders of such Senior
Indebtedness consent to such change pursuant to the terms governing such
Senior Indebtedness.
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 or supplement, but it shall be sufficient if such consent
approves the substance thereof.
Promptly after an amendment under this Section 9.02
becomes effective, the Company shall mail to Holders a notice briefly
describing the amendment.
SECTION 9.03. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment, waiver or supplement to this Indenture
or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder is a continuing consent by the
Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security. However, any such
Holder or subsequent Holder may revoke the consent as to its Security or
portion of a Security if the Trustee receives the notice of revocation
before the date the amendment, supplement or waiver becomes effective. An
amendment, supplement or waiver becomes effective in accordance with its
terms and thereafter binds every Holder.
After an amendment, supplement or waiver becomes
effective with respect to the Securities, it shall bind every Holder unless
it makes a change described in any of clauses (1) through (7) of Section
9.02. In that case the amendment, supplement or waiver shall bind each
Holder of a Security who has consented to it and, provided that notice of
such amendment, supplement or waiver is reflected on a Security that
evidences the same debt as the consenting Holder's Security, every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security.
SECTION 9.05. Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms
of a Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate notation on
the Security as directed and prepared by the Company about the changed
terms and return it to the Holder. Alternatively, if the Company so
determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
SECTION 9.06. Trustee Protected.
-----------------
The Trustee may, but shall not be obligated to, sign any
amendment, supplement or waiver authorized pursuant to this Article that
affects the Trustee's rights, duties or obligations. The Trustee shall be
entitled to receive and may conclusively rely upon, in addition to the
documents required by Section 13.04, an Opinion of Counsel and an Officers'
Certificate that any supplemental indenture, modification, amendment or
waiver complies with the Indenture.
ARTICLE TEN
CONVERSION
SECTION 10.01. Conversion Privilege; Restrictive Legends.
-----------------------------------------
A Holder of a Security may convert the principal of such
Security into Common Stock at any time during the period stated in
paragraph 9 of the Securities. The number of shares issuable upon
conversion of a Security is determined as follows: divide each $1,000 of
the principal amount to be converted by the Conversion Price in effect on
the conversion date and round the result to the nearest 1/100th of a share.
The Conversion Price is subject to adjustment in accordance with Section
10.06.
A Holder may convert a portion of the principal of such
Security if the portion is at least $1,000 principal amount or an integral
multiple of $1,000 principal amount. Provisions of this Indenture that
apply to conversion of all of a Security also apply to conversion of a
portion of it.
Any shares issued upon conversion of a Security shall
bear the Private Placement Legend set forth in Exhibit B(I) until after the
second anniversary of the later of the Issue Date for such Security and the
last date on which the Company or any Affiliate of the Company was the
owner of such shares or the Security (or any predecessor security) from
which such shares were converted (or such shorter period of time as
permitted by Rule 144(k) under the Securities Act or any successor
provision thereunder or such longer period of time as may be required under
the Securities Act or applicable state securities laws unless otherwise
agreed by the Company and the Holder thereof).
SECTION 10.02. Conversion Procedure.
--------------------
To convert a Security a Holder must satisfy the
requirements in paragraph 9 of the Securities. The date on which the Holder
satisfies all those requirements is the conversion date. As soon as
practicable, 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 a check in lieu of any fractional share. The Person
in whose name the certificate is registered shall be treated as a
shareholder of record on and after the conversion date.
Except as described below, no payment or adjustment will
be made for accrued interest on, or liquidated damages with respect to, a
converted Security or for dividends on any Common Stock issued on
conversion. If any Security is converted during the period from but
excluding, a record date for the payment of interest to, but excluding, the
next succeeding interest payment date, unless such Security has been called
for redemption on a redemption date between such dates, such Security must
be accompanied by funds equal to the interest payable to the registered
Holder on such interest payment date on the principal amount so converted.
A Security converted on an interest payment date need not be accompanied by
any payment, and the interest on the principal amount of the Security being
converted will be paid on such interest payment date to the registered
Holder of such Security on the applicable record date.
If a Holder converts more than one Security at the same
time, the number of full shares issuable upon the conversion shall be based
on the total principal amount of the Securities converted.
Upon surrender of a Security that is converted in part
the Trustee shall authenticate for the Holder a new Security equal in
principal amount to the unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a
Legal Holiday in a place where a Conversion Agent is located, the Security
may be surrendered to that Conversion Agent on the next succeeding day that
is not a Legal Holiday.
SECTION 10.03. Fractional Shares.
-----------------
The Company will not issue fractional shares of Common
Stock upon conversion of Securities and instead will deliver a cash
adjustment in lieu of the fractional share based upon the current market
value of the Common Stock. The current market value of a fraction of a
share is determined by multiplying the current market price of a full share
by the fraction, and rounding the result to the nearest cent. For purposes
of this Section, the current market price of a share of Common Stock is the
Closing Price of the Common Stock on the Trading Day immediately preceding
the conversion date.
SECTION 10.04. Taxes on Conversion.
-------------------
If a Holder converts its 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 shares are issued in a name other
than the Holder's name.
SECTION 10.05. Company to Provide Stock.
------------------------
The Company shall reserve out of its authorized but
unissued Common Stock or its Common Stock held in treasury enough shares of
Common Stock to permit the conversion of all of the Securities, including
such greater number of shares of Common Stock into which such Securities
shall be convertible into as a result of a Conversion Price adjustment
contemplated by Section 10.06 hereof.
All shares of Common Stock which may be issued upon
conversion of the Securities shall be validly issued, fully paid and
non-assessable.
The Company will endeavor to comply with all securities
laws regulating the offer and delivery of shares of Common Stock upon
conversion of Securities and will endeavor to list such shares on each
national securities exchange on which the Common Stock is listed.
SECTION 10.06. Adjustment of Conversion Price.
------------------------------
The Conversion Price shall be adjusted from time to time
by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or
make a distribution to all holders of the outstanding Common Stock
in shares of Common Stock, the Conversion Price in effect at the
opening of business on the date following the Record Date with
respect to shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price
by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding at the close of business on the Record
Date fixed for such determination and the denominator shall be the
sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction
to become effective immediately after the opening of business on
the day following the Record Date. If any dividend or distribution
of the type described in this Section 10.06(a) is declared but not
so paid or made, the Conversion Price shall again be adjusted to
the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.
(b) In case the Company shall issue rights or warrants to
all holders of its outstanding shares of Common Stock entitling
them to subscribe for or purchase shares of Common Stock at a
price per share less than the Current Market Price on the Record
Date fixed for the determination of shareholders entitled to
receive such rights or warrants, the Conversion Price shall be
adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect at the opening of
business on the date after such Record Date by a fraction of which
the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the Record Date plus the
number of shares which the aggregate offering price of the total
number of shares so offered for subscription or purchase would
purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Common Stock
outstanding on the close of business on the Record Date plus the
total number of additional shares of Common Stock so offered for
subscription or purchase. Such adjustment shall become effective
immediately after the opening of business on the day following the
Record Date fixed for determination of shareholders entitled to
receive such rights or warrants. To the extent that shares of
Common Stock are not delivered pursuant to such rights or
warrants, upon the expiration or termination of such rights or
warrants the Conversion Price shall be readjusted to the
Conversion Price that would then be in effect had the adjustments
made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock
actually delivered. In the event that such rights or warrants are
not so issued, the Conversion Price shall again be adjusted to be
the Conversion Price that would then be in effect if such date
fixed for the determination of shareholders entitled to receive
such rights or warrants had not been fixed. In determining whether
any rights or warrants entitle the holders to subscribe for or
purchase shares of Common Stock at less than such Current Market
Price, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any
consideration received for such rights or warrants, the value of
such consideration, if other than cash, to be determined in good
faith by the Board of Directors.
(c) In case the outstanding shares of Common Stock shall
be split or subdivided into a greater number of shares of Common
Stock, the Conversion Price in effect at the opening of business
on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and conversely, in
case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day
upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case
may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision
or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class
of capital stock of the Company (other than any dividends or
distributions to which Section 10.06(a) applies) or evidences of
its indebtedness, cash or other assets (including securities, but
excluding (1) any rights or warrants referred to in Section
10.06(b), (2) dividends and distributions paid exclusively in cash
and (3) any capital stock, evidences of indebtedness, cash or
assets distributed upon a merger or consolidation to which Section
10.07 applies) (the foregoing hereinafter in this Section 10.06(d)
called the "Subject Securities"), unless the Company elects to
reserve such Subject Securities for distribution to the Holders
upon conversion of the Securities so that any such Holder
converting Securities will receive upon such conversion, in
addition to the shares of Common Stock to which such Holder is
entitled, the amount and kind of such Subject Securities which
such Holder would have received if such Holder had converted its
Securities into Common Stock immediately prior to the Record Date
for such distribution of the Subject Securities, then, in each
such case, the Conversion Price shall be reduced so that the same
shall be equal to the price determined by multiplying the
Conversion Price in effect immediately prior to the close of
business on the Record Date with respect to such distribution by a
fraction of which the numerator shall be the Current Market Price
on such date less the fair market value on such date of the
portion of the Subject Securities so distributed applicable to one
share of Common Stock and the denominator shall be such Current
Market Price, such reduction to become effective immediately prior
to the opening of business on the day following the Record Date;
provided, however, that in the event the then fair market value of
the portion of the Subject Securities so distributed applicable to
one share of Common Stock is equal to or greater than the Current
Market Price on the Record Date, then in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder
shall have the right to receive upon conversion of a Security (or
any portion thereof) the amount of Subject Securities such Holder
would have received had such Holder converted such Security (or
portion thereof) immediately prior to such Record Date. In the
event that such dividend or distribution is not so paid or made,
the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such dividend or
distribution had not been declared.
For purposes of this Section 10.06(d), rights or warrants
distributed by the Company to all holders of Common Stock
entitling the holders thereof to subscribe for or purchase shares
of the Company's capital stock (either initially or under certain
circumstances) that are (i) deemed to be transferred with such
shares of Common Stock; (ii) not exercisable; and (iii) issued in
respect of future issuances of Common Stock, until the occurrence
of a specified event or events ("Trigger Event") shall be deemed
not to have been distributed and no adjustment to the Conversion
Price with respect thereto shall be made until the occurrence of
the earliest Trigger Event. If any such right or warrant is
subject to subsequent events, upon the occurrence of which such
right or warrant shall become exercisable to purchase different
securities, evidences of indebtedness or other assets or entitle
the holder to purchase a different number or amount of the
foregoing or to purchase any of the foregoing at a different
purchase price, then the occurrence of each such event shall be
deemed to be the date of issuance and record date with respect to
a new right or warrant (and a termination or expiration of the
existing right or warrant without exercise by the holder thereof).
In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other
event (of the type described in the preceding sentence) with
respect thereto, that resulted in an adjustment to the Conversion
Price under this Section 10.06(d), (1) in the case of any such
rights or warrants which shall all have been redeemed or
repurchased without exercise by any holders thereof, the
Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event,
as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a
holder of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made
to all holders of Common Stock as of the date of such redemption
or repurchase, and (2) in the case of such rights or warrants all
of which shall have expired or been terminated without exercise,
the Conversion Price shall be readjusted as if such rights and
warrants had never been issued.
For purposes of this Section 10.06(d) and Sections
10.06(a) and (b), any dividend or distribution to which this
Section 10.06(d) is otherwise applicable that also includes shares
of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock applies (or both), shall be deemed
instead to be (1) a dividend or distribution of the evidences of
indebtedness, assets, shares of capital stock, rights or warrants
(other than such shares of Common Stock or rights or warrants)
(and any Conversion Price reduction required by this Section
10.06(d) with respect to such dividend or distribution shall then
be made) immediately followed by (2) a dividend or distribution of
such shares of Common Stock or such rights or warrants (and any
further Conversion Price reduction required by Sections 10.06(a)
and (b) with respect to such dividend or distribution shall then
be made), except (A) the Record Date of such dividend or
distribution shall be substituted as "the date fixed for the
determination of shareholders entitled to receive such dividend or
other distribution", "Record Date fixed for such determination"
and "Record Date" within the meaning of Section 10.06(a) and as
"the date fixed for the determination of shareholders entitled to
receive such rights or warrants", "the Record Date fixed for the
determination of the shareholders entitled to receive such rights
or warrants" and "such Record Date" within the meaning of Section
10.06(b) and (B) any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the
close of business on the Record Date fixed for such determination"
within the meaning of Section 10.06(a).
With respect to any shareholder rights plan existing on
the date hereof or in the event that the Company implements any
other shareholder rights plan, upon conversion of the Securities
the Holders will receive, in addition to the Common Stock issuable
upon such conversion, the rights issued under such rights plan
(notwithstanding the occurrence of an event causing such rights to
separate from the Common Stock at or prior to the time of
conversion); provided, a Holder who is a holder of Common Stock
(or direct or indirect interests therein) at the time of
conversion, but who is not entitled as such a holder to such
rights pursuant to the terms of any such plan, shall not be
eligible to receive any such rights hereunder. Any distribution of
rights or warrants pursuant to a shareholder rights plan complying
with the requirements set forth in the immediately preceding
sentence of this paragraph shall not constitute a distribution of
rights or warrants for the purposes of the other provisions of
this Section 10.06(d).
(e) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any
cash that is distributed upon a merger or consolidation to which
Section 10.07 applies or as part of a distribution referred to in
Section 10.06(d)), in an aggregate amount that, combined together
with (1) the aggregate amount of all other such all-cash
distributions to all holders of its Common Stock within the twelve
(12) months preceding the date of payment of such distribution,
and in respect of which no adjustment pursuant to this Section
10.06(e) has been made, and (2) the aggregate of any cash plus the
fair market value of consideration payable in respect of any
tender offer by the Company or any subsidiary for all or any
portion of the Common Stock concluded within the twelve (12)
months preceding the date of payment of such distribution, and in
respect of which no adjustment pursuant to Section 10.06(f) has
been made (such aggregate amount, the "Common Dividend Amount"),
exceeds 10% of the product of the Current Market Price on the
Record Date with respect to such distribution times the number of
shares of Common Stock outstanding on such date (the "Market
Capitalization"), then, and in each such case, immediately after
the close of business on such date, the Conversion Price shall be
reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to
the close of business on such Record Date by a fraction (i) the
numerator of which shall be equal to the Current Market Price on
the Record Date less an amount equal to the quotient of (x) the
amount by which the Common Dividend Amount exceeds 10% of the
Market Capitalization and (y) the number of shares of Common Stock
outstanding on the Record Date and (ii) the denominator of which
shall be equal to the Current Market Price on such date; provided,
however, that in the event the portion of the cash so distributed
applicable to one share of Common Stock is equal to or greater
than the Current Market Price of the Common Stock on the Record
Date, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Holder shall have the right to receive
upon conversion of a Security (or any portion thereof) the amount
of cash such Holder would have received had such holder converted
such Security (or portion thereof) immediately prior to such
Record Date. In the event that such dividend or distribution is
not so paid or made, the Conversion Price shall again be adjusted
to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.
