GENTA INCORPORATED and U.S. BANK NATIONAL ASSOCIATION as Trustee
Exhibit
4.8
GENTA
INCORPORATED
and
U.S.
BANK NATIONAL ASSOCIATION
as
Trustee
FORM OF
INDENTURE
Dated as
of [___], 2009
$[___]
Principal Amount
8%
Unsecured Subordinated Convertible Notes due 2011
TABLE
OF CONTENTS
|
Page
|
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| ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE |
1
|
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|
Section
1.1
|
Definitions.
|
1
|
||
|
Section
1.2
|
Other
Definitions.
|
7
|
||
|
Section
1.3
|
Incorporation
by Reference of Trust Indenture Act.
|
8
|
||
|
Section
1.4
|
Rules
of Construction.
|
8
|
||
| ARTICLE 2 THE SECURITIES |
8
|
|||
|
Section
2.1
|
Form
and Dating.
|
8
|
||
|
Section
2.2
|
Execution
and Authentication of Securities.
|
9
|
||
|
Section
2.3
|
Registrar,
Paying Agent and Conversion Agent.
|
9
|
||
|
Section
2.4
|
Paying
Agent to Hold Money in Trust.
|
9
|
||
|
Section
2.5
|
Securityholder
Lists.
|
10
|
||
|
Section
2.6
|
Transfer
and Exchange.
|
10
|
||
|
Section
2.7
|
Interest
Payment and Record Dates.
|
10
|
||
|
Section
2.8
|
Mutilated,
Destroyed, Lost and Stolen Securities.
|
10
|
||
|
Section
2.9
|
Outstanding
Securities.
|
11
|
||
|
Section
2.10
|
Cancellation.
|
11
|
||
|
Section
2.11
|
No
Sinking Fund.
|
11
|
||
|
Section
2.12
|
[Intentionally
Omitted]
|
11
|
||
|
Section
2.13
|
Global
Securities.
|
12
|
||
|
Section
2.14
|
CUSIP
Numbers.
|
12
|
||
|
Section
2.15
|
Deposit
of Moneys.
|
13
|
||
|
Section
2.16
|
Ranking.
|
13
|
||
|
Section
2.17
|
Additional
Securities.
|
13
|
||
| ARTICLE 3 COVENANTS |
13
|
|||
|
Section
3.1
|
Payment
of Principal and Interest.
|
13
|
||
|
Section
3.2
|
Maintenance
of Office or Agency.
|
13
|
||
|
Section
3.3
|
SEC
Reports.
|
14
|
||
|
Section
3.4
|
Compliance
Certificate.
|
14
|
||
|
Section
3.5
|
Stay,
Extension and Usury Laws.
|
15
|
||
|
Section
3.6
|
Corporate
Existence.
|
15
|
||
|
Section
3.7
|
Taxes.
|
15
|
||
|
Section
3.8
|
Further
Instruments and Acts.
|
15
|
||
| ARTICLE 4 SUCCESSORS |
15
|
|||
|
Section
4.1
|
When
Company May Merge, Etc.
|
15
|
||
|
Section
4.2
|
Successor
Corporation Substituted.
|
15
|
||
-i-
TABLE
OF CONTENTS
(continued)
|
Page
|
||||
| ARTICLE 5 DEFAULTS AND REMEDIES |
16
|
|||
|
Section
5.1
|
Events
of Default.
|
16
|
||
|
Section
5.2
|
Acceleration
of Maturity; Rescission and Annulment.
|
17
|
||
|
Section
5.3
|
Collection
of Indebtedness and Suits for Enforcement by Trustee
|
18
|
||
|
Section
5.4
|
Trustee
May File Proofs of Claim.
|
19
|
||
|
Section
5.5
|
Trustee
May Enforce Claims Without Possession of Securities.
|
19
|
||
|
Section
5.6
|
Application
of Money Collected.
|
19
|
||
|
Section
5.7
|
Limitation
on Suits.
|
20
|
||
|
Section
5.8
|
Unconditional
Right of Holders to Receive Principal and Interest and to Convert
Securities
|
20
|
||
|
Section
5.9
|
Restoration
of Rights and Remedies.
|
20
|
||
|
Section
5.10
|
Rights
and Remedies Cumulative.
|
20
|
||
|
Section
5.11
|
Delay
or Omission Not Waiver.
|
20
|
||
|
Section
5.12
|
Control
by Holders.
|
21
|
||
|
Section
5.13
|
Waiver
of Past Defaults.
|
21
|
||
|
Section
5.14
|
Undertaking
for Costs.
|
21
|
||
|
Section
5.15
|
Prepayment
|
21
|
||
| ARTICLE 6 TRUSTEE |
23
|
|||
|
Section
6.1
|
Duties
of Trustee.
|
23
|
||
|
Section
6.2
|
Rights
of Trustee.
|
24
|
||
|
Section
6.3
|
Individual
Rights of Trustee.
|
24
|
||
|
Section
6.4
|
Trustee’s
Disclaimer.
|
24
|
||
|
Section
6.5
|
Notice
of Defaults.
|
25
|
||
|
Section
6.6
|
Reports
by Trustee to Holders.
|
25
|
||
|
Section
6.7
|
Compensation
and Indemnity.
|
25
|
||
|
Section
6.8
|
Replacement
of Trustee.
|
25
|
||
|
Section
6.9
|
Successor
Trustee by ▇▇▇▇▇▇, Etc.
|
26
|
||
|
Section
6.10
|
Eligibility;
Disqualification.
|
26
|
||
|
Section
6.11
|
Preferential
Collection of Claims Against Company.
|
26
|
||
| ARTICLE 7 SATISFACTION AND DISCHARGE |
26
|
|||
|
Section
7.1
|
Satisfaction
and Discharge of Indenture.
|
26
|
||
|
Section
7.2
|
Application
of Trust Funds; Indemnification.
|
27
|
||
|
Section
7.3
|
Repayment
to Company.
|
27
|
||
|
Section
7.4
|
Reinstatement.
|
27
|
||
-ii-
TABLE
OF CONTENTS
(continued)
|
Page
|
||||
| ARTICLE 8 AMENDMENTS AND WAIVERS |
28
|
|||
|
Section
8.1
|
Without
Consent of Holders.
|
28
|
||
|
Section
8.2
|
With
Consent of Holders.
|
28
|
||
|
Section
8.3
|
Compliance
with Trust Indenture Act.
|
29
|
||
|
Section
8.4
|
Revocation
and Effect of Consents.
|
29
|
||
|
Section
8.5
|
Notation
on or Exchange of Securities.
|
29
|
||
|
Section
8.6
|
Trustee
Protected.
|
29
|
||
| ARTICLE 9 CONVERSION |
29
|
|||
|
Section
9.1
|
Conversion
Privilege; Restrictive Legends.
|
29
|
||
|
Section
9.2
|
Limitation
on the Right to Convert.
|
30
|
||
|
Section
9.3
|
Conversion.
|
30
|
||
|
Section
9.4
|
Conversion
Procedure and Payment Upon Conversion.
|
31
|
||
|
Section
9.5
|
Taxes
on Conversion.
|
33
|
||
|
Section
9.6
|
Company
to Provide Stock.
|
33
|
||
|
Section
9.7
|
Adjustment
of Conversion Rate.
