Indenture (2002)Full Document 

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                           KING PHARMACEUTICALS, INC.,

                              SUBSIDIARY GUARANTORS

                                       and

                              THE BANK OF NEW YORK,

                                   as Trustee


                             ----------------------

                                    INDENTURE

                          Dated as of November 1, 2001

                             ----------------------


               2 3/4% Convertible Debentures due November 15, 2021

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                                TABLE OF CONTENTS


                                                                                 
ARTICLE 1  DEFINITIONS AND INCORPORATION BY REFERENCE

             1.01.   Definitions .................................................   1
             1.02.   Incorporation by Reference of Trust Indenture Act ...........   8
             1.03.   Rules of Construction .......................................   8

ARTICLE 2  THE SECURITIES

             2.01.   Form and Dating .............................................   9
             2.02.   Execution and Authentication ................................   9
             2.03.   Registrar, Paying Agent and Conversion Agent and New York
                     Presenting Agent ............................................  10
             2.04.   Payment on Securities; Paying Agent to Hold Money in Trust ..  10
             2.05.   Securityholder Lists ........................................  11
             2.06.   Transfer and Exchange .......................................  11
             2.07.   Replacement Securities ......................................  12
             2.08.   Outstanding Securities ......................................  12
             2.09.   Treasury Securities .........................................  13
             2.10.   Temporary Securities ........................................  13
             2.11.   Cancellation ................................................  13
             2.12.   Defaulted Interest ..........................................  13
             2.13.   CUSIP Numbers ...............................................  13
             2.14.   Additional Transfer and Exchange Requirements ...............  13

ARTICLE 3  REDEMPTION

             3.01.   Notices to Trustee ..........................................  18
             3.02.   Selection of Securities to Be Redeemed ......................  18
             3.03.   Notice of Redemption ........................................  18
             3.04.   Effect of Notice of Redemption ..............................  19
             3.05.   Deposit of Redemption Price .................................  19
             3.06.   Securities Redeemed in Part .................................  20

ARTICLE 4  REPURCHASES

             4.01.   Purchase of Securities at Option of the Holder ..............  20
             4.02.   Repurchase upon Change of Control ...........................  23

ARTICLE 5  COVENANTS

             5.01.   Payment of Securities .......................................  24
             5.02.   SEC Reports .................................................  24
             5.03.   Compliance Certificate ......................................  25
             5.04.   Corporate Existence .........................................  25
             5.05.   Notice of Defaults ..........................................  25
             5.06.   Further Instruments and Acts ................................  25
             5.07.   Resale of Certain Securities ................................  25
             5.08.   Restriction on Secured Debt .................................  25


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             5.09.   Restriction on Sale and Leaseback Transactions ..............  27
             5.10.   Restriction on Transfer of Principal Facility to Unrestricted
                     Subsidiaries ................................................  28
             5.11.   Future Guarantors ...........................................  28

ARTICLE 6  SUCCESSORS

             6.01.   When Company May Merge, Etc .................................  28

ARTICLE 7  DEFAULTS AND REMEDIES

             7.01.   Events of Default ...........................................  30
             7.02.   Acceleration ................................................  31
             7.03.   Other Remedies ..............................................  31
             7.04.   Waiver of Past Defaults .....................................  31
             7.05.   Control by Majority .........................................  31
             7.06.   Limitation on Suits .........................................  32
             7.07.   Rights of Holders to Receive Payment ........................  32
             7.08.   Collection Suit by Trustee ..................................  32
             7.09.   Trustee May File Proofs of Claim ............................  32
             7.10.   Priorities ..................................................  32
             7.11.   Undertaking for Costs .......................................  33