(f) In case a tender offer made by the Company or any
subsidiary for all or any portion of the Common Stock shall expire
and such tender offer shall require the payment to holders of
Common Stock of an aggregate consideration that together with
(1) the aggregate of the cash plus the fair
market value of consideration payable in respect of any
other tender offers by the Company or any of its
subsidiaries for all or any portion of the Common Stock
expiring within the twelve (12) months preceding the
expiration of such tender offer and in respect of which
no adjustment pursuant to this Section 10.06(f) has been
made, and
(2) the aggregate amount of any all-cash
distributions to all holders of the Company's Common
Stock made within twelve (12) months preceding the
expiration of such tender offer and in respect of which
no adjustment pursuant to Section 10.06(e) has been made,
exceeds 10% of the product of the Current Market Price as of the
time of expiration of such tender offer times the number of shares
of Common Stock outstanding at such time, then, and in each such
case, immediately prior to the opening of business on the day
after the expiration of such tender offer, the Conversion Price
shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the date of the
expiration of such tender offer by a fraction of which the
numerator shall be the number of shares of Common Stock
outstanding on the date of expiration of the tender offer
multiplied by the Current Market Price of the Common Stock on the
Trading Day next succeeding the date of expiration of the tender
offer and the denominator shall be the sum of (x) the fair market
value of the aggregate consideration payable for all shares of
Common Stock validly tendered and not withdrawn as of the date of
expiration of the tender offer and (y) the product of the number
of shares of Common Stock outstanding less all shares validly
tendered and not withdrawn as of the date of expiration of the
tender offer and the Current Market Price of the Common Stock on
the Trading Day next succeeding the date of expiration of the
tender offer, such reduction (if any) to become effective
immediately prior to the opening of business on the day following
the date of expiration of the tender offer. In the event the
Company is permanently prevented by applicable law from effecting
any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such tender offer had not
been made. If the application of this Section 10.06(f) to any
tender offer would result in an increase in the Conversion Price,
no adjustment shall be made for such tender offer under this
Section 10.06(f).
(g) For purposes of this Section 10.06, the following
terms have the meanings indicated:
(1) "Closing Price" with respect to any
securities on any day shall mean the closing sale price
regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing
bid and asked prices, regular way, in each case on the
Nasdaq National Market or New York Stock Exchange, as
applicable, or, if such security is not listed or
admitted to trading on such Nasdaq National Market or New
York Stock Exchange, on the principal national security
exchange or quotation system on which such security is
quoted or listed or admitted to trading, or, if not
quoted or listed or admitted to trading on any national
securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the
over-the-counter market on the day in question as
reported by the National Quotation Bureau Incorporated,
or a similar generally accepted reporting service, or if
not so available, in such manner as furnished by any New
York Stock Exchange member firm selected from time to
time by the Board of Directors for that purpose, or a
price determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in
a Board Resolution.
(2) "Current Market Price" shall mean the
average of the Closing Prices per share of Common Stock
for the ten (10) consecutive Trading Days immediately
prior to the date for which a Current Market Price is
required; provided, however, that:
(1) if the "ex" date (as hereinafter
defined) for any event (other than the issuance
or distribution requiring such computation) that
requires an adjustment to the Conversion Price
pursuant to Section 10.06(a), (b), (c), (d),
(e), (f) or (g) occurs during such ten
consecutive Trading Days, then the Closing Price
for each Trading Day prior to the "ex" date for
such other event shall be adjusted by
multiplying such Closing Price by the same
fraction by which the Conversion Price is so
required to be adjusted as a result of such
other event,
(2) if the "ex" date for any event
(other than the issuance or distribution
requiring such computation) that requires an
adjustment to the Conversion Price pursuant to
Section 10.06(a), (b), (c), (d), (e), (f) or (g)
occurs on or after the "ex" date for the
issuance or distribution requiring such
computation and prior to the day in question,
then the Closing Price for each Trading Day on
and after the "ex" date for such other event
shall be adjusted by multiplying such Closing
Price by the reciprocal of the fraction by which
the Conversion Price is so required to be
adjusted as a result of such other event, and
(3) if the "ex" date for the issuance
or distribution requiring such computation is
prior to the day in question, after taking into
account any adjustment required pursuant to
clause (1) or (2) of this proviso, the Closing
Price for each Trading Day on or after such "ex"
date shall be adjusted by adding thereto the
amount of any cash and the fair market value of
the evidences of indebtedness, shares of capital
stock or assets being distributed applicable to
one share of Common Stock as of the close of
business on the day before such "ex" date.
For purposes of any computation under Sections
10.06(f) or (g), the Current Market Price of the Common
Stock on any date shall be deemed to be the average of
the daily Closing Prices per share of Common Stock for
such day and the next two succeeding Trading Days;
provided, however, that if the "ex" date for any event
(other than the tender offer requiring such computation)
that requires an adjustment to the Conversion Price
pursuant to Section 10.06(a), (b), (c), (d), (e), (f) and
(g) occurs on or after the date of expiration of the
tender or exchange offer requiring such computation and
prior to the day in question, the Closing Price for each
Trading Day on and after the "ex" date for such other
event shall be adjusted by multiplying such Closing Price
by the reciprocal of the fraction by which the Conversion
Price is so required to be adjusted as a result of such
other event.
For purposes of this definition, the term "ex"
date, (1) when used with respect to any issuance or
distribution, means the first date on which the Common
Stock trades regular way on the relevant exchange or in
the relevant market from which the Closing Price was
obtained without the right to receive such issuance or
distribution, (2) when used with respect to any
subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades
regular way on such exchange or in such market after the
time at which such subdivision or combination becomes
effective, and (3) when used with respect to any tender
or exchange offer means the first date on which the
Common Stock trades regular way on such exchange or in
such market after the Expiration Time of such offer.
(3) "fair market value" shall mean the amount
which a willing buyer would pay a willing seller in an
arm's length transaction determined in good faith by the
Board of Directors, whose determination shall be
conclusive and described in a Board Resolution.
(4) "Record Date" shall mean, with respect to
any dividend, distribution or other transaction or event
in which the holders of Common Stock have the right to
receive any cash, securities or other property or in
which the Common Stock (or other applicable security) is
exchanged for or converted into any combination of cash,
securities or other property, the date fixed for
determination of shareholders entitled to receive such
cash, securities or other property (whether such date is
fixed by the Board of Directors or by statute, contract
or otherwise).
(5) "Trading Day" shall mean (x) if the
applicable security is listed or admitted for trading on
the New York Stock Exchange or another national security
exchange, a day on which the New York Stock Exchange or
such other national security exchange, as the case may
be, is open for business, (y) if the applicable security
is quoted on the Nasdaq National Market, a day on which
trades may be made thereon or (z) if the applicable
security is not so listed, admitted for trading or
quoted, any day other than a Saturday or Sunday or a day
on which banking institutions in the State of New York
are authorized or obligated by law or executive order to
close.
(h) The Company may make such reductions in the
Conversion Price, in addition to those required by Sections
10.06(a), (b), (c), (d), (e) and (f), as the Board of Directors
considers to be advisable to avoid or diminish any income tax to
holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax
purposes.
To the extent permitted by applicable law, the Company
from time to time may reduce the Conversion Price by any amount
for any period of time if the period is at least twenty (20) days
and the reduction is irrevocable during the period. Whenever the
Conversion Price is reduced pursuant to the preceding sentence,
the Company shall mail to the Holder of each Security at his last
address appearing on the register maintained by the Registrar a
notice of the reduction at least fifteen (15) days prior to the
date the reduced Conversion Price takes effect, and such notice
shall state the reduced Conversion Price and the period during
which it will be in effect.
(i) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that any
adjustment that would otherwise be required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this Article Ten shall be made
by the Company and shall be made to the nearest cent or to the
nearest one hundredth of a share, as the case may be. No
adjustment need be made for a change in the par value or no par
value of the Common Stock.
(j) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Trustee, and
any Conversion Agent other than the Trustee, an Officers'
Certificate setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts
requiring such adjustment. Unless and until a Trust Officer of the
Trustee shall have received such Officers' Certificate, the
Trustee shall not be deemed to have knowledge of any adjustment of
the Conversion Price and may assume without inquiry that the last
Conversion Price of which it has knowledge remains in effect.
Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the date on which
each adjustment becomes effective and shall mail such notice of
such adjustment of the Conversion Price to the Holder of each
Security at his last address appearing on the register maintained
by the Registrar, within twenty (20) days of the effective date of
such adjustment. Failure to deliver such notice shall not affect
the legality or validity of any such adjustment.
(k) In any case in which this Section 10.06 provides that
an adjustment shall become effective immediately after a Record
Date for an event, the Company may defer until the occurrence of
such event (i) issuing to the Holder of any Security converted
after such Record Date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the
Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such Holder any amount in cash
in lieu of any fraction pursuant to Section 10.03.
(l) For purposes of this Section 10.06, the number of
shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company will not pay any
dividend or make any distribution on shares of Common Stock held
in the treasury of the Company.
SECTION 10.07. Effect of Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------
In the case of (i) any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange
for such Common Stock or (iii) any sale or conveyance of the properties and
assets of the Company as, or substantially as, an entirety to any other
corporation as a result of which holders of Common Stock shall be entitled
to receive stock, securities or other property or assets (including cash)
with respect to or in exchange for such Common Stock, then, unless an
adjustment with respect thereto shall be made pursuant to Section 10.06,
the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Trustee a supplemental indenture providing that the
Securities shall be convertible into the kind and amount of shares of stock
and other securities or property or assets (including cash) receivable upon
such reclassification, change, consolidation, merger, combination, sale or
conveyance by a holder of a number of shares of Common Stock issuable upon
conversion of such Securities immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming
such holder of Common Stock did not exercise rights of election, if any, as
to the kind or amount of securities, cash or other property receivable upon
such consolidation, merger, statutory exchange, sale or conveyance. Such
supplemental indenture shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Article Ten. If, in the case of any such reclassification, change,
consolidation, merger, combination, sale or conveyance, the stock or other
securities and assets receivable thereupon by a holder of shares of Common
Stock include shares of stock or other securities and assets of a Person
other than the successor or purchasing corporation, as the case may be, in
such reclassification, change, consolidation, merger, combination, sale or
conveyance, then such supplemental indenture shall also be executed by such
other Person and shall contain such additional provisions to protect the
interests of the Holders as the Board of Directors shall reasonably
consider necessary by reason of the foregoing.
The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each Holder of Securities, at its
address appearing on the register maintained by the Registrar, within
twenty (20) days after execution thereof. Failure to deliver such notice
shall not affect the legality or validity of such supplemental indenture.
SECTION 10.08. Notice of Certain Transactions.
------------------------------
If:
(1) the Company proposes to take any action that would
require an adjustment in the conversion rate;
(2) the Company proposes to take any action that would
require a supplemental indenture pursuant to Section 10.07; or
(3) there is a proposed liquidation, winding up or
dissolution of the Company,
the Company shall mail to Holders a notice stating the proposed record date
for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger,
transfer, lease, liquidation or dissolution. The Company shall mail the
notice at least 10 days before such date. Failure to mail the notice or any
defect in it shall not affect the validity of the transaction.
SECTION 10.09. Company Determination Final.
---------------------------
Any determination that the Board of Directors makes
pursuant to this Article Ten is conclusive, absent manifest error.
SECTION 10.10. Trustee's Disclaimer.
--------------------
The Trustee has no duty to determine when an adjustment
under this Article or under the terms of the Securities should be made, how
it should be made or what it should be. Such information shall be timely
provided to the Trustee in an Officers' Certificate. The Trustee has no
duty to determine whether any provisions of a supplemental indenture under
Section 10.07 are correct. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities. The Trustee shall not be responsible for the Company's failure
to comply with this Article. Each Conversion Agent other than the Company
shall have the same protection under this Section 10.10 as the Trustee.
ARTICLE ELEVEN
[RESERVED]
ARTICLE TWELVE
SUBORDINATION
SECTION 12.01. Securities Subordinated to Senior Indebtedness.
----------------------------------------------
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and agrees, that
the indebtedness represented by the Securities and the payment of the
principal of (and premium, if any) and interest on each and all of the
Securities is hereby expressly subordinate and junior, to the extent and in
the manner hereinafter set forth, in right of payment to the prior payment
in full of all Senior Indebtedness.
(a) Upon any distribution of assets of the Company, upon
any dissolution, winding-up, liquidation or reorganization of the Company,
whether in bankruptcy, insolvency, reorganization or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of the Company or otherwise, then
the holders of all Senior Indebtedness shall first be entitled to receive
payment of the full amount due thereon in cash or other consideration
satisfactory to the holders of Senior Indebtedness in respect of principal
(and premium, if any) and interest, or provision shall be made for such
amount in cash or other consideration satisfactory to the holders of Senior
Indebtedness, before the Holders of any of the Securities are entitled to
receive any payment or distribution of any character, whether in cash,
securities or other property, on account of the principal of (or premium,
if any) or interest on the indebtedness evidenced by the Securities.
For purposes of this Article Twelve, the words, "cash,
securities or other property" shall not be deemed to include shares of
stock of the Company as reorganized or readjusted, or securities of the
Company or any other corporation provided for by a plan of reorganization
or readjustment, the payment of which is subordinated at least to the
extent provided in this Article Twelve with respect to the Securities to
the payment of all Senior Indebtedness which may at the time be
outstanding; provided that (i) the Senior Indebtedness is assumed by the
new corporation, if any, resulting from any reorganization or readjustment,
and (ii) the rights of the holders of Senior Indebtedness (other than
leases which are not assumed by the Company or the new corporation, as the
case may be) are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another Person or the liquidation or
dissolution of the Company following the conveyance or transfer of its
property as an entirety, or substantially as an entirety, to another Person
upon the terms and conditions provided for in Article Five shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section 12.01(a) if such other Person shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article Five.