|
33
|
||
|
Section
9.8
|
No
Adjustment.
|
36
|
||
|
Section
9.9
|
Other
Adjustments.
|
37
|
||
|
Section
9.10
|
Adjustments
for Tax Purposes.
|
37
|
||
|
Section
9.11
|
Notice
of Adjustment.
|
37
|
||
|
Section
9.12
|
Notice
of Certain Transactions.
|
37
|
||
|
Section
9.13
|
Effect
of Reclassifications, Consolidations, Mergers, Binding Share Exchanges or
Sale on Conversion Privilege
|
38
|
||
|
Section
9.14
|
Trustee’s
Disclaimer.
|
38
|
||
|
Section
9.15
|
Rights
Distributions Pursuant to the Stockholder Rights Plan
|
39
|
||
| ARTICLE 10 SUBORDINATION |
39
|
|||
|
Section
10.1
|
Agreement
of Subordination.
|
39
|
||
|
Section
10.2
|
Payments
to Holders.
|
39
|
||
|
Section
10.3
|
Subrogation
of Securities.
|
40
|
||
|
Section
10.4
|
Authorization
to Effect Subordination.
|
41
|
||
|
Section
10.5
|
Notice
to Trustee.
|
41
|
||
|
Section
10.6
|
Trustee’s
Relation to Senior Debt.
|
42
|
||
|
Section
10.7
|
No
Impairment of Subordination.
|
42
|
||
|
Section
10.8
|
Certain
Conversions Not Deemed Payment.
|
42
|
||
|
Section
10.9
|
Article
Applicable to Paying Agents.
|
43
|
||
|
Section
10.10
|
Senior
Debt Entitled to Rely.
|
43
|
||
|
Section
10.11
|
Reliance
on Judicial Order or Certificate of Liquidating Agent
|
43
|
||
-iii-
TABLE
OF CONTENTS
(continued)
|
Page
|
||||
|
Section
10.12
|
Termination
of Subordination
|
43
|
||
| ARTICLE 11 MISCELLANEOUS |
43
|
|||
|
Section
11.1
|
Trust
Indenture Act Controls.
|
43
|
||
|
Section
11.2
|
Notices.
|
43
|
||
|
Section
11.3
|
Communication
by Holders with Other Holders.
|
44
|
||
|
Section
11.4
|
Certificate
and Opinion as to Conditions Precedent.
|
44
|
||
|
Section
11.5
|
Statements
Required in Certificate or Opinion.
|
44
|
||
|
Section
11.6
|
Rules
by Trustee and Agents.
|
45
|
||
|
Section
11.7
|
Legal
Holidays.
|
45
|
||
|
Section
11.8
|
No
Recourse Against Others.
|
45
|
||
|
Section
11.9
|
Counterparts.
|
45
|
||
|
Section
11.10
|
Governing
Laws.
|
45
|
||
|
Section
11.11
|
No
Adverse Interpretation of Other Agreements.
|
45
|
||
|
Section
11.12
|
Successors.
|
45
|
||
|
Section
11.13
|
Severability.
|
45
|
||
|
Section
11.14
|
Table
of Contents, Headings, Etc.
|
45
|
||
|
Section
11.15
|
Calculations
in respect of the Securities.
|
46
|
||
-iv-
Genta
Incorporated
Reconciliation
and tie between Trust Indenture Act of 1939 and
Indenture,
dated as of [_________], 2009
|
Section
310(a)(1)
|
Section
5.10
|
|
|
(a)(2)
|
Section
5.10
|
|
|
(a)(3)
|
Not
Applicable
|
|
|
(a)(4)
|
Not
Applicable
|
|
|
(a)(5)
|
Section
5.10
|
|
|
(b)
|
Section
5.10
|
|
|
Section
311(a)
|
Section
5.11
|
|
|
(b)
|
Section
5.11
|
|
|
(c)
|
Not
Applicable
|
|
|
Section
312(a)
|
Section
2.6
|
|
|
(b)
|
Section
8.3
|
|
|
(c)
|
Section
8.3
|
|
|
Section
313(a)
|
Section
5.6
|
|
|
(b)(1)
|
Section
5.6
|
|
|
(b)(2)
|
Section
5.6
|
|
|
(c)(1)
|
Section
5.6
|
|
|
(d)
|
Section
5.6
|
|
|
Section
314(a)
|
Section
3.3, Section 8.5
|
|
|
(b)
|
Not
Applicable
|
|
|
(c)(1)
|
Section
8.4
|
|
|
(c)(2)
|
Section
8.4
|
|
|
(c)(3)
|
Not
Applicable
|
|
|
(d)
|
|
Not
Applicable
|
|
(e)
|
Section
8.5
|
|
|
(f)
|
Not
Applicable
|
|
|
Section
315(a)
|
Section
5.1
|
|
|
(b)
|
Section
5.5
|
|
|
(c)
|
Section
5.1
|
|
|
(d)
|
Section
5.1
|
|
|
(e)
|
Section
5.14
|
|
|
Section
316(a)
|
Section
2.10
|
|
|
(a)(1)(A)
|
Section
5.12
|
|
|
(a)(1)(B)
|
Section
5.13
|
|
|
(b)
|
Section
5.8
|
|
|
Section
317(a)(1)
|
Section
5.3
|
|
|
(a)(2)
|
Section
5.4
|
|
|
(b)
|
Section
2.5
|
|
|
Section
318(a)
|
Section
8.1
|
Note:
This reconciliation and tie shall not, for any purpose, be deemed to be part of
the Indenture.
i
Indenture
dated as of [
], 2009 between Genta Incorporated, a Delaware corporation (the
“Company”), and U.S. Bank National Association, a national banking association,
as trustee (the “Trustee”).
WITNESSED
THAT:
WHEREAS,
pursuant to the terms of this Indenture, the Company desires to provide for the
establishment of a series of its Securities, to be titled as its 8% Unsecured
Subordinated Convertible Notes due 2011 (the “Securities”), the
form and substance of such Securities and the terms, provisions and conditions
thereof to be set forth as provided herein.
NOW,
THEREFORE:
Each
party agrees as follows for the benefit of the other party and for the equal and
ratable benefit of the Holders of the Securities.
ARTICLE
1
DEFINITIONS
AND INCORPORATION BY REFERENCE
Section
1.1 Definitions.
“2008
Notes” means those certain 15% Senior Secured Convertible Notes due
2010.
“Affiliate”
means any Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with another Person. A Person shall be deemed
to be “controlled by” any other Person if such other Person possesses, directly
or indirectly, power (a) to vote ten percent (10%) or more of the
securities (on a fully diluted basis) having ordinary voting power for the
election of directors or managing general partners; or (b) to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise.
“Agent”
means any Registrar, Paying Agent, Service Agent or authenticating
agent.
“April
2009 Notes” means those certain 8% Senior Secured Convertible Notes due
2012.
“Authorized
Newspaper” means a newspaper in an official language of the country of
publication customarily published at least once a day for at least five days in
each calendar week and of general circulation in the place in connection with
which the term is used. If it shall be impractical to make any publication of
any notice required hereby in an Authorized Newspaper, any publication or other
notice in lieu thereof that is made or given by the Trustee shall constitute a
sufficient publication of such notice.
“Beneficial
Holder” means, with respect to a Global Security registered in the name of the
Depository, the Person for which the Security is beneficially held.