ARTICLE 8  TRUSTEE

             8.01.   Duties of Trustee ...........................................  33
             8.02.   Rights of Trustee ...........................................  34
             8.03.   Individual Rights of Trustee ................................  35
             8.04.   Trustee's Disclaimer ........................................  35
             8.05.   Notice of Defaults ..........................................  35
             8.06.   Reports by Trustee to Holders ...............................  35
             8.07.   Compensation and Indemnity ..................................  36
             8.08.   Replacement of Trustee ......................................  36
             8.09.   Successor Trustee, Agents by Merger, Etc ....................  37
             8.10.   Eligibility; Disqualification ...............................  37
             8.11.   Preferential Collection of Claims Against Company ...........  37

ARTICLE 9  DISCHARGE OF INDENTURE

             9.01.   Termination of Company's Obligations ........................  38

ARTICLE 10 AMENDMENTS, SUPPLEMENTS AND WAIVERS

             10.01.  Without Consent of Holders ..................................  38
             10.02.  With Consent of Holders .....................................  38
             10.03.  Compliance with Trust Indenture Act .........................  39
             10.04.  Revocation and Effect of Consents ...........................  39
             10.05.  Notation on or Exchange of Securities .......................  39
             10.06.  Trustee to Sign Amendments, Etc .............................  39


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ARTICLE 11  CONVERSION

             11.01.  Conversion Privilege ........................................  40
             11.02.  Conversion Procedure ........................................  40
             11.03.  Fractional Shares ...........................................  41
             11.04.  Taxes on Conversion .........................................  41
             11.05.  Company to Provide Stock ....................................  41
             11.06.  Adjustment for Change in Capital Stock ......................  41
             11.07.  Adjustment for Rights Issue .................................  42
             11.08.  Adjustment for Certain Distributions ........................  43
             11.09.  Adjustment for All Cash Distribution ........................  44
             11.10.  Adjustment for Tender or Exchange Offer .....................  44
             11.11.  Current Market Price ........................................  45
             11.12.  When Adjustment May Be Deferred .............................  45
             11.13.  When No Adjustment Required .................................  46
             11.14.  Notice of Adjustment ........................................  46
             11.15.  Voluntary Reduction .........................................  46
             11.16.  Notice of Certain Transactions ..............................  46
             11.17.  Provisions in Case of Consolidation, Merger of the Company
                     or Transfer or Lease ........................................  46
             11.18.  Company Determination Final .................................  47
             11.19.  Trustee's Disclaimer ........................................  47

ARTICLE 12  SUBSIDIARY GUARANTIES

             12.01.  Guaranties ..................................................  47
             12.02.  Limitation on Liability .....................................  49
             12.03.  Successors and Assigns ......................................  49
             12.04.  No Waiver  ..................................................  49
             12.05.  Modification ................................................  49
             12.06.  Release of Subsidiary Guarantor .............................  49

ARTICLE 13  MISCELLANEOUS

             13.01.  Trust Indenture Act Controls ................................  50
             13.02.  Notices .....................................................  50
             13.03.  Communications by Holders with Other Holders ................  50
             13.04.  Certificate and Opinion as to Conditions Precedent ..........  50
             13.05.  Statements Required in Certificate or Opinion ...............  51
             13.06.  Rules by Trustee and Agents .................................  51
             13.07.  Legal Holidays ..............................................  51
             13.08.  Governing Law ...............................................  51
             13.09.  No Recourse Against Others ..................................  51
             13.10.  Successors ..................................................  51
             13.11.  Counterpart Originals .......................................  51
             13.12.  Severability ................................................  52

SIGNATURES

EXHIBIT A           -    FORM OF SECURITY




----------------

Note: This Table of Contents shall not, for any purpose, be deemed to be a part
      of the Indenture.


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                  INDENTURE dated as of November 1, 2001, among KING
PHARMACEUTICALS, INC., a Tennessee corporation (the "Company"), the SUBSIDIARY
GUARANTORS listed on Schedule A hereto 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 2
3/4% Convertible Debentures due November 15, 2021 (the "Securities"):

                                    ARTICLE 1

                   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 the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

                  "Agent" means any Registrar, Paying Agent, Conversion Agent,
New York Presenting Agent or Co-Registrar.