(b) No payment shall be made by the Company with respect
to the principal of, premium, if any, or interest on the Securities or to
acquire any of the Securities, if (i) any default in payment of the
principal of or premium, if any, or interest on, or any other obligation
under any Designated Senior Indebtedness occurs and is continuing (a
"Payment Default") beyond any applicable grace period with respect thereto,
unless and until all such payments due in respect of such Designated Senior
Indebtedness have been paid in full in cash or other consideration
satisfactory to holders of Senior Indebtedness or such default shall have
been cured or waived or shall have ceased to exist, (ii) any event of
default, other than a Payment Default, with respect to any Designated
Senior Indebtedness occurs and is continuing permitting the holders of such
Designated Senior Indebtedness (or a trustee or other representative on
behalf of the holders thereof) to declare such Designated Senior
Indebtedness due and payable prior to the date on which it would otherwise
have become due and payable, and the Trustee receives notice thereof from
the Company or by any holders of such Designated Senior Indebtedness (or a
trustee or other representative on behalf of the holders thereof) (the
"Payment Blockage Notice"), for a period (the "Payment Blockage Period")
ending on the earlier of the date on which such event of default shall have
been cured or waived or shall have ceased to exist or 179 days after
receipt of the Payment Blockage Notice, or (iii) any judicial proceeding
shall be pending with respect to any such default in payment or event of
default; provided, further, any number of additional Payment Blockage
Periods may be commenced during an existing Payment Blockage Period;
provided, however, that no such additional Payment Blockage Period shall
extend beyond the initial Payment Blockage Period. Notwithstanding anything
in the subordination provisions of this Indenture or the Securities to the
contrary, (x) in no event will a Payment Blockage Period extend beyond 179
days from the date of the Payment Blockage Notice in respect thereof was
given and (y) there shall be no new Payment Blockage Period unless and
until 360 days have elapsed since the initial effectiveness of the prior
Payment Blockage Period. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be the basis for a subsequent payment blockage notice, unless
the default has been cured or waived for a period of not less than 90 days.
(c) If the maturity of the Securities is accelerated, no
payment may be made on the Securities until all amounts due or to become
due on Senior Indebtedness have been paid in full in cash or other
consideration satisfactory to holders of Senior Indebtedness or until such
acceleration has been cured or waived.
(d) In the event that, notwithstanding the foregoing
provisions of Sections 12.01(a), (b) and (c), any payment on account of
principal of or interest on the Securities shall be made by or on behalf of
the Company and received by the Trustee, by any Holder or by any Paying
Agent (or, if the Company is acting as its own Paying Agent, money for any
such payment shall be segregated and held in trust), at a time when such
payment is not permitted by any of such provisions, then, unless and until
all Senior Indebtedness (or Designated Senior Indebtedness, in the case of
Section 12.01(b)) is paid in full in cash or other consideration
satisfactory to the holders thereof, or such payment is otherwise permitted
to be made by the provisions of each of Sections 12.01(a), 12.01(b) and
12.01(c) (subject, in each case, to the provisions of Section 12.07), such
payment on account of principal of or interest on the Securities shall be
held in trust for the benefit of, and shall be immediately paid over to,
the holders of Senior Indebtedness (or Designated Senior Indebtedness, in
the case of Section 12.01(b)) or their representative or representatives or
the trustee or trustees under any indenture under which any instruments
evidencing any of the Senior Indebtedness (or Designated Senior
Indebtedness, in the case of Section 12.01(b)) may have been issued, as
their interests may appear.
Regardless of anything to the contrary herein, nothing
shall prevent (A) any payment by the Company or the Trustee to Holders of
amounts in connection with a redemption of Securities if (i) notice of such
redemption has been given pursuant to Section 3.01 prior to the receipt by
the Trustee of a Payment Blockage Notice, and (ii) such notice of
redemption is given not earlier than 75 days before the Redemption Date, or
(B) any payment by the Trustee to the Holders of amounts deposited with it
pursuant to Section 8.01.
SECTION 12.02. Subrogation.
-----------
Subject to the payment in full of all Senior Indebtedness
to which the indebtedness evidenced by the Securities is in the
circumstances subordinated as provided in Section 12.01, the Holders of the
Securities (together with the holders of any other indebtedness of the
Company which is subordinate in right of payment to the payment in full of
all Senior Indebtedness, which is not subordinate in right of payment to
the Securities and which by its terms grants such right of subrogation to
the holders thereof) shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to such Senior
Indebtedness until all amounts owing on the Securities shall be paid in
full, and, as between the Company, its creditors other than holders of such
Senior Indebtedness, and the Holders of the Securities, no such payment or
distribution made to the holders of Senior Indebtedness by virtue of this
Article which otherwise would have been made to the Holders of the
Securities shall be deemed to be a payment by the Company on account of
such Senior Indebtedness, it being understood that the provisions of this
Article are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of Senior Indebtedness, on the other hand.
SECTION 12.03. Obligation of Company Unconditional.
-----------------------------------
Nothing contained in this Article or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between
the Company, its creditors other than the holders of Senior Indebtedness,
and the Holders of the Securities, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and
when the same shall become due and payable in accordance with their terms,
or is intended to or shall affect the relative rights of the Holders of the
Securities and creditors of the Company other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or
the Holder of any Security from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights,
if any, under this Article of the holders of Senior Indebtedness in respect
of cash, property or securities of the Company received upon the exercise
of any such remedy.
SECTION 12.04. Modification of Terms of Senior Indebtedness.
--------------------------------------------
Any renewal or extension of the time of payment of any
Senior Indebtedness or the exercise by the holders of Senior Indebtedness
of any of their rights under any instrument creating or evidencing Senior
Indebtedness, including without limitation the waiver of default
thereunder, may be made or done without notice to or assent from the
Holders of the Securities or the Trustee.
No compromise, alteration, amendment, modification,
extension, renewal or other change of, or waiver, consent or other action
in respect of, any liability or obligation under or in respect of, or of
any of the terms, covenants or conditions of any indenture or other
instrument under which any Senior Indebtedness is outstanding or of such
Senior Indebtedness, whether or not such release is in accordance with the
provisions of any applicable document, shall in any way alter or affect any
of the provisions of this Article or of the Securities relating to the
subordination thereof.
SECTION 12.05. [Reserved]
---------
SECTION 12.06. Effectuation of Subordination by Trustee.
----------------------------------------
Each Holder of Securities, by his acceptance thereof,
authorizes and directs the Trustee in his or her behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided
in this Article and appoints the Trustee his or attorney-in-fact for any
and all such purposes.
Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee and the Holders of the Securities
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any such dissolution, winding up,
liquidation or reorganization proceeding affecting the affairs of the
Company is pending or upon a certificate of the trustee in bankruptcy,
receiver, assignee for the benefit of creditors, liquidating trustee or
agent or other Person making any payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, and as to other facts pertinent to the right of such Persons
under this Article, and if such evidence is not furnished, the Trustee may
defer any payment to such Persons pending judicial determination as to the
right of such Persons to receive such payment.
SECTION 12.07. Knowledge of Trustee.
--------------------
Notwithstanding the provisions of this Article or any
other provisions of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any Senior Indebtedness, of any default in
payment of principal, premium (if any) or interest on any Senior
Indebtedness, or of any facts which would prohibit the making of any
payment of moneys to or by the Trustee, or the taking of any other action
by the Trustee, unless and until a Trust Officer of the Trustee having
responsibility for the administration of the trust established by this
Indenture shall have received written notice thereof from the Company, any
Holder of Securities, any Paying or Conversion Agent of the Company or the
holder or representative of any class of Senior Indebtedness, and, prior to
the receipt of any such written notice, the Trustee shall be entitled in
all respects to assume that no such default or facts exist; provided,
however, that unless on the third Business Day prior to the date upon which
by the terms hereof any such moneys may become payable for any purpose the
Trustee shall have received the notice provided for in this Section 12.07,
then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such moneys and
apply the same to the purpose for which they were received, and shall not
be affected by any notice to the contrary which may be received by it on or
after such date.
SECTION 12.08. Trustee's Relation to Senior Indebtedness.
-----------------------------------------
The Trustee shall be entitled to all the rights set forth
in this Article with respect to any Senior Indebtedness at the time held by
it, to the same extent as any other holder of Senior Indebtedness and
nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of or
payments to the Trustee under or pursuant to Section 7.07.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall
not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and the Trustee shall not be liable to any holder of Senior
Indebtedness if it shall pay over or deliver to Holders, the Company or any
other Person moneys or assets to which any holder of Senior Indebtedness
shall be entitled by virtue of this Article or otherwise.
SECTION 12.09. Rights of Holders of Senior Indebtedness Not Impaired.
-----------------------------------------------------
No right of any present or future holder of any Senior
Indebtedness to enforce the subordination herein shall at any time or in
any way be prejudiced or impaired by any act or failure to act on the part
of the Company or by any noncompliance by the Company with the terms,
provisions and covenants of this Indenture, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
SECTION 12.10. Certain Conversions Not Deemed Payment.
--------------------------------------
For the purposes of Article Ten only, (1) the issuance
and delivery of junior securities upon conversion of Securities in
accordance with Article Ten shall not be deemed to constitute a payment or
distribution on account of the principal of, premium, if any, or interest
on Securities or on account of the purchase or other acquisition of
Securities, and (2) the payment, issuance or delivery of cash (except in
satisfaction of fractional shares pursuant to Section 10.03), property or
securities (other than junior securities) upon conversion of a Security
shall be deemed to constitute payment on account of the principal of,
premium, if any, or interest on such Security. For the purposes of this
Section 12.10, the term "junior securities" means (a) shares of any stock
of any class of the Company or (b) securities of the Company that are
subordinated in right of payment to all Senior Indebtedness to
substantially the same extent as, or to a greater extent than, the
Securities are so subordinated as provided in this Article. Nothing
contained in this Article Twelve or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its
creditors (other than holders of Senior Indebtedness) and the Holders, the
right, which is absolute and unconditional, of the Holder of any Security
to convert such note in accordance with Article Ten.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. 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 13.02. Notices.
-------
Any notice, request or communication by the Company or
the Trustee to the other is duly given if in writing and delivered in
person, mailed by first-class mail or by express delivery to the other's
address stated in this Section 13.02. The Company or the Trustee by notice
to the other may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication to a Holder shall be mailed
by first-class mail to its address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same
time.
All notices or communications shall be in writing.
The Company's address is:
Venator Group, Inc.
112 West 34th street
New York, New York 10120
Attention: General Counsel
The Trustee's address is:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
SECTION 13.03. Communication by Holders with Other Holders.
-------------------------------------------
Holders may communicate pursuant to TIA ss. 312(b) with
other Holders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA ss. 312(c).
SECTION 13.04. 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:
(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.
Each signer of an Officers' Certificate or an Opinion of
Counsel may (if so stated) rely, effectively, upon an Opinion of Counsel as
to legal matters and an Officers' Certificate as to factual matters if such
signer reasonably and in good faith believes in the accuracy of the
document relied upon.
SECTION 13.05. Statements Required in Certificate or Opinion.
---------------------------------------------
Each Officers' Certificate or Opinion of Counsel with
respect to compliance with a condition or covenant provided for in this
Indenture shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is necessary
to enable him or her to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with.
SECTION 13.06. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or at
a meeting of Holders. The Registrar, Paying Agent or Conversion Agent may
make reasonable rules and set reasonable requirements for their respective
functions.
SECTION 13.07. Legal Holidays.
--------------
A "Legal Holiday" is a Saturday, a Sunday or a day on
which banking institutions are not required to be open in The City of New
York, in the State of New York or in the city in which the Trustee
administers its corporate trust business. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall
accrue on that payment for the intervening period.
A "Business Day" is a day other than a Legal Holiday.
SECTION 13.08. No Recourse Against Others.
--------------------------
All liability described in the Securities of any
director, officer, employee or shareholder, as such, of the Company is
waived and released.
SECTION 13.09. Duplicate Originals.
-------------------
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
SECTION 13.10. Governing Law.
-------------
The laws of the State of New York, without regard to
principles of conflicts of law, shall govern this Indenture and the
Securities.
SECTION 13.11. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a subsidiary. Any such
indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.12. Successors.
----------
All agreements of the Company in this Indenture and the
Securities shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 13.13. Separability.
------------
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 and a Holder shall have no claim
therefor against any party hereto.
SECTION 13.14. Table of Contents, Headings, etc.
--------------------------------
The Table of Contents, Cross-Reference Table and headings
of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first above written.
VENATOR GROUP, INC.
By: /s/ John Cannon
--------------------------------------------------
Name: John Cannon
Title: Vice President and Treasurer
THE BANK OF NEW YORK
as Trustee
By: /s/ Julie Salovitch-Miller
--------------------------------------------------
Name: Julie Salovitch-Miller
Title: Vice President
EXHIBIT A
REGISTERED [Face of Security]
NUMBER DOLLARS
CUSIP______________ VENATOR GROUP, INC.
5.50% CONVERTIBLE SUBORDINATED NOTE DUE 2008
VENATOR GROUP, INC., a New York corporation (herein
called the "Company"), for value received, hereby promises to pay to Cede &
Co. or registered assigns, the principal sum of $125,000,000 Dollars on
June 1, 2008, and to pay interest thereon as provided on the reverse hereof
on the principal sum, until the principal hereof and any unpaid and accrued
interest is paid or duly provided for. The right to payment of principal,
premium, if any, and interest is subordinated to the rights of Senior
Indebtedness as set forth in the Indenture referred to on the reverse side
hereof.
Interest Payment Dates: June 1 and December 1, with the
first payment to be made on December 1, 2001.
Record Dates: May 15 and November 15.
IN WITNESS WHEREOF, VENATOR GROUP, INC. has caused this
instrument to be duly signed.
VENATOR GROUP, INC.
By:
--------------------------------------------------
Name:
Title:
By:
--------------------------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK, as Trustee
By:
------------------------------------------------
Authorized Officer
[REVERSE OF SECURITY]
VENATOR GROUP, INC.
5.50% CONVERTIBLE SUBORDINATED NOTE DUE 2008
1. Interest. Venator Group, Inc., a New York corporation
(the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semi-annually in arrears on June 1 and December 1 of each year, with the
first payment to be made on December 1, 2001. Interest on the Securities
will accrue on the principal amount from the most recent date to which
interest has been paid or duly provided for or, if no interest has been
paid, from June 8, 2001. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Maturity. The Securities will mature on June 1, 2008
unless earlier converted, redeemed or repurchased pursuant to the
terms hereof and the Indenture.
3. Method of Payment. The Company will pay interest on
the Securities (except defaulted interest) to the Persons who are
registered Holders of Securities at the close of business on the record
date set forth on the face of this Security next preceding the applicable
interest payment date except that (i) interest payable upon redemption or
repurchase, unless the date of redemption or repurchase is an interest
payment date, will be payable to the Person to whom the principal is
payable and (ii) in the case of any Security or portion of any Security
that is converted into Common Stock during the period from, but excluding,
a record date for any interest payment date to, but excluding, that
interest payment date either (A) if the Security, or portion of the
Security, has been called for redemption on a redemption date that occurs
during that period, or is to be repurchased on a Repurchase Date that
occurs during that period, the Company will not be required to pay interest
on that interest payment date in respect of any Security, or portion of any
Security, that is so redeemed or repurchased; or (B) if otherwise, any
Security or portion of any Security that is not called for redemption but
is submitted for conversion during that period must be accompanied by funds
equal to the interest payable on that interest payment date on the
principal amount so converted. Holders must surrender Securities to a
Paying Agent to collect the principal payments. The Company will pay the
principal, premium, if any, and interest in money of the United States that
at the time of payment is legal tender. Principal and interest may, at the
Company's option, be paid either (i) by check mailed to the address of the
Person entitled to the interest as it appears in the register kept by the
Registrar (provided (a) payments to the Depositary will be made by wire
transfer of immediately available funds to the account of the Depositary or
its nominee and (b) a Holder with an aggregate principal amount of
Securities in excess of $10 million will, at the written election of the
Holder, filed on or before the relevant record date with the Trustee, be
paid by wire transfer in immediately available funds); or (ii) by transfer
to an account maintained by that Person located in the U.S.