“Board of
Directors” means the Board of Directors of the Company or any duly authorized
committee thereof.
“Board
Resolution” means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been adopted by the Board of
Directors or pursuant to authorization by the Board of Directors and to be in
full force and effect on the date of the certificate, and delivered to the
Trustee.
“Business
Day” means, unless otherwise provided by Board Resolution, Officers’ Certificate
or supplemental indenture hereto, any day except a Saturday, Sunday or a legal
holiday in the Town of Morristown, New Jersey on which banking institutions
are authorized or required by law, regulation or executive order to
close.
“Capital
Stock” of any Person means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of such Person and all
warrants or options to acquire such capital stock.
“Change
of Control” shall mean:
(i) the
consolidation, merger or other business combination of the Company with or into
another Person (other than (A) pursuant to a migratory merger effected solely
for the purpose of changing the jurisdiction of incorporation of the Company or
(B) a consolidation, merger or other business combination in which holders of
the Company’s voting power immediately prior to the transaction continue after
the transaction to hold, directly or indirectly, the voting power of the
surviving entity or entities necessary to elect a majority of the members of the
board of directors (or their equivalent if other than a corporation) of such
entity or entities); or
(ii) the
sale, transfer disposition or exclusive license of more than fifty percent (50%)
of the Company’s intellectual property or assets (based on the fair market value
as determined in good faith by the holders) other than inventory in the ordinary
course of business in one or a related series of transactions; except for any
such transaction described in this clause (ii) that has been approved in writing
by the holders of two-thirds of the then outstanding principal amount of the
Securities; or
(iii) closing
of a purchase, tender or exchange offer made to the holders of more than fifty
percent (50%) of the outstanding shares of Common Stock in which more than fifty
percent (50%) of the outstanding shares of Common Stock were tendered and
accepted.
“Closing
Price” means, on any particular date (i) the last trading price per share of the
Common Stock on such date on the principal Trading Market on which the Common
Stock is then listed, or if there is no such price on such date, then the last
trading price on such Trading Market on the date nearest preceding such date, or
(ii) if the Common Stock is not listed then on a Trading Market, the last
trading price for a share of Common Stock in the over-the-counter market, as
reported in the National Quotation Bureau Incorporated or similar organization
or agency succeeding to its functions of reporting prices at the close of
business on such date, or (iii) if the Common Stock is not then reported by the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the “Pink
Sheet” quotes for the relevant conversion period, as determined in good faith by
the holder, or (iv) if the Common Stock is not then publicly traded the fair
market value of a share of Common Stock as determined by the holder and
reasonably acceptable to the Company.
“Common
Stock” shall mean the Company’s Common Stock, including, except with respect to
the payment of any interest hereunder, any securities into which the Common
Stock is reclassified pursuant to Section 9.13.
“Company”
means the party named as such above until a successor replaces it and thereafter
means the successor.
“Company
Order” means a written order signed in the name of the Company by two Officers,
one of whom must be the Company’s chief executive officer, chief financial
officer or principal accounting officer.
“Company
Request” means a written request signed in the name of the Company by its
Chairman of the Board, a President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to
the Trustee.
“Contingent
Obligation” means, as to any person, any liability, contingent or otherwise, of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another person if the primary purpose or intent of the person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto.
“Conversion
Price” means, as of any date of determination, the dollar amount derived by
dividing one thousand dollars ($1,000) by the Conversion Rate in effect on such
date.
2
“Conversion
Rate” shall initially be 10,000 shares of Common Stock per $1,000 principal
amount of Securities, subject to adjustment as provided in ARTICLE
IX.
“Corporate
Trust Office” means the corporate trust office of the Trustee in the state of
New Jersey at which at any particular time its corporate trust business shall be
administered. Currently, such office is at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇.
“Daily
VWAP” means, for any date, (i) the daily volume weighted average price of the
Common Stock for such date on the principal Trading Market for the Common Stock
as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m.
Eastern Time to 4:02 p.m. Eastern Time); (ii) if the Common Stock is not then
listed or quoted on a Trading Market and if prices for the Common Stock are then
reported in the “Pink Sheets” published by the Pink Sheets, LLC (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported; or (iii) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the holder and reasonably
acceptable to the Company.
“Default”
means any event that is, or after notice or passage of time would be, an Event
of Default.
“Depository”
means, with respect to the Securities issuable or issued in whole or in part in
the form of one or more Global Securities, the person designated as Depository
for such Securities by the Company, which Depository shall be a clearing agency
registered under the Exchange Act; and if at any time there is more than one
such person, “Depository” as used with respect to the Securities shall mean the
Depository with respect to the Securities.
“Dollars”
means the currency of The United States of America.
“DTC”
means The Depository Trust Company, its nominees and successors.
“Equity
Conditions” means, during the period in question, (i) the Company shall have
duly honored all conversions and redemptions scheduled to occur or occurring by
virtue of one or more conversion notices of the Holder, if any, (ii) all
liquidated damages and other amounts owing to the Holder in respect of the
Holder’s Security shall have been paid; (iii) the Common Stock is trading on a
Trading Market and all of the shares issuable pursuant to the Securities and the
Warrants are eligible for trading on a Trading Market (and the Company believes,
in good faith, that trading of the Common Stock on a Trading Market will
continue uninterrupted for the foreseeable future), (iv) there is a sufficient
number of authorized but unissued and otherwise unreserved shares of Common
Stock for the issuance of all of the shares then issuable upon conversion of the
Securities and exercise of the Warrants (disregarding any limitations on
issuance or conversion contained in such documents), (v) there is then existing
no Event of Default or event which, with the passage of time or the giving of
notice, would constitute an Event of Default, (vi) the issuance of the shares in
question to the Holder would not violate the limitations set forth in Section
9.2.2 hereof, and (vii) no public announcement of a pending or proposed Change
of Control has occurred.
“Event of
Default” has the meaning set forth in Section 5.1 hereto.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC thereunder.
“Exchange
Rate Contract” means, with respect to any Person, any currency swap agreements,
forward exchange rate agreements, foreign currency futures or options, exchange
rate collar agreements, exchange rate insurance and other agreements or
arrangements, or combination thereof, the principal purpose of which is to
provide protection against fluctuations in currency exchange rates. An Exchange
Rate Contract may also include an Interest Rate Agreement.
“GAAP”
means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession, which are
applied on a consistent basis.
3
“Global
Security” or “Global Securities” means a Security or Securities, as the case may
be, in the form established pursuant to Section 2.2 evidencing all or part of
the Securities, issued to the Depository or its nominee, and registered in the
name of such Depository or nominee.
“Holder”
or “Securityholder” means a person in whose name a Security is
registered.
“Indebtedness”
means (a) all obligations for borrowed money, (b) all obligations evidenced by
bonds, debentures, notes, or other similar instruments and all reimbursement or
other obligations in respect of letters of credit, bankers acceptances, current
swap agreements, interest rate hedging agreements, interest rate swaps, or other
financial products, (c) all capital lease obligations that exceed $50,000 in the
aggregate in any fiscal year, (d) all obligations or liabilities secured by a
lien or encumbrance on any asset of the Company, irrespective of whether such
obligation or liability is assumed, (e) all obligations for the deferred
purchase price of assets, together with trade debt and other accounts payable
that exceed $50,000 in the aggregate in any fiscal year, (f) all synthetic
leases, (g) any obligation guaranteeing or intended to guarantee (whether
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse) any of the foregoing obligations of any other person, (h) trade debt
and (i) endorsements for collection or deposit.