                  "Agent Members" has the meaning specified in Section 2.01.

                  "Applicable Procedures" means, with respect to any transfer or
exchange of beneficial ownership interests in a Global Security, the rules and
procedures of the Depositary that are applicable to such transfer or exchange.

                  "Associate" has the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date hereof.

                  "Bankruptcy Law" has the meaning specified in Section 7.01.

                  "Beneficial Holder" means each participant in the Depositary
who holds an interest in a Security as indicated in the Participants List
(provided that the Trustee shall be under no duty to make any inquiry regarding
the accuracy of the Participants List).

                  "Board of Directors" or "Board" means the Board of Directors
of the Company or any duly authorized committee of the Board.

                  "Business Day" means any day that is not a Legal Holiday.

                  "Capital Stock" shall mean capital stock of the Company that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of the Company, to shares of capital stock of any other class of the Company.

                  "Certificated Security" means a Security that is in
substantially the form attached hereto as Exhibit A and that does not include
the information or the schedule called for by the footnotes thereof to be
included in a Global Security.




                  "Change of Control" has the meaning specified in paragraph 6
of the Securities.

                  "Change of Control Company Notice" has the meaning specified
in paragraph 6 of the Securities.

                  "Change of Control Purchase Date" has the meaning specified in
paragraph 6 of the Securities.

                  "Change of Control Purchase Price" has the meaning specified
in paragraph 6 of the Securities.

                  "Common Stock" means the common stock, no par value, of the
Company as existing on the date of this Indenture or any other shares of Capital
Stock of the Company into which the Common Stock shall be reclassified or
changed.

                  "Company" means the party named as such above, until a
successor replaces it pursuant to the applicable provisions hereof and
thereafter means the successor.

                  "Company Order" means a written request or order signed in the
name of the Company by any two Officers.

                  "Company Notice" has the meaning specified in Section 4.01(c).

                  "Consolidated Net Tangible Assets" means the total amount of
assets which would be included on a consolidated balance sheet of the Company
and its Subsidiaries under generally accepted accounting principles (less
applicable reserves and other properly deductible items) after deducting
therefrom: (a) all short-term liabilities and liability items, except for
indebtedness payable by its terms more than one year from the date of incurrence
thereof (or renewable or extendible at the option of the obligor for a period
ending more than one year after such date of incurrence); and (b) all goodwill,
trade names, trademarks, patents, unamortized debt discount, unamortized expense
incurred in the issuance of debt, and other like intangibles (except prepaid
royalties).

                  "Conversion Agent" has the meaning specified in Section 2.03.

                  "Conversion Price" is the conversion price from time to time
as provided for in Article 11 and the Securities.

                  "Corporate Trust Office" means the principal office of the
Trustee at 101 Barclay Street, Floor 21 W, New York, New York 10286, Attention:
Corporate Trust Department, or such other office, designated by the Trustee by
written notice to the Company and approved by the Company, at which at any
particular time its corporate trust business shall be administered.

                  "Current Market Price" has the meaning specified in Section
11.11.

                  "Custodian" has the meaning specified in Section 7.01.

                  "Default" means any event which is, or after notice or passage
of time would be, an Event of Default.

                  "Depositary" has the meaning specified in Section 2.01(a).

                  "DTC" has the meaning specified in Section 2.01(a).



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                  "Event of Default" has the meaning specified in Section 7.01.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Expiration Time" has the meaning specified in Section 11.10.

                  "Final Surrender Date" has the meaning specified in paragraph
6 of the Securities.

                  "Global Security" means a permanent Global Security that is in
substantially the form attached hereto as Exhibit A and that includes the
information and schedule called for by the footnote thereof and which is
deposited with the Depositary or its custodian and registered in the name of the
Depositary or its nominee.

                  "Guaranty Agreement" means a supplemental indenture, in a form
satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor guarantees
the Company's obligations with respect to the Securities on the terms provided
for in Article 12.

                  "Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.