4. Paying Agent, Registrar, Conversion Agent. Initially,
The Bank of New York (the "Trustee") will act as Paying Agent, Registrar
and Conversion Agent. The Company may change any Paying Agent, Registrar or
Conversion Agent without notice. The Company may act in any such capacity.
5. Indenture. The Company issued the Securities under an
Indenture dated as of June 8, 2001 (the "Indenture") between the Company
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) (the "Act") as in
effect on the date of the Indenture. The Securities are subject to all such
terms, and Holders are referred to the Indenture and the Act for a
statement of such terms. The Securities are general unsecured subordinated
obligations of the Company limited to a maximum of $125,000,000 aggregate
principal amount (plus such additional amount (up to an aggregate of
$150,000,000) purchased by the Initial Purchasers pursuant to the option
described in Section 2.02), except as otherwise provided in the Indenture
(except for Securities issued in substitution for destroyed, mutilated,
lost or stolen Securities). Terms used herein which are defined in the
Indenture have the meanings assigned to them in the Indenture.
6. Optional Redemption by the Company. At any time on or
after June 4, 2004, the Company may redeem the Securities on at least 20
days' notice as a whole or, from time to time, in part at the following
prices, expressed as a percentage of the principal amount, together with
accrued interest to, but excluding, the date fixed for redemption:
Redemption
Period Price
Beginning June 4, 2004 and ending on May 31, 2005.............. 103.1%
Beginning June 1, 2005 and ending on May 31, 2006.............. 102.4%
Beginning June 1, 2006 and ending on May 31, 2007.............. 101.6%
Beginning June 1, 2007 and ending on May 31, 2008.............. 100.8%
Any accrued interest becoming due on the date fixed for redemption will be
payable to the holders of record on the relevant record date of the
Securities being redeemed.
7. Notice of Redemption. Notice of redemption pursuant to
paragraph 6 will be mailed at least 20 days before the redemption date to
each Holder of Securities to be redeemed at its registered address.
Securities in denominations larger than $1,000 principal amount may be
redeemed in part but only in whole multiples of $1,000 principal amount. On
and after the redemption date interest ceases to accrue on Securities or
portions of them called for redemption.
8. Repurchase at Option of Holder. Pursuant to Section
3.07 of the Indenture within 10 days after a Repurchase Event occurs, the
Company is required to give notice of the Repurchase Event to the Holders.
Each Holder has the right, at its option, to require the Company to
repurchase all or any portion of the Securities 30 days after the notice of
repurchase event is mailed. The Repurchase Price will be 100% of the
principal amount of the Securities submitted for repurchase, plus accrued
and unpaid interest to, but excluding, the Repurchase Date. If a Repurchase
Date is an interest payment date, then the interest payable on that date
will be paid to the holder of record on the relevant record date. Subject
to the conditions of Section 3.07 of the Indenture, the Company, at its
option, instead of paying the Repurchase Price in cash, may pay the
Repurchase Price in Common Stock, valued at 95% of the average of the
Closing Prices for the five Trading Days immediately before and including
the third Trading Day preceding the Repurchase Date.
9. Conversion. A Holder of a Security may convert the
principal of such Security into Common Stock at any time after the date of
original issuance of the Security to the close of business on the business
day prior to June 1, 2008, or (x) if the Security is called for redemption
by the Company, the Holder may convert it at any time before the close of
business on the date that is one business day before the date fixed for
such redemption, or (y) if the Security is to be repurchased by the Company
pursuant to paragraph 8 hereof, the Holder may convert it at any time
before the close of business on the date that is one business day before
the date fixed for such repurchase. The initial Conversion Price is $15.806
per share of Common Stock, subject to adjustment in certain circumstances
as set forth in Section 10.06 of the Indenture. To determine the number of
shares issuable upon conversion of a Security, divide each $1,00 of the
principal amount to be converted by the Conversion Price in effect on the
conversion date and round the result to the nearest 1/100th share. The
Company is not required to issue fractional shares of Common Stock upon
conversion and, instead, will pay a cash amount as provided in Section
10.03 of the Indenture. Except as provided in Article Ten of the Indenture,
no payment or adjustment for the principal of, premium, if any, interest on
or liquidated damages with respect to, the Securities or for dividends on
any Common Stock will be made. If a Holder surrenders a Security for
conversion between the record date for the payment of interest and the next
interest payment date, such Security, when surrendered for conversion, must
be accompanied by payment of an amount equal to the interest thereon which
the registered Holder on such record date is to receive. A Security which
the Holder has elected to be repurchased may be converted only if the
Holder withdraws its election to have such Security repurchased in
accordance with the terms of the Indenture before the close of business on
the business day prior to the Repurchase Date.
To convert a Security a Holder must (1) complete and sign
the Conversion Notice, with appropriate signature guarantee, on the back of
the Security, (2) surrender the Security to a Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by the
Registrar or Conversion Agent, (4) pay the amount of interest, if any, the
Holder may be paid as provided in the last sentence of the above paragraph
and (5) pay any transfer or similar tax if required. A Holder may convert a
portion of a Security if the portion is $1,000 principal amount or an
integral multiple of $1,000 principal amount.
Any shares issued upon conversion of a Security shall
bear the Private Placement Legend until after the second anniversary of the
later of the issue date for the Securities and the last date on which the
Company or any Affiliate of the Company was the owner of such shares or the
Security (or any predecessor security) from which such shares were
converted (or such shorter period of time as permitted by Rule 144(k) under
the Securities Act or any successor provision thereunder) (or such longer
period of time as may be required under the Securities Act or applicable
state securities laws as set forth in the Opinion of Counsel delivered to
the Conversion Agent, unless otherwise agreed by the Company and the Holder
thereof).
10. Subordination. The Securities are subordinated in
right of payment, in the manner and to the extent set forth in the
Indenture, to the prior payment in full of all Senior Indebtedness. Each
Holder by accepting a Security agrees to such subordination and authorizes
the Trustee to give it effect.
11. Denominations, Transfer, Exchange. The Securities are
in registered form without coupons in denominations of $1,000 principal
amount and whole multiples of $1,000 principal amount. The transfer of
Securities may be registered and Securities may be exchanged as provided in
the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents. No service charge
shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. The Registrar need not
exchange or register the transfer of any Security selected for redemption
in whole or in part. Also, it need not exchange or register the transfer of
any Securities for a period of 15 days before the mailing of a notice of
redemption of the Securities selected to be redeemed.
12. Persons Deemed Owners. The registered Holder of a
Security may be treated as the owner of such Security for all purposes.
13. Merger or Consolidation. The Company shall not
consolidate with, or merge into, or transfer or lease all or substantially
all of its assets to, any Person unless, among other things, the Person is
organized under the laws of the United States, any State thereof or the
District of Columbia and such Person assumes by supplemental indenture all
the obligations of the Company under the Securities, the Indenture and the
Registration Rights Agreement and after giving effect to the transaction no
Default or Event of Default exists.
Notwithstanding the foregoing, any subsidiary of the
Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company or any other subsidiary or
subsidiaries of the Company.
14. Amendments, Supplements and Waivers. Subject to
certain exceptions, the Indenture or the Securities may be amended or
supplemented with the consent of the Holders of at least a majority in
aggregate principal amount of the Securities then outstanding, and any
existing Default or Event of Default may be waived with the consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or the consent of any Holder, the Indenture
or the Securities may be amended or supplemented to cure any ambiguity,
omission, defect or inconsistency, to provide for uncertificated Securities
in addition to certificated Securities, to comply with Sections 5.01 and
10.07 of the Indenture or to make any change that does not adversely affect
the rights of any Holder.
15. Defaults and Remedies. An Event of Default includes
the occurrence of any or the following: default in payment of the principal
of or any premium on the Securities; default for 30 days in payment of
interest; failure by the Company for 90 days after notice to it to comply
with any of its other agreements in the Indenture or the Securities; and
certain events of bankruptcy or insolvency. If any Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Securities then outstanding may declare all the
Securities to be due and payable, subject to certain limitations contained
in the Indenture. Holders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority in principal amount
of the Securities then outstanding may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders notice of any
continuing Default or Event of Default (except a Default or Event of
Default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company must furnish an
annual compliance certificate to the Trustee.
16. Registration Rights. The Holders are entitled to
shelf registration rights as set forth in the Registration Rights
Agreement. The Holders shall be entitled to receive liquidated damages in
certain circumstances, all as set forth in the Registration Rights
Agreement.
17. Trustee Dealings with Company. The Trustee under the
Indenture, or any banking institution serving as successor Trustee
thereunder, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates, as
if it were not Trustee.
18. No Recourse Against Others. No past, present or
future director, officer, employee or shareholder, as such, of the Company
shall have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.
19. Authentication. This Security shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
20. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian),
and U/G/M/A (Uniform Gifts to Minors Act).
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON
WRITTEN REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE
MADE TO:
VENATOR GROUP, INC.
112 West 34th Street
New York, New York 10120
ATTENTION: Treasurer
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
- ---------------------------------------------------------
- -------------------------------------------------------------------------------
(please print or type name and address)
- -------------------------------------------------------------------------------
the within Security and all rights thereunder, and hereby irrevocably
- -------------------------------------------------------------------------------
constitutes and appoints attorney to transfer the Security on the books of
- -------------------------------------------------------------------------------
the Company with full power of substitution in the premises.
Dated:_______________________ ____________________________________________
NOTICE: The signature on this assignment
must correspond with the name as it
appears upon the face of the within
Security in every particular without
alteration or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee:___________________________________________________________
(Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.)
In connection with any transfer of this Security
occurring prior to the date which is the earlier of (i) the date of the
declaration by the Commission of the effectiveness of a registration
statement under the Securities Act of 1933, as amended (the "Securities
Act") covering resales of this Security (which effectiveness shall have
been suspended or terminated at the date of the transfer) and (ii) June 8,
2003 the undersigned confirms that it has not utilized any general
solicitation or general advertising in connection with transfer:
[Check One]
(1) ____ to the Company or a subsidiary thereof; or
(2) ____ pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) ____ to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act
of 1933, as amended) that has furnished to the Trustee a
signed letter containing certain representations and
agreements (the form of which letter can be obtained from
the Trustee); or
(4) ____ outside the United States to a "foreign purchaser" in
compliance with Rule 904 of Regulation S under the
Securities Act of 1933, as amended; or
(5) ____ pursuant to the exemption from registration provided by
Rule 144 under the Securities Act of 1933, as amended; or
(6) ____ pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(7) ____ pursuant to another available exemption from the registration
statement requirements of the Securities Act of 1933,
as amended.
and unless the box below is checked, the undersigned confirms that such
Security is not being transferred to an "affiliate" of the Company as
defined in Rule 144 under the Securities Act of 1933, as amended (an
"Affiliate"):
|_| The transferee is an Affiliate of the Company.
(If the Security is transferred to an Affiliate, the restrictive legend
must remain on the Security for two years following the date of the
transfer).
Unless one of the items is checked, the Trustee will
refuse to register any of the Securities evidenced by this certificate in
the name of any Person other than the registered Holder thereof; provided,
however, that if item (3),(4),(5) or (7) is checked, the Company or the
Trustee may require, prior to registering any such transfer of the
Securities, in their sole discretion, such written legal opinions,
certifications (including an investment letter in the case of box (3) or
(4)) and other information as the Trustee or the Company have reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee
or Registrar shall not be obligated to register this Security in the name
of any Person other than the Holder hereof unless and until the conditions
to any such transfer of registration set forth herein and in Section 2.16
of the Indenture shall have been satisfied.
Dated: Signed:
------------------- -----------------------------------------
(Sign exactly as name appears on the
other side of this Security)
Signature Guarantee:
-----------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is
purchasing this Security for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a "qualified institutional buyer" within the meaning of Rule
144A under the Securities Act of 1933, as amended, and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it
has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
---------------------------------------- --------------------------
NOTICE: To be executed by an
executive officer
CONVERSION NOTICE
To convert this Security into Common Stock of the Company, check the box:
|_|
To convert only part of this Security, state the principal amount to be
converted (must be in multiples 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 I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type other person's name, address and zip code)
_______________________________________________________________________________
Date:______________ Signature(s): __________________________________________
(Signatures must be guaranteed by
an "eligible guarantor
institution" meeting the
requirements of the Registrar,
which requirements include
membership or participation in
the Security Transfer Agent
Medallion Program ("STAMP") or
such other "signature guarantee
program" as may be determined by
the Registrar in addition to, or
in substitution for, STAMP, all
in accordance with the Securities
Exchange Act of 1934, as
amended.)
Signature(s) guaranteed by:
---------------------------------------------------
(Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.)
OPTION OF HOLDER TO ELECT PURCHASE NOTICE
If you want to elect to have this Security purchased by
the Company pursuant to Section 3.07 of the Indenture, check the box: |_|
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 3.07 of the Indenture, state
the principal amount:
$ ----------------------------------
(in an integral multiple of $1,000)
Date:__________________ Signature(s):
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by: ________________________________________
(Signatures must be guaranteed by an
"eligible guarantor institution"
meeting the requirements of the
Registrar, which requirements
include membership or participation
in the Security Transfer Agent
Medallion Program ("STAMP") or such
other "signature guarantee program"
as may be determined by the
Registrar in addition to, or in
substitution for, STAMP, all in
accordance with the Securities
Exchange Act of 1934, as amended.)
EXHIBIT B
FORM OF LEGENDS
I. PRIVATE PLACEMENT LEGEND
Each Security issued under the Indenture shall bear a
legend (and any common stock issued upon conversion of such Security shall
bear a comparable legend) substantially in the following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY
AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
THIS SECURITY (OR ITS PREDECESSOR) MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON
TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND IN CONNECTION WITH ANY TRANSFER OF THIS
SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER
OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
II. GLOBAL SECURITY LEGEND
Any Global Security authenticated and delivered hereunder
shall bear a legend (which would be in addition to any other legends
required in the case of a Restricted Security) in substantially the
following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR
DEPOSITARY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR
ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY 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 DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. 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 SECTION 2.16
OF THE INDENTURE.
EXHIBIT C
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
[Date]
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Re: Venator Group, Inc. (the "Company")
5.50% Convertible Subordinated Notes
due 2008 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of $__________
aggregate principal amount of the Securities, we confirm that such purchase
has been effected pursuant to and in accordance with Regulation S under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, we represent that:
(1)(2) [We are not a U.S. person and are not acquiring
the Securities for the account or benefit of any U.S. person]. [We
are a U.S. person who purchased securities in a transaction that
did not require registration under the Act.]