“Indenture”
means this Indenture as amended from time to time and shall include the form and
terms of particular Securities established as contemplated
hereunder.
“Interest
Rate Agreement” means, with respect to any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement the principal purpose of which is to protect the party
indicated therein against fluctuations in interest rates.
“Issue
Date” means [___], 2009.
“Investment”
means, with respect to any Person, all investments in any other Person, whether
by way of extension of credit, loan, advance, purchase of stock or other
ownership interest (other than ownership interests in such Person), bonds,
notes, debentures or other securities, or otherwise, and whether existing on the
Issue Date or thereafter made, but such term shall not include the cash
surrender value of life insurance policies on the lives of officers or
employees, excluding amounts due from customers for services or products
delivered or sold in the ordinary course of business.
“July
2009 Notes” means those certain 8% Unsecured Subordinated Convertible Notes due
2011 issued in a private placement pursuant to that certain Securities Purchase
Agreement dated as of July 7, 2009 by and among the Company and the Purchasers
listed on Exhibit A thereto.
“Liquidation
Event” means a liquidation pursuant to a filing of a petition for bankruptcy
under applicable law or any other insolvency or debtor’s relief, an assignment
for the benefit of creditors, or a voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company.
“Material
Adverse Effect” means any material adverse effect on the business, operations,
properties, prospects, or financial condition of the Company and its
Subsidiaries and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company to
perform any of its obligations under the Indenture, the Securities Purchase
Agreement, the Securities or the Warrants in any material respect.
“Maturity
Date” means August [___], 2011 or such other date on which the principal of the
Securities becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration or otherwise.
“Officer”
means the Chairman of the Board, the Chief Executive Officer, the Chief
Financial Officer or Principal Accounting Officer, any President, any
Vice-President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of the Company.
“Officers’
Certificate” means a certificate signed by two Officers, one of whom must be the
Company’s principal executive officer, principal financial officer or principal
accounting officer.
4
“Opinion
of Counsel” means a written opinion of legal counsel who is acceptable to the
Trustee. The counsel may be an employee of or counsel to the
Company.
“Permitted
Financing” shall mean (1) issuances of shares of Common Stock or options to
employees, officers, directors or consultants of the Company pursuant to any
stock or option plan duly adopted by a majority of the non-employee members of
the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, duly approved by the
Company’s stockholders and described in the Public Filings; (2) issuances of
securities upon the exercise or exchange of or conversion of any securities
exercisable or exchangeable for or convertible into shares of Common Stock
issued and outstanding on the Issue Date and described in the Public Filings,
provided that such securities have not been amended since the Issue Date to
increase the number of such securities or to decrease the exercise, exchange or
conversion price of any such securities (including the Securities); (3) the
issuance of any Securities under the Securities Purchase Agreement or this
Indenture.
“person”
or “Person” means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
“principal”
of a Security means the principal of the Security.
“Public
Filings” means the Company’s Form 10-K for the fiscal year ended December 31,
2008 and any other report, schedule, form, statement or other document filed by
the Company with the SEC pursuant to the reporting requirements of the Exchange
Act, subsequent to the filing of the Company’s Form 10-K for the fiscal year
ended December 31, 2008 and prior to the Issue Date.
“Representative”
means (a) the indenture trustee or other trustee, agent or representative for
holders of Senior Debt or (b) with respect to any Senior Debt that does not have
any such trustee, agent or other representative, (i) in the case of such Senior
Debt issued pursuant to an agreement providing for voting arrangements as among
the holders or owners of such Senior Debt, any holder or owner of such Senior
Debt acting with the consent of the required persons necessary to bind such
holders or owners of such Senior Debt and (ii) in the case of all other such
Senior Debt, the holder or owner of such Senior Debt.
“Responsible
Officer” means any officer of the Trustee in its Corporate Trust Office and also
means, with respect to a particular corporate trust matter, any other officer to
whom any corporate trust matter is referred because of his or her knowledge of
and familiarity with a particular subject.
“Rights
Agreement” means that certain Rights Agreement dated as of September 20, 2005,
by and between the Company and Mellon Investor Services LLC, as rights agent, as
the same may be amended, supplemented or superseded.
“SEC”
means the Securities and Exchange Commission.
“Securities”
means the 8% Unsecured Subordinated Convertible Notes due August 2011,
authenticated, delivered and issued under this Indenture.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations
of the SEC thereunder.
“Securities
Agent” means any Registrar, Paying Agent, Conversion Agent or co-Registrar or
co-agent.
“Securities
Purchase Agreement” means that certain Securities Purchase Agreement dated as of
the Issue Date, by and among the Company and the purchasers listed
therein.
5
“Senior
Debt” means Indebtedness (including any monetary obligation in respect of the
2008 Notes, the April 2009 Notes and interest, whether or not allowable,
accruing on Indebtedness incurred pursuant to the 2008 Notes or April 2009 Notes
after the filing of a petition initiating any proceeding under any bankruptcy,
insolvency or similar law) of the Company arising under the 2008 Notes, the
April 2009 Notes or any other secured Indebtedness of the Company, whether
outstanding on the date of this Indenture or thereafter created, incurred,
assumed or guaranteed by the Company. Notwithstanding anything to the contrary
in the foregoing, Senior Debt shall not include: (a) Indebtedness of or amounts
owed by the Company for compensation to employees, or for goods or materials
purchased or for services obtained in the ordinary course of business; (b)
Indebtedness of the Company to any Subsidiary of the Company; (c) unsecured
Indebtedness; or (d) Indebtedness of the Company that expressly provides that it
shall not be senior in right of payment to the Securities or expressly provides
that it is pari passu or junior to the Securities. If any payment made to any
holder of any Senior Debt or its Representative with respect to such Senior Debt
is rescinded or must otherwise be returned by such holder or Representative upon
the insolvency, bankruptcy or reorganization of the Company or otherwise, the
reinstated Indebtedness of the Company arising as a result of such rescission or
return shall constitute Senior Debt effective as of the date of such rescission
or return.
“Stated
Maturity” when used with respect to any Security or any installment of principal
thereof or interest thereon, means the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
principal or interest is due and payable.
“Subsidiary”
of any specified person means (i) any corporation of which at least a majority
of the outstanding stock having by the terms thereof ordinary voting power for
the election of directors of such corporation (irrespective of whether or not at
the time stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned by such person, or by one or more other
Subsidiaries, or by such person and one or more other Subsidiaries or (ii) any
other person (other than a corporation) of which at least a majority of the
ownership interest is at the time directly or indirectly owned by such person,
or by one or more other Subsidiaries, or by such person and one or more other
Subsidiaries.
“TIA”
means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in
effect on the date of this Indenture; provided, however, that in the
event the Trust Indenture Act of 1939 is amended after such date, “TIA” means,
to the extent required by any such amendment, the Trust Indenture Act as so
amended.