                  "Indenture" means this Indenture, as amended or supplemented
from time to time.

                  "Initial Purchaser Option" means the option granted by the
Company to the initial purchasers party to the Purchase Agreement to purchase up
to $45,000,000 aggregate principal amount of additional Securities pursuant to
the Purchase Agreement.

                  "Legal Holiday" has the meaning specified in Section 13.07.

                  "New York Presenting Agent" has the meaning specified in
Section 2.03.

                  "Officer" means the Chairman, the President, any Executive or
Senior Vice President, the Treasurer or the Clerk of the Company.

                  "Officers' Certificate" means a certificate signed by two
Officers. See Sections 13.04 and 13.05.

                  "Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company.

                  "Participants List" means the position listings showing
persons that have a beneficial interest in the Securities evidenced by the
Security in global form held by the Depositary and the amount of such interest,
but only to the extent that a copy thereof is furnished by the Depositary to the
Trustee.

                  "Paying Agent" has the meaning specified in Section 2.03.

                  "Permitted Holders" means, collectively, John M. Gregory, Joan
P. Gregory, Jefferson J. Gregory, Terri D. White-Gregory, Joseph R. Gregory,
Hershel P. Blessing, Mary Ann Blessing, James E. Gregory, Dr. R. Henry Richards,
Jeanie Richards, Fred Jarvis and Mary Gregory-Jarvis, their respective estates,
spouses, ancestors and lineal descendants, the legal representatives of any of
the foregoing and the trustees of any bona fide trusts of which the foregoing
are the sole beneficiaries or the grantors, or any Person of which the foregoing
"beneficially owns" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act)
voting securities representing at least 66 2/3% of the total voting power of all
classes of



                                      -3-


ordinary voting stock or other similar interests of such Person (exclusive of
any matters as to which class voting rights exist), including S.J., L.L.C. and
Kingsway L.L.C. to the extent such entities adhere to the aforementioned minimum
beneficial ownership requirements.

                  "Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

                  "Principal Facility" means any manufacturing plant, warehouse,
office building or parcel of real property (including fixtures but excluding
leases and other contract rights which might otherwise be deemed real property)
owned by the Company or any Restricted Subsidiary, whether owned on the date
hereof or thereafter acquired, provided each such plant, warehouse, office
building or parcel of real property has a gross book value (without deduction
for any depreciation reserves) in excess of 2% of Consolidated Net Tangible
Assets other than any such plant, warehouse, office building or parcel of real
property or portion thereof which, in the opinion of the Board of Directors
(evidenced by a Board Resolution) is not of material importance to the business
conducted by the Company and its Subsidiaries taken as a whole.

                  "Purchase Agreement" means the Purchase Agreement, dated
November 1, 2001, among the Company and Credit Suisse First Boston Corporation,
Banc of America Securities LLC, J.P. Morgan Securities Inc., UBS Warburg LLC, as
representatives of the initial purchasers.

                  "Purchase Notice" has the meaning specified in Section 4.01.

                  "Purchase Price" has the meaning specified in paragraph 6 of
the Securities.

                  "Purchased Shares" has the meaning specified in Section 11.10.

                  "QIB" has the meaning specified in Section 2.01(a).

                  "Quoted Prices" of the Common Stock means the last sale price
regular way or, in case no such sale takes place on such day, the average of the
closing bid and asked prices regular way, in either case, at 4:00 p.m. (or such
earlier time as the last sale prior to 4:00 p.m.), New York City time, on the
New York Stock Exchange Composite Tape, or, if the Common Stock is not listed or
admitted to trading on such Exchange, on the national securities exchange in or
nearest the City of New York on which the Common Stock is listed or admitted to
trading, or if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last sale price regular way or, in case no
such sale takes place on such day, the average of the highest reported bid and
lowest reported asked prices as furnished by the National Association of
Securities Dealers, Inc. through Nasdaq or a similar organization if Nasdaq is
no longer reporting such information, or if on any such Trading Day the Common

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