(2) We agree to resell the Securities only in accordance
with the provisions of Regulation S, pursuant to registration
under the Securities Act, or pursuant to an available exemption
from registration; and we agree not to engage in hedging
transactions with regard to such securities unless in compliance
with the Securities Act.
__________
(2) One of the two following sentences must be used.
You, the Company and counsel for the Company are entitled
to rely upon this letter and are irrevocably authorized to produce this
letter or a copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters covered
hereby. Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Transferor]
By:
-------------------------------------
Authorized Signature
EXHIBIT D
Form of Notice of Transfer Pursuant to Registration Statement
[Date]
Venator Group, Inc.
112 West 34th Street
New York, New York 10120
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Re: Venator Group, Inc. (the "Company")
5.50% Convertible Subordinated Notes Due 2008
(the "Securities")
Ladies and Gentlemen:
Please be advised that _____________ has transferred
$___________ aggregate principal amount of the Securities or __ shares of
the Company's common stock, $.001 par value per share, issuable on
conversion of the Securities ("Stock") pursuant to an effective Shelf
Registration Statement on Form S-3 (File No. 333- ) filed by the Company.
We hereby certify that the prospectus delivery
requirements, if any, of the Securities Act of 1933 as amended, have been
satisfied with respect to the transfer described above and that the
above-named beneficial owner of the Securities or Stock is named as a
"Selling Security Holder" in the Prospectus dated __________________ or in
amendments or supplements thereto, and that the aggregate principal amount
of the Securities, or number of shares of Stock transferred are [a portion
of] the Securities or Stock listed in such Prospectus, as amended or
supplemented, opposite such owner's name.
Very truly yours,
____________________________________________
(Name)
EXHIBIT E
Form of Opinion of Counsel in Connection with Registration of Securities
------------------------------------------------------------------------
[Date]
The Bank of New York
101 Barclay Street, Floor 21 West
New York New York 10286
Attention: Corporate Trust Department
Re: Venator Group, Inc. (the "Company")
5.50% Subordinated Convertible Notes Due 2008
(the "Securities")
Ladies and Gentlemen:
Reference is made to the Securities issued pursuant to a
certain indenture dated as of June 8, 2001 by and between the Company and
The Bank of New York, as trustee (the "Trustee"). The Securities were
issued in transactions exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"). The Company has filed with the
Securities and Exchange Commission (the "SEC") a registration statement on
Form S-3 (number 333-____) (the "Registration Statement") relating to the
registration under the Securities Act of $[ ] principal amount of the
Securities and the shares of Common Stock of the Company (the "Shares")
issuable upon conversion of the Securities being registered. The
Registration Statement was declared effective by order of the SEC dated
[_____________].
We have acted as counsel for the Company in connection
with the issuance of the Securities and the preparation and filing of the
Registration Statement and are familiar with the Securities, the Indenture,
the Registration Statement, the above-mentioned SEC order and such other
documents as are necessary to render this opinion.
We have been orally advised by the SEC that the Indenture
has been qualified under the Trust Indenture Act of 1939, as amended, and
that the Registration Statement was declared effective under the Securities
Act at _____, on ____________, 200_, and we have been orally advised by the
SEC that no stop order suspending the effectiveness of the Registration
Statement has been issued and, to the best of our knowledge, no proceedings
for that purpose have been instituted or are pending or threatened by the
SEC.
This opinion is being furnished only to you in connection
with the Indenture and is solely for your benefit and is not to be used,
circulated, quoted or otherwise referred to for any other purpose or relied
upon by any other person for any other purpose without our prior written
consent.
Yours truly,
REGISTRATION RIGHTS AGREEMENT
Dated as of June 8, 2001
By and Among
VENATOR GROUP, INC.,
as Issuer
and
J.P. MORGAN SECURITIES INC.,
BANC OF AMERICA SECURITIES LLC,
BNY CAPITAL MARKETS, INC.,
FIRST UNION SECURITIES, INC.
SCOTIA CAPITAL (USA) INC.,
and
FLEET SECURITIES, INC.,
as Initial Purchasers
5.50% Convertible Subordinated Notes Due 2008
TABLE OF CONTENTS
Page
1. Definitions..........................................................1
2. Shelf Registration...................................................4
3. Liquidated Damages...................................................6
4. Registration Procedures..............................................7
5. Registration Expenses...............................................14
6. Indemnification.....................................................15
7. Rules 144 and 144A..................................................18
8. Underwritten Registrations..........................................18
9. Miscellaneous.......................................................19
(a) No Inconsistent Agreements...................................19
(b) Adjustments Affecting Registrable Securities.................19
(c) Amendments and Waivers.......................................19
(d) Notices......................................................19
(e) Successors and Assigns.......................................21
(f) Counterparts.................................................21
(g) Headings.....................................................21
(h) Governing Law................................................21
(i) Severability.................................................21
(j) Securities Held by the Company or Its Affiliates.............21
(k) Third Party Beneficiaries....................................22
(l) Entire Agreement.............................................22
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as
of June 8, 2001, by and among VENATOR GROUP, INC., a New York corporation
(the "Company"), J.P. MORGAN SECURITIES INC., BANC OF AMERICA SECURITIES
LLC, BNY CAPITAL MARKETS, INC., FIRST UNION SECURITIES, INC., SCOTIA
CAPITAL (USA) INC. and FLEET SECURITIES, INC. (individually, an "Initial
Purchaser" and, together, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated June 4, 2001 (the "Purchase Agreement"), by and among the
Company and the Initial Purchasers, which provides for the sale by the
Company to the Initial Purchasers of $125,000,000 aggregate principal
amount of the Company's 5.50% Convertible Subordinated Notes Due 2008 (the
"Firm Notes"), which are convertible into Common Stock of the Company, par
value $.01 per share (the "Underlying Shares"), plus up to an additional
$25,000,000 aggregate principal amount of the same that the Initial
Purchasers may subsequently elect to purchase pursuant to the terms of the
Purchase Agreement (the "Additional Notes" and, together with the Firm
Notes, the "Convertible Notes"). The Convertible Notes are being issued
pursuant to an indenture dated as of the date hereof (the "Indenture")
between the Company and The Bank of New York, as Trustee.
In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement for the benefit of the Initial
Purchasers and any subsequent holder or holders of the Convertible Notes or
Underlying Shares. The execution and delivery of this Agreement is a
condition to the Initial Purchasers' obligation to purchase the Firm Notes
under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
Agreement: See the first introductory paragraph hereto.
Amount of Registrable Securities: (a) With respect to Convertible
Notes constituting Registrable Securities, the aggregate principal amount
of all such Convertible Notes outstanding, (b) with respect to Underlying
Shares constituting Registrable Securities, the aggregate number of such
Underlying Shares outstanding multiplied by the Conversion Price (as
defined in the Indenture relating to the Convertible Notes upon the
conversion of which such Underlying Shares were issued) in effect at the
time of computing the Amount of Registrable Securities or, if no such
Convertible Notes are then outstanding, the last Conversion Price that was
in effect under such Indenture when any such Convertible Notes were last
outstanding, and (c) with respect to combinations thereof, the sum of (a)
and (b) for the relevant Registrable Securities.
Business Day: Any day that is not a Saturday, Sunday or a day on
which banking institutions in New York are authorized or required by law to
be closed.
Closing Date: June 8, 2001.
Company: See the first introductory paragraph hereto.
Convertible Notes: See the second introductory paragraph hereto.
Damages Payment Date: See Section 3(c) hereof.
Depositary: The Depository Trust Company until a successor is
appointed by the Company.
Effectiveness Date: The 180th day after the Closing Date.
Effectiveness Period: See Section 2 hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Filing Date: The 90th day after the Closing Date.
Holder: Any holder of Registrable Securities.
Indemnified Holder: See Section 6 hereof.
Indemnified Person: See Section 6 hereof.
Indemnifying Person: See Section 6 hereof.
Indenture: See the second introductory paragraph hereto.
Initial Purchasers: See the first introductory paragraph hereto.
Initial Shelf Registration: See Section 2(a) hereof.
Inspectors: See Section 4(n) hereof.
Liquidated Damages: See Section 3(a) hereof.
NASD: See Section 4(q) hereof.
Person: An individual, partnership, corporation, limited liability
company, unincorporated association, trust or joint venture, or a
governmental agency or political subdivision thereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by
reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph hereto.
QIU: See Section 4(q) hereof.
Questionnaire Deadline: See Section 2(d) hereof.
Records: See Section 4(n) hereof.
Registrable Securities: All Convertible Notes and all Underlying
Shares upon original issuance thereof and at all times subsequent thereto
until the earliest to occur of (i) a Registration Statement covering such
Convertible Notes and Underlying Shares having been declared effective by
the SEC and such Convertible Notes and Underlying Shares have been disposed
of in accordance with such effective Registration Statement, (ii) such
Convertible Notes and Underlying Shares having been sold in compliance with
Rule 144 or could (except with respect to affiliates of the Company within
the meaning of the Securities Act) be sold in compliance with Rule 144(k)
and (iii) such Convertible Notes and any Underlying Shares cease to be
outstanding.
Registration Default: See Section 3(a) hereof.
Registration Statement: Any registration statement of the Company
filed with the SEC 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 material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and
sales by subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus delivery
requirements of the Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Shelf Registration: See Section 2(b) hereof.
Shelf Registration Statement: See Section 2(b) hereof.
Subsequent Shelf Registration: See Section 2(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Trustee: The Trustee under the Indenture.
Underlying Shares: See the second introductory paragraph hereto.
Underwritten registration or underwritten offering: A registration
in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Shelf Registration.
(a) Shelf Registration. The Company shall file with the SEC a
Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Registrable Securities (the
"Initial Shelf Registration") on or prior to the Filing Date. The Initial
Shelf Registration shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company shall not
permit any securities other than the Registrable Securities to be included
in the Initial Shelf Registration or any Subsequent Shelf Registration (as
defined below).
The Company shall use its reasonable best efforts to cause the
Initial Shelf Registration to be declared effective under the Securities
Act on or prior to the Effectiveness Date and to keep such Initial Shelf
Registration continuously effective under the Securities Act until the date
that is two years from the Closing Date (as it may be shortened pursuant to
clause (i) or clause (ii) immediately following, the "Effectiveness
Period"), or such shorter period ending when (i) all the Registrable
Securities covered by the Initial Shelf Registration have been sold in the
manner set forth and as contemplated in the Initial Shelf Registration,
(ii) the date on which all the Registrable Securities (x) held by Persons
who are not affiliates of the Company may be resold pursuant to Rule 144(k)
under the Securities Act or (y) cease to be outstanding or (iii) a
Subsequent Shelf Registration covering all of the Registrable Securities
has been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective
for any reason at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered thereunder), the
Company shall use its reasonable best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof, and in any
event shall within 45 days of such cessation of effectiveness amend the
Initial Shelf Registration or any subsequent Shelf Registration, as the
case may be, in a manner to obtain the withdrawal of the order suspending
the effectiveness thereof, or file an additional "shelf" Registration
Statement pursuant to Rule 415 covering all of the Registrable Securities
(a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration is
filed, the Company shall use its reasonable best efforts to cause the
Subsequent Shelf Registration to be declared effective under the Securities
Act as soon as practicable after such filing and to keep such Registration
Statement continuously effective for a period equal to the number of days
in the Effectiveness Period less the aggregate number of days during which
the Initial Shelf Registration or any Subsequent Shelf Registration was
previously continuously effective. As used herein the term "Shelf
Registration" means the Initial Shelf Registration and any Subsequent Shelf
Registration and the term "Shelf Registration Statement" means any
Registration Statement filed in connection with a Shelf Registration.
(c) Supplements and Amendments. The Company shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for
such Shelf Registration, if required by the Securities Act, or if
reasonably requested by the Holders of the majority in Amount of
Registrable Securities covered by such Registration Statement or by any
underwriter of such Registrable Securities.
(d) Information from Holders. No Holder of Registrable Securities
may include any of its Registrable Securities in the Shelf Registration
Statement pursuant to this Agreement unless such Holder furnishes to the
Company in writing, prior to or on the 25th Business Day after receipt of a
request therefor (the "Questionnaire Deadline"), such information as the
Company may reasonably request for use in connection with the Shelf
Registration Statement or Prospectus or preliminary Prospectus included
therein and in any application to be filed with or under state securities
laws. In connection with all such requests for information from Holders of
Registrable Securities, the Company shall notify such Holders of the
requirements set forth in the preceding sentence. No Holder of Registrable
Securities shall be entitled to Liquidated Damages pursuant to Section 3
hereof unless such Holder shall have provided all such reasonably requested
information prior to or on the Questionnaire Deadline. Each Holder as to
which the Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order
to make information previously furnished to the Company by such Holder not
materially misleading.
3. Liquidated Damages.
(a) The Company and the Initial Purchasers agree that the Holders
of Registrable Securities will suffer damages if the Company fails to
fulfill its obligations under Section 2 hereof and that it would not be
feasible to ascertain the extent of such damages with precision.
Accordingly, the Company agrees to pay liquidated damages on the
Registrable Securities ("Liquidated Damages") under the circumstances and
to the extent set forth below (each of which shall be given independent
effect; each a "Registration Default"):
(i) if the Initial Shelf Registration is not filed on or prior to
the Filing Date, then commencing on the day after the Filing Date,
Liquidated Damages shall accrue on the Registrable Securities at a
rate of 0.25% per annum on the Amount of Registrable Securities for
the first 90 days immediately following the Filing Date, such
Liquidated Damages increasing by an additional 0.25% per annum at the
beginning of each subsequent 90-day period;
(ii) if the Initial Shelf Registration is not declared effective
by the SEC on or prior to the Effectiveness Date, then commencing on
day after the Effectiveness Date, Liquidated Damages shall accrue on
the Registrable Securities at a rate of 0.25% per annum on the Amount
of Registrable Securities for the first 90 days immediately following
the day after such Effectiveness Date, such Liquidated Damages
increasing by an additional 0.25% per annum at the beginning of each
subsequent 90-day period; and
(iii) if a Shelf Registration has been declared effective and such
Shelf Registration ceases to be effective at any time during the
Effectiveness Period (other than as permitted under Section 3(b)),
Liquidated Damages shall accrue on the Registrable Securities at a
rate of 0.25% per annum on the Amount of Registrable Securities for
the first 90 days commencing on the day such Shelf Registration ceases
to be effective, such Liquidated Damages increasing by an additional
0.25% per annum at the beginning of each such subsequent 90-day
period;
provided, however, that Liquidated Damages on the Registrable Securities
may not accrue under more than one of the foregoing clauses (i), (ii) or
(iii) at any one time and at no time shall the aggregate amount of
Liquidated Damages accruing exceed in the aggregate 0.50% per annum of the
Amount of Registrable Securities; provided, further, however, that (1) upon
the filing of the Shelf Registration as required hereunder (in the case of
clause (a)(i) of this Section 3), (2) upon the effectiveness of the Shelf
Registration as required hereunder (in the case of clause (a)(ii) of this
Section 3) or (3) upon the effectiveness of a Shelf Registration which had
ceased to remain effective (in the case of (a)(iii) of this Section 3),
Liquidated Damages on the Registrable Securities as a result of such clause
(or the relevant subclause thereof), as the case may be, shall cease to
accrue. It is understood and agreed that, notwithstanding any provision to
the contrary, (i) so long as any Registrable Security is then covered by an
effective Shelf Registration Statement, no Liquidated Damages shall accrue
on such Registrable Security.