“Tradable”
with respect to any shares of Common Stock as of any time means that as of such
time (i) such shares shall be held, or eligible to be held, in an account on
behalf of the Holder at the DTC, (ii) there shall be no SEC or judicial stop
trade order or trading suspension stop-order or any restriction in place with
the transfer agent for the Common Stock with restricting the trading of such
Common Stock and (iii) such shares shall be then eligible under all applicable
federal and state securities laws for immediate resale to the public without
volume, manner of sale, holding period, prospectus delivery, filing,
registration, qualification or other limitations, requirements or
restrictions.
“Trading
Day” means: (a) a day on which the Common Stock is traded on a Trading Market,
or (b) if the Common Stock is not traded on a Trading Market, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in (a) or (b)
hereof, then Trading Day shall mean any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.
“Trading
Market” means the OTC Bulletin Board, the New York Stock Exchange, the NASDAQ
Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market or the
American Stock Exchange.
“Trustee”
means the person named as the “Trustee” in the first paragraph of this
instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture.
6
“U.S.
Government Obligations” means securities that are (i) direct obligations of The
United States of America for the payment of which its full faith and credit is
pledged or (ii) obligations of a person controlled or supervised by and acting
as an agency or instrumentality of The United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation by The
United States of America, and which in the case of (i) and (ii) are not callable
or redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation evidenced by such
depository receipt.
“Voting
Stock” of any Person means the total voting power of all classes of the Capital
Stock of such Person entitled to vote generally in the election of directors of
such Person.
“Warrant”
shall mean those certain Common Stock Purchase Warrants issued pursuant to the
Securities Purchase Agreement.
Section
1.2 Other
Definitions.
|
DEFINED
IN
|
|
|
TERM
|
SECTION
|
|
“Additional
Shares of Common Stock”
|
9.7.6
|
|
“Buy-In”
|
9.4.1
|
|
“Cash
Payment”
|
9.4.2(ii)
|
|
“Common
Stock Equivalents”
|
9.7.7
|
|
“Conversion
Agent”
|
2.3
|
|
“Conversion
Date”
|
9.3.2
|
|
“Conversion
Notice”
|
9.3.1
|
|
“Conversion
Shares”
|
9.4.2(a)(i)
|
|
“Convertible
Securities”
|
9.7.7
|
|
“Delivery
Date”
|
9.4.1
|
|
“DTC”
|
9.4.1
|
|
“DWAC”
|
9.4.1
|
|
“Equity
Conditions”
|
1.1
|
|
“Event
of Default”
|
5.1
|
|
“Global
Securities”
|
2.13
|
|
“Global
Security”
|
2.1
|
|
“Interest
Payment Date”
|
2.7
|
|
“junior
securities”
|
10.8
|
|
“Legal
Holiday”
|
11.7
|
|
“Mandatory
Conversion Date”
|
9.3.2
|
|
“Mandatory
Prepayment”
|
9.6.2(a)
|
|
“Mandatory
Prepayment Price”
|
9.6.2(a)
|
|
“Non-Payment
Default”
|
10.2(B)
|
|
“Notice
of Change of Control”
|
5.15
|
|
“Notice
of Event of Default”
|
5.15
|
|
“Notice
of Prepayment at Option of Holder Upon Change of Control
|
5.15
|
|
“Notice
of Prepayment at Option of Holder Upon Event of Default
|
5.15
|
|
“Participants”
|
2.13.1
|
|
“Paying
Agent”
|
2.3
|
|
“Payment
Default”
|
10.2(A)
|
|
“Physical
Securities”
|
2.1
|
|
“Reference
Property”
|
9.13
|
|
“Registrar”
|
2.3
|
|
“Service
Agent”
|
?.?
|
|
“successor
person”
|
4.1
|
|
“Void
Optional Prepayment Notice
|
5.15
|
|
“Voluntary
Conversion Date”
|
9.3.1
|
7
Section
1.3 Incorporation by Reference
of Trust Indenture Act.
Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
“Commission”
means the SEC.
“indenture
securities” means the Securities.
“indenture
security holder” means a Securityholder or Holder.
“indenture
to be qualified” means this Indenture.
“indenture
trustee” or “institutional trustee” means the Trustee.
“obligor”
on the indenture securities means the Company and any successor obligor upon the
Securities.
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 are used herein as so defined.
Section
1.4 Rules of
Construction.
Unless
the context otherwise requires:
(a)
a
term has the meaning assigned to it;
(b) an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles;
(c)
references to “generally accepted accounting principles” shall mean generally
accepted accounting principles in effect as of the time when and for the period
as to which such accounting principles are to be applied;
(d)
“or” is
not exclusive;
(e)
“including” means “including without limitation”;
(f) words
in the singular include the plural, and in the plural include the singular;
and
(g)
provisions
apply to successive events and transactions.
ARTICLE
2
THE
SECURITIES
Section
2.1 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.
The
Securities 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”),
deposited with the Trustee, as custodian for DTC (who shall be the initial
Depository with respect to the Securities), duly executed by the Company and
authenticated by the Trustee and bearing the legend set forth in Exhibit B. 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 Depository, as hereinafter provided; provided, that, except as
permitted by Section 2.13, in no event shall the aggregate principal amount of
the Global Security or Securities exceed $[___].
8
Securities
issued in exchange for interests in a Global Security pursuant to Section 2.13.2
may be issued in the form of permanent certificated Securities in registered
form in substantially the form set forth in Exhibit A (the “Physical Securities”)
and, if applicable, bearing any legends required hereby.
The
Securities shall be denominated in Dollars, and all cash payments due thereon
shall be made in Dollars. The Securities shall be issuable only in registered
form without interest coupons and only in denominations of $1,000 principal
amount and any integral multiple thereof.
Section
2.2 Execution and Authentication
of Securities.
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
Company Order, the Trustee shall authenticate Securities for original issue in
the aggregate principal amount of $[___]. The aggregate principal amount of
Securities outstanding at any time may not exceed $[___] except as provided in
Section 2.13.2.
Section
2.3 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 Corporate Trust Office shall serve as the office or agency for the
aforementioned purposes. 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; and the term “Conversion Agent”
includes any additional conversion agent.
The
Company shall enter into an appropriate agency agreement with any Securities
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Securities Agent. The Company
shall notify the Trustee of the name and address of any Securities 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
2.4 Paying Agent to Hold Money
in Trust.
Each
Paying Agent shall hold in trust for the benefit of the Securityholders or the
Trustee all moneys held by the Paying Agent for the payment of 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 such
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.
9
Section
2.5 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 the
Securityholders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
ten days 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 the
Securityholders.
Section
2.6 Transfer and
Exchange.
Subject
to Section 2.13.2, where Securities are presented to the Registrar with a
request to register a transfer or to exchange them for an equal principal amount
of Securities, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Trustee shall authenticate the Securities at the
Registrar’s request.
No
service charge shall be made for any transfer, exchange or conversion of
Securities, but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge that may be imposed in connection
with any transfer, exchange or conversion of Securities, other than exchanges
pursuant to Section 8.5 or Section 9.3, not involving any transfer.
Section
2.7 Interest Payment and Record
Dates.
Beginning
on the Issue Date, the outstanding principal balance of the
Securities shall bear interest, in arrears, at a rate per annum equal to eight
percent (8.00%), payable semi-annually on January 1 and July 1 of each year
(each, an “Interest
Payment Date”) commencing January 1, 2010, or earlier upon conversion,
redemption or prepayment of the Securities. The Record Date for an
Interest Payment Date that falls on January 1 shall be the immediately preceding
December 1, the Record Date for an Interest Payment Date that falls on July 1
shall be the immediately preceding June 1; interest shall be paid in cash or
through the issuance of Securities to the Holder in the principal amount equal
to the accrued interest as of the applicable Interest Payment Date or date of
such earlier conversion, redemption or prepayment of the Securities, at the
Company’s option. The Company shall notify the Trustee in the event
interest is paid through the issuance of Securities. Interest shall be computed
on the basis of a 360-day year of twelve (12) thirty- (30) day months and shall
accrue commencing on the Issue Date. Furthermore, upon the occurrence of an
Event of Default, the Company will pay interest in cash, payable on demand, on
the outstanding principal balance of and unpaid interest the Securities from the
date of the Event of Default until such Event of Default is cured at the rate of
the lesser of twenty percent (20%) and the maximum applicable legal rate per
annum.
Certificates
for Securities issued as interest payments hereunder shall be transmitted by the
Company to its transfer agent who will transfer such certificates to the Holder
(or Beneficial Holder) by crediting the account of the Holder’s prime broker
with the DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system if the
Company is a participant in such system on or before the applicable date such
interest is due.
Section
2.8 Mutilated, Destroyed, Lost
and Stolen Securities.
If any
mutilated Security is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there
shall be delivered to the Company and the Trustee (i) a duly
executed, notarized and unsecured written statement from the Holder with respect
to the loss, theft or destruction of any Security (or any replacement hereof)
and (ii) such standard indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a protected
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and make available for delivery, in lieu of any such destroyed,
lost, mutilated or stolen Security, a new Security and of like tenor and
principal amount and bearing a number not contemporaneously
outstanding. In the case of a mutilation of any Security, upon
surrender and cancellation of such Security, the Company shall issue a new
Security, of like tenor and amount, in lieu of such mutilated
Security.
10
In case
any such mutilated, destroyed, lost or stolen 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.
Upon the
issuance of any new Security under this Section, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every new
Security issued pursuant to this Section in lieu of any destroyed, lost or
stolen Security shall constitute an original additional contractual obligation
of the Company, whether or not the destroyed, lost or stolen Security shall be
at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities
duly issued hereunder.
The
provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities.
Section
2.9 Outstanding
Securities.
If the
Paying Agent (other than the Company) holds on the Maturity Date, money
sufficient to pay the principal amount with respect to all Securities to be paid
upon maturity plus, if applicable, accrued and unpaid interest, if any, payable
as herein provided upon maturity, then (unless there shall be a Default in the
payment of such principal amount, or of such accrued and unpaid interest),
except as otherwise provided herein, on and after such date such Securities
shall be deemed to be no longer outstanding, interest on such Securities shall
cease to accrue, and such Securities shall be deemed paid whether or not such
Securities are delivered to the Paying Agent. Thereafter, all rights of the
Holders of such Securities shall terminate with respect to such Securities,
other than the right to receive the principal amount plus, if applicable, such
accrued and unpaid interest, in accordance with this Indenture.
If a
Security is converted in accordance with ARTICLE IX, or prepaid in full in
accordance with Section 5.15, then, from and after the time of such conversion
on the Conversion Date, such Security shall cease to be outstanding, and
interest, if any, shall cease to accrue on such Security unless there shall be a
Default in the payment or delivery of the consideration payable hereunder upon
such conversion or prepayment. The Company shall notify the Trustee in the event
a Security is prepaid in full pursuant to Section 5.15 of this
Indenture.
Section
2.10 Cancellation.
The
Company at any time may deliver Securities to the Trustee for cancellation. The
Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange, conversion, or
payment. The Trustee shall cancel all Securities surrendered for transfer,
exchange, conversion, payment, replacement or cancellation and shall destroy
such canceled Securities (subject to the record retention requirement of the
Exchange Act) and deliver a certificate of such destruction to the Company,
unless the Company otherwise directs. The Company may not issue new Securities
to replace Securities that it has paid or delivered to the Trustee for
cancellation or that has been converted.
Section
2.11 No Sinking
Fund.
There
shall be no sinking fund with respect to the Securities.
Section
2.12 [Intentionally
Omitted]
11
Section
2.13 Global
Securities.
2.13.1 Terms of Securities.
The Global Securities initially shall (i) be registered in the name of
the Depository for the Securities or the nominee of such Depository, (ii) be
delivered to the Trustee as custodian for such Depository and (iii) bear legends
as required hereby. Members of, or participants in, the Depository for the
Securities (“Participants”) shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by such Depository, or the Trustee as its custodian, or under the
Global Security, and such Depository 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 such Depository or impair, as between such Depository
and Participants, the operation of customary practices governing the exercise of
the rights of a Holder of any Security.
2.13.2 Transfer and Exchange.
Notwithstanding any provisions to the contrary contained in Section 2.6
of the Indenture and in addition thereto, any Global Security shall be
exchangeable pursuant to Section 2.6 of this Indenture for Securities registered
in the names of Holders other than the Depository for such Security or its
nominee only if (i) such Depository notifies the Company that it is unwilling or
unable to continue as Depository for such Global Security or if at any time such
Depository ceases to be a clearing agency registered under the Exchange Act,
and, in either case, the Company fails to appoint a successor Depository within
90 days of such event, (ii) the Company executes and delivers to the Trustee an
Officers’ Certificate to the effect that such Global Security shall be so
exchangeable or (iii) an Event of Default with respect to the Securities
represented by such Global Security shall have happened and be continuing. Any
Global Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Securities registered in such names as the Depository shall
direct in writing in an aggregate principal amount equal to the principal amount
of the Global Security with like tenor and terms.
Except as
provided in this Section 2.13.2, a Global Security may not be transferred except
as a whole by the Depository with respect to such Global Security to a nominee
of such Depository, by a nominee of such Depository to such Depository or
another nominee of such Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such a successor Depository.
2.13.3 Legend. Unless
otherwise provided pursuant to Section 2.2, any Global Security issued hereunder
shall bear a legend 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 the Depository or a nominee of the
Depository. This Security is exchangeable for Securities registered in the name
of a person other than the Depository or its nominee only in the limited
circumstances described in the Indenture, and may not be transferred except as a
whole by the Depository to a nominee of the Depository, by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such a
successor Depository.”
2.13.4 Acts of Holders. The
Depository, as a Holder, may appoint agents 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.
2.13.5 Payments.
Notwithstanding the other provisions of this Indenture, unless otherwise
specified as contemplated by Section 2.2, payment of the principal of and
interest, if any, on any Global Security shall be made to the Holder
thereof.
2.13.6 Consents, Declaration and
Directions. Except as provided in Section 2.13.5, the Company, the
Trustee and any Agent shall treat a person as the Holder of such principal
amount of outstanding Securities represented by a Global Security as shall be
specified in a written statement of the Depository with respect to such Global
Security, for purposes of obtaining any consents, declarations, waivers or
directions required to be given by the Holders pursuant to this
Indenture.
Section
2.14 CUSIP
Numbers.
The
Company in issuing the Securities may use “CUSIP” numbers (if then generally in
use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other elements of identification printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such CUSIP numbers. The Company shall promptly notify the Trustee
of any change in the CUSIP numbers.