(b) Notwithstanding paragraph (a) of this Section 3, the Company
shall be permitted to suspend the effectiveness of a Shelf Registration for
up to 45 consecutive days in any 90-day period, for a total of not more
than 90 days in any 365-day period, without paying Liquidated Damages.
(c) So long as Convertible Notes remain outstanding, the Company
shall notify the Trustee within two Business Days after each and every date
on which an event occurs in respect of which Liquidated Damages is required
to be paid. Any amounts of Liquidated Damages due pursuant to (a)(i),
(a)(ii) or (a)(iii) of this Section 3 will be payable in cash semi-annually
on each June 1 and December 1 (each a "Damages Payment Date"), commencing
with the first such date occurring after any such Liquidated Damages
commences to accrue, to Holders to whom regular interest is payable on such
Damages Payment Date with respect to Convertible Notes that are Registrable
Securities and to Persons that are registered Holders 15 days prior to such
Damages Payment Date with respect to Underlying Shares that are Registrable
Securities. The amount of Liquidated Damages for Registrable Securities
will be determined by multiplying the applicable rate of Liquidated Damages
by the Amount of Registrable Securities outstanding on the Damages Payment
Date following such Registration Default in the case of the first such
payment of Liquidated Damages with respect to a Registration Default (and
thereafter at the next succeeding Damages Payment Date until the cure of
such Registration Default), multiplied by a fraction, the numerator of
which is the number of days such Liquidated Damages rate was applicable
during such period (determined on the basis of a 360-day year comprised of
twelve 30-day months and, in the case of a partial month, the actual number
of days elapsed), and the denominator of which is 360.
4. Registration Procedures.
In connection with the filing of any Registration Statement
pursuant to Section 2 hereof, the Company shall effect such registrations
to permit the resale of the securities covered thereby in accordance with
the intended method or methods of disposition thereof, and pursuant thereto
and in connection with any Registration Statement filed by the Company
hereunder the Company shall:
(a) Prepare and file with the SEC prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by
Section 2 hereof, and use its reasonable best efforts to cause each
such Registration Statement to become effective and remain effective
as provided herein; provided, however, that before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company shall furnish to and afford the Holders of the
Registrable Securities covered by such Registration Statement, a
single counsel to such Holders (chosen in accordance with Section
5(b)) and the managing underwriters, if any, a reasonable opportunity
to review copies of all such documents proposed to be filed (in each
case, where possible, at least four Business Days prior to such
filing, or such date as is reasonable under the circumstances). The
Company shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto if the Holders of a majority in
Amount of Registrable Securities covered by such Registration
Statement, their counsel or the managing underwriters, if any, shall
reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration as may be
necessary to keep such Registration Statement continuously effective
for the Effectiveness Period; cause the related Prospectus to be
supplemented by any Prospectus supplement required by applicable law,
and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities
Act; and use all reasonable best efforts to comply with the provisions
of the Securities Act and the Exchange Act applicable to it with
respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so
supplemented. The Company shall be deemed not to have used its
reasonable best efforts to keep a Registration Statement effective
during the Effectiveness Period if it voluntarily takes any action
that would result in selling Holders of the Registrable Securities
covered thereby not being able to sell such Registrable Securities
during that period unless such action is required by applicable law or
unless the Company complies with this Agreement, including, without
limitation, the provisions of Sections 3(b) and 4(k) hereof.
(c) Notify the selling Holders of Registrable Securities, a single
counsel to such Holders (chosen in accordance with Section 5(b)) and
the managing underwriters, if any, promptly (but in any event within
two Business Days) and, confirm such notice in writing, (i) when a
Prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, at the sole expense of the Company,
one conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits),
(ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus or the initiation
of any proceedings for that purpose, (iii) of the happening of any
event, the existence of any condition or any information becoming
known that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or
that requires the making of any changes in or amendments or
supplements to such Registration Statement, Prospectus or documents so
that, in the case of the Registration Statement, it will 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 that in the case of the Prospectus, it
will 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 and (iv) of the Company's
determination that a post-effective amendment to a Registration
Statement would be appropriate.
(d) Use its reasonable best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of a Prospectus and, if any
such order is issued, to use its reasonable best efforts to obtain the
withdrawal of any such order at the earliest possible moment.
(e) If requested by the managing underwriter or underwriters, if
any, or the Holders of the majority in Amount of Registrable
Securities being sold in connection with an underwritten offering (i)
promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or
underwriters, if any, such Holders or counsel for any of them
reasonably determine is necessary to be included therein, (ii) make
all required filings of such prospectus supplement of such
post-effective amendment as soon as reasonably practicable after the
Company has received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment and (iii)
supplement or make amendment to such Registration Statement.
(f) Furnish to each selling Holder of Registrable Securities, a
single counsel to such Holders (chosen in accordance with Section
5(b)) and each managing underwriter, if any, at the sole expense of
the Company, one conformed copy of the Registration Statement or
Registration Statements and each post-effective 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 Holder of
Registrable Securities or managing underwriter, as the case may be).
(g) Deliver to each selling Holder of Registrable Securities, a
single counsel to such Holders (chosen in accordance with Section
5(b)) and the underwriters, if any, at the sole expense of the
Company, as many copies of the Prospectus (including each form of
preliminary prospectus) and each amendment or supplement thereto and
any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the second paragraph of Section
4(s) hereof, the Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling
Holders of Registrable Securities and the underwriters or agents, if
any, and dealers (if any), in connection with the offering and sale of
the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to use
its reasonable best efforts to register or qualify, to the extent
required by applicable law, and to cooperate with the selling Holders
of Registrable Securities, the managing underwriter or underwriters,
if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities or offer and sale under
the securities or Blue Sky laws of such jurisdictions within the
United States as any selling Holder, or the managing underwriter or
underwriters, if any, reasonably request; provided, however, that
where Registrable Securities are offered other than through an
underwritten offering, the Company agrees to cause the Company's
counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 4(h);
keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by the applicable Registration
Statement; provided, however, that the Company shall not be required
to (A) qualify generally to do business in any jurisdiction where it
is not then so qualified, (B) take any action that would subject it to
general service of process in any such where it is not then so subject
or (C) subject itself to taxation in excess of a nominal dollar amount
in any such jurisdiction where it is not then so subject.
(i) Cooperate with the selling Holders of Registrable Securities
and the managing underwriter or underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing
shares of Registrable Securities to be sold, which certificates shall
not bear any restrictive legends and shall be in a form eligible for
deposit with The Depository Trust Company; and enable such shares of
Registrable Securities to be in such denominations and registered in
such names as the managing underwriter or underwriters, if any, or
Holders may reasonably request.
(j) Use its reasonable best efforts to cause the Registrable
Securities covered by any Shelf Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be reasonably necessary to enable the seller or
sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Securities, except as
may be required solely as a consequence of the nature of such selling
Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) Upon the occurrence of any event contemplated by paragraph
4(c)(ii), 4(c)(iii) or 4(c)(iv) hereof, as promptly as practicable
prepare and (subject to Section 4(a) hereof) file with the SEC, at the
sole expense of the Company, a supplement or post-effective amendment
to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a 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.
(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Securities, (i) provide the
Trustee with certificates for the Registrable Securities in a form
eligible for deposit with The Depository Trust Company and (ii)
provide required CUSIP numbers for the Registrable Securities.
(m) In connection with any underwritten offering of Registrable
Securities pursuant to a Shelf Registration, enter into an
underwriting agreement as is customary in underwritten offerings of
securities similar to the Registrable Securities and take all such
other actions as are reasonably requested by the managing underwriter
or underwriters in order to expedite or facilitate the registration or
the disposition of such Registrable Securities and, in such
connection, (i) make such representations and warranties to, and
covenants with, the underwriters with respect to the business of the
Company and its subsidiaries (including any acquired business,
properties or entity, if applicable) and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily
made by issuers to underwriters in underwritten offerings of
securities similar to the Registrable Securities and confirm the same
in writing if and when requested; (ii) obtain the written opinion of
counsel to the Company and written updates thereof in form, scope and
substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings of
securities similar to the Registrable Securities and such other
matters as may be reasonably requested by the managing underwriter or
underwriters; and (iii) obtain "cold comfort" letters and updates
thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified
public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included or
incorporated by reference in the Registration Statement), addressed to
each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings of securities
similar to the Registrable Securities and such other matters as
reasonably requested by the managing underwriter or underwriters as
permitted by the Statement on Auditing Standards No. 72. The above
shall be done as and to the extent required by such underwriting
agreement.
(n) Make available for inspection by any selling Holder of such
Registrable Securities being sold, any underwriter participating in
any such disposition of Registrable Securities, if any, and any
attorney, accountant or other agent retained by any such selling
Holder, or underwriter (collectively, the "Inspectors"), at the
offices where normally kept, during reasonable business hours at such
time or times as shall be mutually convenient for the Company and the
Inspectors as a group, all financial and other records, pertinent
corporate documents and instruments of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of
the Company and its subsidiaries to supply all information reasonably
requested by any such Inspector in connection with such Registration
Statement. Records that the Company determines, in good faith, to be
confidential and any Records that it notifies the Inspectors are
confidential shall not be disclosed by any Inspector unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or material omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, (iii) disclosure of such
information is, in the opinion of counsel for any Inspector, necessary
or advisable in connection with any action, claim, suit or proceeding
directly involving or potentially involving such Inspector and arising
out of, based upon, relating to, or involving this Agreement or any
transactions contemplated hereby or arising hereunder, (iv) the
information in such Records has been made generally available to the
public other than through the acts of such Inspector; provided,
however, that prior notice shall be provided as soon as practicable to
the Company of the potential disclosure of any information by such
Inspector pursuant to clause (ii) or (iii) of this sentence to permit
the Company to obtain a protective order (or waive the provisions of
this paragraph (n)) and that such Inspector shall take such actions as
are reasonably necessary to protect the confidentiality of such
information (if practicable) to the extent such action is otherwise
not inconsistent with, an impairment of or in derogation of the rights
and interests of any Holder or Inspector or (v) the information in
such Records has been made generally available to the public other
than as a result of a breach of this Agreement.
(o) Provide (i) the Holders of the Registrable Securities to be
included in such Registration Statement and not more than one counsel
for all the Holders of such Registrable Securities, (ii) the
underwriters (which term, for purposes of this Registration Rights
Agreement, shall include a Person deemed to be an underwriter within
the meaning of Section 2(11) of the Securities Act), if any, thereof,
(iii) the sales or placement agent, if any, thereof, and (iv) one
counsel for such underwriters or agents, reasonable opportunity to
participate in the preparation of such Registration Statement, each
prospectus included therein or filed with the SEC, and each amendment
or supplement thereto.
(p) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earning statements
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) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold
to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month
periods.
(q) Cooperate with each seller of Registrable Securities covered
by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. (the
"NASD"), including, if the Conduct Rules of the NASD or any successor
thereto as amended from time to time so require, engaging a "qualified
independent underwriter" ("QIU") as contemplated therein and making
Records available to such QIU as though it were a participating
underwriter for the purposes of Section 4(n) and otherwise applying
the provisions of this Agreement to such QIU (including
indemnification) as though it were a participating underwriter.
(r) Cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement relating
to the Registrable Securities; and in connection therewith, cooperate
with the Trustee and the Holders of the Registrable Securities 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 its reasonable best 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.
(s) Use its reasonable best efforts to take all other steps
necessary or advisable to effect the registration of the Registrable
Securities covered by a Registration Statement contemplated hereby.
Each Holder who intends to be named as a selling Holder in the
Shelf Registration Statement shall furnish to the Company in writing,
within 25 Business Days after receipt of a request therefor as set forth in
a questionnaire in the form attached hereto as Annex A, such information
regarding such Holder and the proposed distribution by such Holder of its
Registrable Securities as the Company may reasonably request for use in
connection with the Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein. Holders that do not complete the
questionnaire and deliver it to the Company shall not be named as selling
securityholders in the Prospectus or preliminary Prospectus included in the
Shelf Registration Statement and therefore shall not be permitted to sell
any Registrable Securities pursuant to the Shelf Registration Statement.
Each Holder who intends to be named as a selling Holder in the Shelf
Registration Statement shall promptly furnish to the Company in writing
such other information as the Issuer may from time to time reasonably
request in writing. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information required
to be disclosed so that the information previously furnished to the Company
by such seller is not materially misleading and does not omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made.
Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon actual receipt of any notice from
the Company of the happening of any event of the kind described in Section
4(c)(ii), 4(c)(iii) or 4(c)(iv) hereof, such Holder will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement or Prospectus until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section
4(k) hereof, or until it is advised in writing by the Company that the use
of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto.
5. Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the
Company, including, without limitation, (i) all registration and filing
fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten
offering and (B) fees and expenses of compliance with state securities or
Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Securities and determination of the eligibility of the
Registrable Securities for investment under the laws of such jurisdictions
as provided in Section 4(h) hereof), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable
Securities in a form eligible for deposit with The Depository Trust Company
and of printing prospectuses if the printing of prospectuses is requested
by the managing underwriter or underwriters, if any, or by the Holders of
the majority in Amount of Registrable Securities included in any
Registration Statement, (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company and reasonable fees
and disbursements of a single counsel (chosen in accordance with Section
5(b)) for the sellers of Registrable Securities (subject to the provisions
of Section 5(b) hereof), (v) fees and disbursements of all independent
certified public accountants referred to in Section 4(m)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi)
Securities Act liability insurance, if the Company desires such insurance,
(vii) fees and expenses of all other Persons retained by the Company,
(viii) internal expenses of the Company (including, without limitation, all
salaries and expenses of officers and employees of the Company performing
legal or accounting duties), (ix) the expense of any annual audit, (x) the
fees and expenses incurred in connection with the listing of the securities
to be registered on any securities exchange, if applicable, and (xi) the
expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales
agreements and any other documents necessary in order to comply with this
Agreement. Notwithstanding anything in this Agreement to the contrary, each
Holder shall pay all underwriting discounts and brokerage commissions with
respect to any Registrable Securities sold by it.
(b) The Company shall reimburse the Holders of the Registrable
Securities being registered in a Shelf Registration for the reasonable fees
and disbursements of not more than one counsel chosen by the Holders of a
majority in Amount of Registrable Securities to be included in such
Registration Statement.