12
Section
2.15 Deposit of
Moneys.
Prior to
11:00 A.M., New York City time, on each interest payment date or the Maturity
Date, the Company shall have deposited with a Paying Agent (other than the
Company) money, in funds immediately available on such date, sufficient to make
cash payments, if any, due on such interest payment date, if applicable, or, 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, if
applicable, or, the Maturity Date, as the case may be.
Section
2.16 Ranking.
The
obligations of the Company under the Securities shall be subordinate to the
Senior Debt to the extent of the security for the Senior Debt; provided,
however, that at such time as the security for the Senior Debt may be released,
the Securities shall be pari passu in time and right of payment with the Senior
Debt.
Section
2.17 Additional
Securities.
The
Company may, without the consent of the Holders and notwithstanding Section 2.1
and Section 2.2 hereof, issue additional Securities hereunder with the same
terms and conditions (except for any difference in the issue price therefor and
interest accrued prior to the date of issuance thereof) and with the same CUSIP
number as the Securities initially issued hereunder in an aggregate principal
amount of up to $[___], which will form the same series with the Securities
initially issued hereunder, provided that such additional Securities constitute
the same issue as the Securities initially issued hereunder for U.S. federal
income tax purposes. The Securities initially issued hereunder and any such
additional Securities would rank equally and ratably and would be treated as a
single series of debt securities for all purposes under the
Indenture.
ARTICLE
3
COVENANTS
Section
3.1 Payment of Principal and
Interest.
3.1.1 The Company shall pay
all amounts due with respect to the Securities on the dates and in the manner
provided in the Securities. All such amounts shall be considered paid on the
date due if the Paying Agent (other than the Company) holds on that date money
sufficient to pay the amount then due with respect to the Securities (unless
there shall be a Default in the payment of such amounts to the respective
Holder(s)).
3.1.2 The Company shall pay,
in cash, interest on any overdue amount (including, to the extent permitted by
applicable law, overdue interest) at the rate set forth in Section
2.7.
3.1.3 Any amount of the
principal of the Securities repaid hereunder may not be
reborrowed. Except as set forth in Section 5.15, the Company may not
prepay any portion of the principal amount of the Securities without the prior
written consent of the Holder of such Securities, which consent may be withheld
in the Holder’s sole and absolute discretion.
Section
3.2 Maintenance of Office or
Agency.
The
Company will maintain an office or agency (which may be an office of the Trustee
or an affiliate of the Trustee, Registrar or co-Registrar) in New York City, New
York or New Jersey, where Securities may be surrendered for registration of
transfer or exchange, payment or conversion and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The Corporate Trust Office will initially serve as the office or agency for such
purposes. The Company will give prompt written notice to the Trustee of 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 of any change in the location thereof, such
presentations, surrenders, notices and demands may continue to be made or served
at the Corporate Trust Office of the Trustee.
13
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 New York City,
New York or New Jersey 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.
Section
3.3 SEC
Reports.
3.3.1 The Company shall
deliver to the Trustee, no later than fifteen (15) days after the date such
report is required to be filed with the SEC pursuant to the Exchange Act (after
giving effect, to the extent applicable, any extension permitted by Rule 12b-25
under the Exchange Act), a copy of each report (or copies of such portions of
such report as the SEC may from time to time by rules and regulations prescribe)
the Company is required to file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act; provided, however, that the Company shall not be required to
deliver to the Trustee any material for which the Company has sought and
received confidential treatment by the SEC; provided further, each such report
will be deemed to be so delivered to the Trustee at the time such report is
filed with the SEC through the SEC’s ▇▇▇▇▇ database.
3.3.2 If the Company is, at
any time while any Securities are outstanding, no longer subject to the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act, then
the Company shall continue to provide to the Trustee (and, unless the SEC will
not accept such filing, file with the SEC in accordance with rules and
regulations prescribed from time to time by the SEC) and, upon request, to each
Holder, no later than the date the Company would have been required to file the
same with the SEC, the reports the Company would have been required to file with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act (after giving
effect, to the extent it would have been applicable, any extension permitted by
Rule 12b-25 under the Exchange Act) if the Company had securities listed and
registered on a national securities exchange and were subject to the reporting
requirements of such sections. The Company shall also deliver to the Trustee
copies of the Company’s annual report to stockholders, containing audited
financial statements, and any other financial reports which the Company
furnishes to its stockholders. The Company also shall comply with the other
provisions of TIA § 314(a). Delivery of such reports, information and documents
to the Trustee is for informational purposes only, and the Trustee’s receipt
thereof 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 including
without limitation the certificate provided in Section 3.4
below).
Section
3.4 Compliance
Certificate.
The
Company shall deliver to the Trustee, within 90 days after the end of each
fiscal year of the Company, or, if earlier, the date the Company is, or would
be, required to file with the SEC the Company’s annual report (whether on Form
10-K under the Exchange Act or another appropriate form) for such fiscal year,
an Officers’ Certificate stating that a review of the activities of the Company
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he may have knowledge).
The
Company will, so long as any of the Securities are outstanding, deliver to the
Trustee, forthwith upon becoming aware of any Default or Event of Default, an
Officers’ Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect
thereto.
14
Section
3.5 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 or the Securities; and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
has been enacted.
Section
3.6 Corporate
Existence.
Subject
to ARTICLE IV, 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
rights (charter and statutory), licenses and franchises of the Company; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company taken as a whole
and that the loss thereof is not adverse in any material respect to the
Holders.
Section
3.7 Taxes.
The
Company shall pay prior to delinquency all taxes, assessments and governmental
levies, except as contested in good faith and by appropriate
proceedings.
Section
3.8 Further
Instruments and Acts.
Upon
request of the Trustee, the Company shall execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purposes of this Indenture.
ARTICLE
4
SUCCESSORS
Section
4.1 When Company May Merge,
Etc.
The
Company shall not consolidate with or merge into, or convey, transfer or lease
all or substantially all of its properties and assets to, any person (a “successor person”),
and may not permit any person to merge into, or convey, transfer or lease its
properties and assets substantially as an entirety to, the Company, whether in a
single transaction or a series of related transactions, unless:
(a) the
successor person (if any) is a corporation organized and validly existing under
the laws of any U.S. domestic jurisdiction and expressly assumes by supplemental
indenture the Company’s obligations on the Securities and under this Indenture;
and
(b)
immediately after giving effect to the transaction, no Default or Event of
Default, shall have occurred and be 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
comply with this Indenture.
Section
4.2 Successor
Corporation Substituted.
Upon any
consolidation or merger, or any sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company in accordance with Section
4.1, the successor corporation formed by such consolidation or into or with
which the Company is merged or to which such sale, lease, conveyance or other
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same effect
as if such successor person has been named as the Company herein; provided, however, that the
predecessor Company in the case of a sale, lease, conveyance or other
disposition shall not be released from the obligation to pay the principal of
and interest, if any, on the Securities.
15
ARTICLE
5
DEFAULTS
AND REMEDIES
Section
5.1 Events
of Default.