6. Indemnification.
The Company agrees to indemnify and hold harmless (i) each Initial
Purchaser, (ii) each Holder, (iii) each Person, if any, who controls
(within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act) any of the foregoing (any of the Persons referred
to in this clause (iii) being hereinafter referred to as a "controlling
person"), (iv) the respective officers, directors, partners, employees,
representatives and agents of the Initial Purchasers, the Holders
(including predecessor Holders) or any controlling person (any person
referred to in clause (i), (ii), (iii) or (iv) may hereinafter be referred
to as an "Indemnified Holder"), from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation,
reasonable legal fees and other expenses incurred in connection with any
suit, action or proceeding or any claim asserted) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus, or any amendment or supplement
thereto or any related preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with information relating to any Holder
furnished to the Company in writing by such Holder expressly for use in
therein; provided, however, that the Company shall not be liable to any
Indemnified Holder under the indemnity agreement of this paragraph with
respect to any preliminary prospectus to the extent that any such loss,
claim, damage, liability, judgment or expense of such Indemnified Holder
results from the fact that such Indemnified Holder sold Registrable
Securities under a Registration Statement to a Person as to whom it shall
be established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (or of the preliminary
prospectus as then amended or supplemented if the Company shall have
furnished such Indemnified Holder with such amendment or supplement thereto
on a timely basis) and the loss, claim, damage, liability or expense of
such Indemnified Holder results from an untrue statement or omission of a
material fact contained in the preliminary prospectus which was corrected
in the Prospectus (or in the preliminary prospectus as then amended or
supplemented if the Company shall have furnished such Indemnified Holder
with such amendment or supplement thereto, as the case may be, on a timely
basis). The Company shall notify Indemnified Holder promptly of the
institution, threat or assertion of any claim, proceeding (including any
governmental investigation) or litigation in connection with the matters
addressed by this Agreement which involves the Company or such Indemnified
Holder.
Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, officers and each
Person who controls the Company within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to each Holder, but only with
reference to such losses, claims, damages or liabilities which are caused
by any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with information relating to a
Holder furnished to the Company in writing by such Holder expressly for use
in any Registration Statement or Prospectus, or any amendment or supplement
thereto or any related preliminary prospectus.
If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought
or asserted against any Person in respect of which indemnity may be sought
pursuant to either of the two preceding paragraphs, such Person (the
"Indemnified Person") shall promptly notify the Person or Persons against
whom such indemnity may be sought (each an "Indemnifying Person") in
writing, and such Indemnifying Person, upon request of the Indemnified
Person, shall retain counsel reasonably satisfactory to the Indemnified
Person to represent the Indemnified Person and any others entitled to
indemnification pursuant to this Section 6 that the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such
counsel related to such proceeding. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) such Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) such Indemnifying Person has failed
within a reasonable time to retain counsel reasonably satisfactory to such
Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include an Indemnifying Person and an
Indemnified Person 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 an Indemnifying Person shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all Indemnified Persons, and
that all such fees and expenses shall be reimbursed as they are incurred.
Any such separate firm for the Indemnified Holders shall be designated in
writing by the Holders of the majority in Amount of Registrable Securities,
and any such separate firm for the Company, its directors, respective
officers and such control Persons of the Company shall be designated in
writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, such Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement
or judgment. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or
could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (i) includes an
unconditional release of such Indemnified Person from all liability on
claims that are the subject matter of such proceeding 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 Person.
If the indemnification provided for in the first and
second paragraphs of this Section 6 is unavailable to an Indemnified Person
or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraph, in
lieu of indemnifying such Indemnified Person thereunder, shall contribute
to the amount paid or payable by such Indemnified Person as a result of
such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Indemnifying
Person on the one hand, and the Indemnified Person on the other hand,
pursuant to the Purchase Agreement or from the offering of the Registrable
Securities pursuant to any Shelf Registration or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
Indemnifying Person on the one hand, and the Indemnified Person on the
other, in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand, and any Indemnified Holder on the other, shall be deemed to
be in the same proportion as the total net proceeds from the initial
offering and sale of Convertible Notes (before deducting expenses) received
by the Company bear to the total net proceeds received by such Indemnified
Holder from sales of Registrable Securities giving rise to such
obligations. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or such
Indemnified Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
Each of the Company and the Initial Purchasers agrees
that it would not be just and equitable if contribution pursuant to this
Section 6 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages
and liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6, in no event shall any Holder be required to
contribute any amount in excess of the amount by which the net proceeds
received by such Holder from the sale of the Registrable Securities
pursuant to a Shelf Registration Statement exceeds the amount of damages
which such Holder would have 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.
The remedies provided for in this Section 6 are not
exclusive and shall not limit any rights or remedies that may otherwise be
available to any indemnified party at law or in equity.
The indemnity and contribution agreements contained in
this Section 6 shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation
made by or on behalf of any Holder or any Person controlling any Holder or
by or on behalf of the Company, its officers or directors or any other
Person controlling any of the Company and (iii) acceptance of and payment
for any of the Registrable Securities.
7. Rules 144 and 144A.
The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder in a timely
manner in accordance with the requirements of the Securities Act and the
Exchange Act and, for so long as any Registrable Securities remain
outstanding, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder or beneficial owner of
Registrable Securities, make available such information necessary to permit
sales pursuant to Rule 144A under the Securities Act. The Company further
covenants that, for so long as any Registrable Securities remain
outstanding, it will use its reasonable best efforts to take such further
action as any Holder of Registrable Securities 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 limitation of the exemptions provided by (a) Rule 144(k) and Rule 144A
under the Securities Act, as such rules may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the SEC.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities pursuant to the
Exchange Act.
8. Underwritten Registrations.
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or managers that will manage the
offering will be selected by the Holders of the majority in Amount of
Registrable Securities to be included in such offering and will be
reasonably acceptable to the Company.
No Holder of Registrable Securities may participate in
any underwritten registration hereunder unless such Holder (a) agrees to
sell such Holder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the
date hereof, and the Company shall not, after the date of this Agreement,
enter into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions
hereof. The Company has not entered and will not enter into any agreement
with respect to any of its securities that will grant to any Person
piggyback registration rights with respect to a Registration Statement,
except to the extent any existing right has heretofore been waived.
(b) Adjustments Affecting Registrable Securities. The Company
shall not, directly or indirectly, take any action with respect to the
Registrable Securities as a class that would adversely affect the ability
of the Holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, otherwise than with
the prior written consent of the Company and the Holders of not less than
the majority in Amount of Registrable Securities; provided, however, that
Section 6 and this Section 9(c) may not be amended, modified or
supplemented without the prior written consent of the Company and each
Holder (including, in the case of an amendment, modification or supplement
of Section 6, any Person who was a Holder of Registrable Securities
disposed of pursuant to any Registration Statement). 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,
impair, limit or compromise the rights of other Holders of Registrable
Securities may be given by Holders of at least a majority in Amount of the
Registrable Securities being sold by such Holders pursuant to such
Registration Statement.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee)
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or
facsimile:
(1) if to a Holder of the Registrable Securities, at the most current
address of such Holder set forth on the records of the registrar
under the Indenture, in the case of Holders of Convertible Notes,
and the stock ledger of the Company, in the case of Holders of
common stock of the Company.
(2) if to the Initial Purchasers:
J.P. MORGAN SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
BNY CAPITAL MARKETS, INC.
FIRST UNION SECURITIES, INC.
SCOTIA CAPITAL (USA) INC.
FLEET SECURITIES, INC.
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Attention: Syndicate Department
with copies to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Gerald Tanenbaum, Esq.
(3) if to the Company, at the addresses as follows:
Venator Group, Inc.
112 West 34th Street
New York, New York 10120
Facsimile No.: (212) 720-3643
Attention: Gary Bahler, General Counsel
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Facsimile No.: (212) 735-2000
Attention: David Goldschmidt, Esq.
All such notices and communications shall be deemed to
have been duly given: when delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if
mailed; one Business Day after being timely delivered to a next-day air
courier; and when receipt is acknowledged by the addressee, if sent by
facsimile.
(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 hereto, including the Holders; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a succssor
or assign of a Holder unless and except to the extent such successor or
assign holds 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 an 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, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE FEDERAL AND NEW YORK
STATE COURTS SITTING IN MANHATTAN, NEW YORK CITY, THE STATE OF NEW YORK, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction 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, 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 is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(j) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage in Amount of
Registrable Securities is required hereunder, Registrable Securities held
by the Company or its affiliates (as such term is defined in Rule 405 under
the Securities Act) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Securities
are intended third party beneficiaries of this Agreement and this Agreement
may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein and
any and all prior oral or written agreements, representations, or
warranties, contracts, understandings, correspondence, conversations and
memoranda between the Initial Purchasers on the one hand, and the Company
on the other, or between or among any agents, representatives, parents,
subsidiaries, affiliates, predecessors in interest or successors in
interest with respect to the subject matter hereof and thereof are merged
herein and replaced hereby.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
VENATOR GROUP, INC.
By: /s/ John Cannon
--------------------------------------
Name: John Cannon
Title: Vice President and Treasurer
J.P. MORGAN SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
BNY CAPITAL MARKETS, INC.
FIRST UNION SECURITIES, INC.
SCOTIA CAPITAL (USA) INC.
FLEET SECURITIES, INC.
By: J.P. MORGAN SECURITIES INC.
By: /s/ Paul A. O'Hearn
---------------------------------
Name: Paul A. O'Hearn
Title: Vice President
ANNEX A
VENATOR GROUP, INC.
NOTICE OF REGISTRATION STATEMENT AND
SELLING SECURITYHOLDER ELECTION AND QUESTIONNAIRE
NOTICE
Venator Group, Inc. (the "Company") has filed, or intends
shortly to file, with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-3 or such other Form as
may be available (the "Shelf Registration Statement") for the registration
and resale under Rule 415 of the Securities Act of 1933, as amended (the
"Securities Act"), of the Company's Convertible Subordinated Notes due 2008
(CUSIP No. ) (the "Notes"), and common stock, par value $0.01 per share,
issuable upon conversion thereof (the "Shares" and, together with the
Notes, the "Transfer Restricted Securities") in accordance with the terms
of the Registration Rights Agreement, dated as of June 8, 2001 (the
"Registration Rights Agreement"), between the Company and J.P. MORGAN
SECURITIES INC., BANC OF AMERICA SECURITIES LLC, BNY CAPITAL MARKETS, INC.,
FIRST UNION SECURITIES, INC., SCOTIA CAPITAL (USA) INC. and FLEET
SECURITIES, INC. A copy of the Registration Rights Agreement is available
from the Company. All capitalized terms not otherwise defined herein have
the meaning ascribed thereto in the Registration Rights Agreement.
To sell or otherwise dispose of any Transfer Restricted
Securities pursuant to the Shelf Registration Statement, a beneficial owner
of Transfer Restricted Securities generally will be required to be named as
a selling securityholder in the related Prospectus, deliver a Prospectus to
purchasers of Transfer Restricted Securities, be subject to certain civil
liability provisions of the Securities Act and be bound by those provisions
of the Registration Rights Agreement applicable to such beneficial owner
(including certain indemnification rights and obligations, as described
below). To be included in the Shelf Registration Statement, this Election
and Questionnaire must be completed, executed and delivered to the Company
at the address set forth herein for receipt PRIOR TO OR ON [insert date
that is 25 business days from the notice date] (the "Election and
Questionnaire Deadline"). Beneficial owners that do not complete and return
this Election and Questionnaire prior to the Election and Questionnaire
Deadline and deliver it to the Company as provided below will not be named
as selling securityholders in the prospectus and therefore will not be
permitted to sell any Transfer Restricted Securities pursuant to the Shelf
Registration Statement.
Certain legal consequences arise from being named as a
selling securityholder in the Shelf Registration Statement and the related
Prospectus. Accordingly, holders and beneficial owners of Transfer
Restricted Securities are advised to consult their own securities law
counsel regarding the consequences of being named or not being named as a
selling securityholder in the Shelf Registration Statement and the related
Prospectus.
ELECTION
The undersigned holder (the "Selling Securityholder") of
Transfer Restricted Securities hereby elects to include in the Shelf
Registration Statement the Transfer Restricted Securities beneficially
owned by it and listed below in Item 3 (unless otherwise specified under
Item 3). The undersigned, by signing and returning this Election and
Questionnaire, understands that it will be bound with respect to such
Transfer Restricted Securities by the terms and conditions of this Election
and Questionnaire and the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, the
Selling Securityholder has agreed to indemnify and hold harmless the
Company, the Company's directors, the Company's officers, employees,
representatives and agents and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against certain losses arising in
connection with statements concerning the Selling Securityholder made in
the Shelf Registration Statement or the related Prospectus in reliance upon
the information provided in this Election and Questionnaire.
The Selling Securityholder hereby provides the following
information to the Company and represents and warrants that such
information is accurate and complete:
QUESTIONNAIRE
1. (a) Full legal name of Selling Securityholder:
____________________________________________________________
(b) Full legal name of registered holder (if not the same as
(a) above) through which Transfer Restricted Securities
listed in (3) below are held:
____________________________________________________________
(c) Full legal name of DTC participant (if applicable and if
not the same as (b) above) through which Transfer
Restricted Securities listed in (3) are held:
____________________________________________________________
2. Address for notices to Selling Securityholders:
Telephone:
---------------------------------------------------------
Fax:
---------------------------------------------------------------
Contact Person:
----------------------------------------------------
3. Beneficial ownership of Transfer Restricted Securities:
(a) Type of Transfer Restricted Securities beneficially
owned, and principal amount of Notes or number of shares
of Common Stock, as the case may be, beneficially owned:
____________________________________________________________
(b) CUSIP No(s). of such Transfer Restricted Securities
beneficially owned:
____________________________________________________________
4. Beneficial ownership of the Company's securities owned by the Selling
Securityholder:
Except as set forth below in this Item (4), the undersigned is not
the beneficial or registered owner of any securities of the
Company other than the Transfer Restricted Securities listed above
in Item (3) ("Other Securities").
(a) Type and amount of Other Securities beneficially owned by
the Selling Securityholder:
____________________________________________________________
(b) CUSIP No(s). of such Other Securities beneficially owned:
____________________________________________________________
5. Relationship with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (5% or
more) has held any position or office or has had any other
material relationship with the Company) (or their predecessors or
affiliates) during the past three years.
State any exceptions here:
_____________________________________________________________________
_____________________________________________________________________
6. Plan of Distribution:
Except as set forth below, the undersigned (including its donees
or pledgees) intends to distribute the Transfer Restricted
Securities listed above in Item (3) pursuant to the Shelf
Registration Statement only as follows (if at all). Such Transfer
Restricted Securities may be sold from time to time directly by
the undersigned or, alternatively, through underwriters,
broker-dealers or agents. If the Transfer Restricted Securities
are sold through underwriters or broker-dealers, the Selling
Securityholder will be responsible for underwriting discounts or
commissions or agent's commissions. Such Transfer Restricted
Securities may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at
varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may
involve crosses or block transactions):
(i) on any national securities exchange or
quotation service on which the Transfer Restricted
Securities may be listed or quoted at the time of sale;
(ii) in the over-the-counter market;
(iii) in transactions otherwise than on such
exchanges or services or in the over-the-counter market;
or
(iv) through the writing of options.
In connection with sales of the Transfer Restricted Securities or
otherwise, the undersigned may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of
the Transfer Restricted Securities and deliver Transfer Restricted
Securities to close out such short positions, or loan or pledge
Transfer Restricted Securities to broker-dealers that in turn may
sell such securities.
State any exceptions here:
_____________________________________________________________________
_____________________________________________________________________
Note: In no event will such method(s) of distribution take the
form of an underwritten offering of the Transfer Restricted
Securities without the prior agreement of the Company.
By signing below, the Selling Securityholder acknowledges
that it understands its obligation to comply, and agrees it will comply,
with the provisions of the prospectus delivery and other provisions of the
Securities Act and Exchange Act and the respective rules and regulations
promulgated thereunder, particularly Regulation M thereunder (or any
successor rules or regulations), in connection with any offering of
Transfer Restricted Securities pursuant to the Shelf Registration
Statement.
If the Selling Securityholder transfers all or any
portion of the Transfer Restricted Securities listed in Item (3) above
after the date on which such information is provided to the Company, the
Selling Securityholder agrees to notify the transferee(s) at the time of
the transfer of its rights and obligations under this Election and
Questionnaire and the Registration Rights Agreement.
By signing below, the Selling Securityholder consents to
the disclosure of the information contained herein in its answers to Items
(1) through (6) above and the inclusion of such information in the Shelf
Registration Statement and the related Prospectus. The Selling
Securityholder understands that such information will be relied upon by the
Company in connection with the preparation or amendment of the Shelf
Registration Statement and the related Prospectus.
In accordance with the Selling Securityholder's
obligation under the Registration Rights Agreement to provide such
information as may be required by law for inclusion in the Shelf
Registration Statement, the Selling Securityholder agrees to promptly
notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof at any time
while the Shelf Registration Statement remains effective. All notices
hereunder and pursuant to the Registration Rights Agreement shall be made
in writing at the address set forth below.
Once this Election and Questionnaire is executed by the
Selling Securityholders and received by the Company, the terms of this
Election and Questionnaire and the representations and warranties contained
herein shall be binding on, shall inure to the benefit of and shall be
enforceable by the respective successors, heirs, personal representatives
and assigns of the Company and the Selling Securityholder with respect to
the Transfer Restricted Securities beneficially owned by such Selling
Securityholder and listed in Item (3) above. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
IN WITNESS WHEREOF, the undersigned, by authority duly
given, has caused this Election and Questionnaire to be executed and
delivered either in person or by its authorized agent.
Dated:
Beneficial Owner
By: ________________________________
Name:
Title:
Please return the completed and executed Election and Questionnaire for receipt
prior to or on [deadline for response] to Venator Group, Inc. at:
Venator Group, Inc.
112 W. 34th Street
New York, NY 10120
Attention: Treasurer
EXHIBIT 1 TO ANNEX A
NOTICE TO TRANSFER PURSUANT
TO REGISTRATION STATEMENT
Venator Group, Inc.
112 W. 34th Street
New York, NY 10120
Attention: Treasurer
The Bank of New York
101 Barclay Street
New York, NY 10286
Attention: ______________
Re: Venator Group, Inc.'s
5.50% Convertible Subordinated
Notes due 2008 (the "Notes")
Dear Sirs:
Please be advised that has transferred $ aggregate
principal amount of the above-referenced Notes or shares of the Company's
Common Stock issued on conversion or repurchase of the Notes, pursuant to
the Registration Statement on Form S-3 (File No. 333- ) filed by the
Company.
We hereby certify that the prospectus delivery
requirements, if any, of the Securities Act of 1933, as amended, have been
satisfied with respect to the transfer described above and that the
above-named beneficial owner of the Notes or Common Stock is named as a
selling securityholder in the Prospectus dated , or in amendments or
supplements thereto, and that the aggregate principal amount of the Notes
or number of shares of Common Stock transferred are [all or a portion of]
the Notes or Common Stock listed in such Prospectus, as amended or
supplemented, opposite such owner's name.
Very truly yours,
[NAME]
By:
------------------------------------
(Authorized Signature)
Dated:
Exhibit 5.1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]
July 11, 2001
Venator Group, Inc.
112 West 34th Street
New York, New York 10120
Re: Venator Group Inc.'s Registration Statement on Form S-3
-------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Venator Group, Inc., a New
York corporation (the "Company"), in connection with its filing with the
Securities and Exchange Commission (the "Commission") of a registration
statement on Form S-3 on July 11, 2001 (the "Registration Statement") with
respect to the registration under the Securities Act of 1933, as amended
(the "Securities Act"), of $125,000,000 aggregate principal amount at
maturity of its 5.50% Convertible Subordinated Notes due 2008 (the
"Securities"), and shares of the Company's common stock (the "Common
Stock"), par value $0.01 per share (the "Shares"), issuable upon conversion
of the Securities, as contemplated by the Registration Rights Agreement,
dated as of June 8, 2001 (the "Registration Rights Agreement"), by and
among the Company, J.P. Morgan Securities Inc., Banc of America Securities
LLC, BNY Capital Markets, Inc., First Union Securities, Inc., Scotia
Capital (USA) Inc., and Fleet Securities, Inc. (collectively, the "Initial
Purchasers"). The Company issued the Securities pursuant to a purchase
agreement, dated as of June 4, 2001, by and among the Company and the
Initial Purchasers (the "Purchase Agreement"). The Securities and the
Shares are to be offered and sold by certain securityholders of the
Company.
This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement; (ii) an executed copy of the Registration Rights
Agreement; (iii) an executed copy of the indenture, dated as of June 8,
2001 (the "Indenture"), between the Company and The Bank of New York, as
trustee; (iv) the Certificate of Incorporation of the Company, as amended
to date; (v) the By-laws of the Company, as amended to date; (vi) certain
resolutions of the Company's Board of Directors adopted by unanimous
written consent on May 23, 2001 relating to the issuance and sale of
securities, execution of a registration rights agreement and filing of a
registration statement and related matters; (vii) the Form T-1 of the
Trustee filed as an exhibit to the Registration Statement; (viii) the form
of note representing the Securities; and (ix) a specimen certificate
representing the Common Stock. We have also examined originals or copies,
certified or otherwise identified to our satisfaction, of such records of
the Company and such agreements, certificates of public officials,
certificates of officers or other representatives of the Company and
others, and such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinions set forth
herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, conformed or
photostatic copies and the authenticity of the originals of such latter
documents. In making our examination of executed documents, we have assumed
that the parties thereto, other than the Company, had or will have the
power, corporate or other, to enter into and perform all obligations
thereunder and have also assumed the due authorization by all requisite
action, corporate or other, and execution and delivery by such parties of
such documents and the validity and binding effect on such parties. As to
any facts material to the opinions expressed herein which we have not
independently established or verified, we have relied upon oral or written
statements and representations of officers and other representatives of the
Company and others. In rendering the opinion set forth in paragraph 2
below, we have assumed that the certificates evidencing the Shares will be
manually signed by one of the authorized officers of the transfer agent and
registrar for the Common Stock and registered by such transfer agent and
registrar and will conform to the specimen certificate examined by us
evidencing the Common Stock.
Our opinions set forth herein are limited to the laws of the
State of New York which, in our experience, are normally applicable to
transactions of the type contemplated by the Registration Statement and
Registration Rights Agreement and to the extent that judicial or regulatory
orders or decrees or consents, approvals, licenses, authorizations,
validations, filings, recordings or registrations with governmental
authorities are relevant, to those required under such laws (all of the
foregoing being referred to as "Opined on Law"). We do not express any
opinion with respect to the law of any jurisdiction other than Opined on
Law or as to the effect of any such non opined on law on the opinions
herein stated.
Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. The Securities have been duly authorized and are valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that enforcement thereof
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding
at law or equity).
2. The Shares initially issuable upon conversion of the
Securities have been duly authorized and reserved for issuance and, when
issued and delivered upon such conversion pursuant to the terms of the
Indenture, will be validly issued, fully paid and, except as provided in
section 630 of the New York Business Corporation Law (the "BCL"),
non-assessable.
In rendering the opinion set forth above in paragraph 1, we have
assumed that the execution and delivery by the Company of the Indenture and
the Securities and the performance by the Company of its obligations
thereunder do not violate, conflict with or constitute a default under any
agreement or instrument to which the Company or its properties is subject,
except for those agreements and instruments which have been identified to
us by the Company as being material to it and which are listed in Part 2 of
the Registration Statement or the Company's Annual Report on Form 10-K.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to
the reference to our firm under the caption "Legal Matters" in the
Registration Statement. In giving this consent, we do not thereby admit
that we are included in the category of persons whose consent is required
under Section 7 of the Securities Act or the rules and regulations of the
Commission.
Very truly yours,
Exhibit 12.1
VENATOR GROUP, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
-------------------------------------------------
(Unaudited)
($ in millions)
Thirteen weeks ended Fiscal Year Ended
--------------------- ----------------------------------------------------------
May 5 April 29, Feb. 3, Jan 29, Jan. 30, Jan 31, Jan.25,
2001 2000 2001 2000 1999 1998 1997
---- ---- ---- ---- ---- ---- ----
NET EARNINGS
Income from continuing operations $ 32 $ 23 $ 107 $ 59 $ 14 $185 $185
Income tax expense (benefit)
21 15 69 38 (28) 104 124
Interest expense, excluding capitalized
interest 8 11 41 65 57 41 53
Portion of rents deemed representative of
the interest factor (1/3) 39 43 155 170 161 146 140
------ -- ------- -- ---- --- ----- --- ---- --- ---- --- --- ---
$ 100 $ 92 $372 $ 332 $204 $476 $ 502
===== ==== ==== ===== ==== ==== =====
FIXED CHARGES
Gross interest expense $ 8 $ 11 $ 42 $ 67 $ 64 $ 41 $ 53
Portion of rents deemed representative of
the interest factor (1/3) 39 43 155 170 161 146 140
------ -- ------- -- ---- --- ----- --- ---- --- ---- --- --- ---
$ 47 $ 54 $ 197 $ 237 $225 $187 $ 193
==== ==== ===== ===== ==== ==== =====
RATIO OF EARNINGS TO FIXED CHARGES
2.1 1.7 1.9 1.4 0.9 2.5 2.6
Earnings were not adequate to cover fixed charges by $21 million for the
fiscal year ended January 30, 1999.
EXHIBIT 15.1
Accountants' Acknowledgment
The Board of Directors
Venator Group, Inc.:
Re: Registration statement No. 333-xxxx
With repect to the subject registration statement, we acknowlege our
awareness of the use therein of our report dated May 17, 2001 related to
our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is
not considered part of a registration statement prepared or certified by an
accountant or a report prepared of certifed by an accountant within the
meaning of sections 7 and 11 of the Act.
/s/ KPMG LLP
New York, New York
July 11, 2001
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Venator Group, Inc.:
We consent to the use of our audit report dated March 7, 2001 on the
consolidated financial statements of Venator Group, Inc. and subsidiaries
as of February 3, 2001 and January 29, 2000, and for each of the years in
the three-year period then ended, incorporated by reference herein and to
the reference to our firm under the heading "Experts" in the prospectus.
Our report dated March 7, 2001 refers to a change in the method of
accounting for sales under the Registrant's layaway program in 2000 and a
change in the method of calculating the market-related value of its United
States pension plan assets in 1999.
/s/ KPMG LLP
New York, New York
July 11, 2001
Exhibit 25.1
==============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
VENATOR GROUP, INC.
(Exact name of obligor as specified in its charter)
New York 13-3513936
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
112 W. 34th Street
New York, New York 10120
(Address of principal executive offices) (Zip code)
-------------
5.50% Convertible Subordinated Notes due 2008
(Title of the indenture securities)
==============================================================================
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- ------------------------------------------------------------------------------
Name Address
- ------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit
hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of
1939 (the "Act") and 17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New
York (formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to
Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of
New York, a corporation organized and existing under the laws of the State
of New York, has duly caused this statement of eligibility to be signed on
its behalf by the undersigned, thereunto duly authorized, all in The City
of New York, and State of New York, on the 19th day of June, 2001.
THE BANK OF NEW YORK
By: /s/ THOMAS E. TABOR
----------------------------------
Name: THOMAS E. TABOR
Title: ASSISTANT VICE PRESIDENT
- ------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December
31, 2000, published in accordance with a call made by the Federal Reserve
Bank of this District pursuant to the provisions of the Federal Reserve
Act.
Dollar Amounts
ASSETS In Thousands Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.. $3,083,720
Interest-bearing balances........................... 4,949,333
Securities:
Held-to-maturity securities......................... 740,315
Available-for-sale securities....................... 5,328,981
Federal funds sold and Securities purchased under
agreements to resell................................ 5,695,708
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............36,590,456
LESS: Allowance for loan and
lease losses............598,536
LESS: Allocated transfer risk
reserve........................12,575
Loans and leases, net of unearned income,
allowance, and reserve............................ 35,979,345
Trading Assets......................................... 11,912,448
Premises and fixed assets (including capitalized
leases)............................................. 763,241
Other real estate owned................................ 2,925
Investments in unconsolidated subsidiaries and
associated companies................................ 183,836
Customers' liability to this bank on acceptances
outstanding......................................... 424,303
Intangible assets...................................... 1,378,477
Other assets........................................... 3,823,797
Total assets........................................... $74,266,429
LIABILITIES
Deposits:
In domestic offices................................. $28,328,548
Noninterest-bearing.......................12,637,384
Interest-bearing..........................15,691,164
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 27,920,690
Noninterest-bearing..........................470,130
Interest-bearing..........................27,450,560
Federal funds purchased and Securities sold under
agreements to repurchase............................ 1,437,916
Demand notes issued to the U.S.Treasury................ 100,000
Trading liabilities.................................... 2,049,818
Other borrowed money:
With remaining maturity of one year or less......... 1,279,125
With remaining maturity of more than one year
through three years............................... 0
With remaining maturity of more than three years.... 31,080
Bank's liability on acceptances executed and
outstanding......................................... 427,110
Subordinated notes and debentures...................... 1,646,000
Other liabilities...................................... 4,604,478
Total liabilities...................................... $67,824,765
EQUITY CAPITAL
Common stock........................................... 1,135,285
Surplus................................................ 1,008,775
Undivided profits and capital reserves................. 4,308,492
Net unrealized holding gains (losses) on
available-for-sale securities....................... 27,768
Accumulated net gains (losses) on cash flow hedges 0
Cumulative foreign currency translation adjustments....
(38,656)
Total equity capital................................... 6,441,664
Total liabilities and equity capital................... $74,266,429
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true to the best of my
knowledge and belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and to the
best of our knowledge and belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System
and is true and correct.
Thomas A. Renyi
Alan R. Griffith
Gerald L. Hassell Directors
- -----------------------------------------------------------------------------