An “Event
of Default” is deemed to occur with respect to the Securities if and only
if:
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(a)
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any
default in the payment of (1) the principal amount under the
Securities when
due, or (2) interest on, or liquidated damages in respect of, the
Securities, as and when the same shall become due and payable (whether on
the Maturity Date or by acceleration or
otherwise);
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(b)
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the
Company shall fail to observe or perform any other covenant, condition or
agreement contained in the Securities which failure is not cured, if
possible to cure, within three (3) business days after notice of such
default sent by any Holder or the
Trustee;
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(c)
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the
failure of the Common Stock to be listed on at least one of the OTC
Bulletin Board, the American Stock Exchange, the Nasdaq Global Market, the
Nasdaq Capital Market or The New York Stock Exchange, Inc. for a period of
twenty (20) consecutive Trading
Days;
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(d)
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the
Company’s notice to the Trustee or any Holder, including by way of public
announcement, at any time, of its inability to comply (including for any
of the reasons described in Section 9.6.2) or its intention not to comply
with proper requests for conversion of the Securities into shares of
Common Stock;
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(e)
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the
Company shall fail to (i) timely deliver the shares of Common Stock as and
when required herein, (ii) make the payment of any fees and/or liquidated
damages under this Indenture, the Securities, the Warrants or the
Securities Purchase Agreement, which failure is not remedied within three
(3) business days after the incurrence
thereof;
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(f)
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default
shall be made in the performance or observance of any material covenant,
condition or agreement contained in the Indenture, the Securities, the
Securities Purchase Agreement or the Warrants that is not covered by any
other provisions of this Section and such default is not fully cured
within seven (7) business days after the Company receives notice from the
Holder or Trustee of the occurrence
thereof;
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(g)
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at
any time following the Issue Date the Company shall fail to have a
sufficient number of shares of Common Stock authorized, reserved and
available for issuance to satisfy the potential conversion in full
(disregarding for this purpose any and all limitations of any kind on such
conversion) of the
Securities;
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(h)
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any
material representation or warranty made by the Company or any of its
Subsidiaries herein or in the Securities Purchase Agreement, the
Securities or the Warrant shall prove to have been false or incorrect or
breached in a material respect on the date as of which
made;
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(i)
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the
Company shall, or shall announce an intention to, consider, pursue or
consummate a Change of Control or a Change of Control shall be
consummated, or Company shall negotiate, consider, propose or enter into
any agreement, understanding or arrangement with respect to any Change of
Control;
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(j)
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the
Company or any of its Subsidiaries shall (A) default in any payment of any
amount or amounts of principal of or interest on any Indebtedness (other
than the Indebtedness under the Securities) the aggregate principal amount
of which Indebtedness is in excess of $250,000 or (B) default in the
observance or performance of any other agreement or condition relating to
any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur
or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders or beneficiary
or beneficiaries of such Indebtedness to cause with the giving of notice
if required, such Indebtedness to become due prior to its stated
maturity;
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16
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(k)
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if
the Company shall (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property or assets, (ii)
make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the United States Bankruptcy Code or under the
comparable laws of any foreign or domestic jurisdiction, (iv) file a
petition seeking to take advantage of any bankruptcy, insolvency,
moratorium, reorganization or other similar law affecting the enforcement
of creditors’ rights generally, (v) acquiesce in writing to any petition
filed against it in an involuntary case under United States Bankruptcy
Code or under the comparable laws of any foreign or domestic jurisdiction,
(vi) issue a notice of bankruptcy or winding down of its operations or
issue a press release regarding same, or (vii) take any action under the
laws of any foreign or domestic jurisdiction analogous to any of the
foregoing;
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(l)
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a
proceeding or case shall be commenced in respect of the Company or any of
its Subsidiaries, without its application or consent, in any court of
competent jurisdiction, seeking (i) the liquidation, reorganization,
moratorium, dissolution, winding up, or composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of it or of all or any substantial part of its assets in
connection with the liquidation or dissolution of the Company or any of
its Subsidiaries or (iii) similar relief in respect of it under any law
providing for the relief of debtors, and such proceeding or case described
in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and
in effect, for a period of thirty (30) days or any order for relief shall
be entered in an involuntary case under United States Bankruptcy Code (as
now or hereafter in effect) or under the comparable laws of any
jurisdiction (foreign or domestic) against the Company or any of its
Subsidiaries or action under the laws of any jurisdiction (foreign or
domestic) analogous to any of the foregoing shall be taken with respect to
the Company or any of its Subsidiaries and shall continue undismissed, or
unstayed and in effect for a period of sixty (60)
days;
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(m)
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the
occurrence of an Event of Default under any of the July 2009 Notes or the
Senior Debt;
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(n)
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the
Company deregisters its shares of Common Stock and as a result such shares
of Common Stock are no longer publicly
traded;
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(o)
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the
Company consummates a “going private” transaction and as a result the
Common Stock is no longer registered under Sections 12(b) or 12(g) of the
Exchange Act;
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(p)
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there
shall be any SEC or judicial stop trade order or trading suspension
stop-order or any restriction in place with the transfer agent for the
Common Stock restricting the trading of such Common
Stock;
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(q)
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the
occurrence of a Material Adverse Effect in respect of the Company or any
of its Subsidiaries taken as a whole;
or
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(r)
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the
Company shall, as payment of interest hereon, issue invalid
Securities.
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Section
5.2 Acceleration
of Maturity; Rescission and Annulment.
If an
Event of Default with respect to Securities at the time outstanding occurs and
is continuing with respect to the Company, then in every such case, the Trustee
or the Holders may declare the principal amount of and accrued and unpaid
interest, if any, on all of the Securities to be due and payable immediately, by
a notice in writing to the Company, and upon any such declaration such principal
amount and accrued and unpaid interest, if any, shall become immediately due and
payable; provided,
however, that upon the occurrence of an Event of Default described above,
the Trustee or the Holders, in their sole and absolute discretion, may (a)
demand the redemption of the Securities pursuant to Section 5.15 (to the extent
permitted by such Section); (b) demand that the principal amount of the
Securities then outstanding and all accrued and unpaid interest thereon shall be
converted into shares of Common Stock at the Conversion Price per share on the
Trading Day immediately preceding the date the Trustee or Holders demand
conversion pursuant to this clause, or (c) exercise or otherwise enforce any one
or more of the Holders’ rights, powers, privileges, remedies and interests under
the Securities, the Securities Purchase Agreement, the Warrants or applicable
law; provided further, however, that upon the occurrence of an Event of Default
described in clause (l), the entire unpaid principal balance of the Securities,
together with all interest accrued hereon, shall automatically become due and
payable, and thereupon, the same shall be accelerated and so due and payable,
without presentment, demand, protest, or notice, all of which are hereby
expressly unconditionally and irrevocably waived by the Company. No course of
delay on the part of the Trustee or the Holders shall operate as a waiver
thereof or otherwise prejudice the right of the Holders. No remedy conferred
hereby shall be exclusive of any other remedy referred to herein or now or
hereafter available at law, in equity, by statute or
otherwise. Securities shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
the Holders. Upon the Company’s receipt of a notice from the Holders as set
forth above, the Company shall notify the Trustee and provide the Trustee with
direction in sufficient detail, satisfactory to the Trustee, with regard to the
actions to be taken by the Trustee in fulfilling its obligations in connection
herewith.
17
At any
time after such a declaration of acceleration with respect to the Securities has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
66-2/3% of the then outstanding aggregate principal amount of the Securities, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(a) the
Company has paid or deposited with the Trustee a sum sufficient to
pay
(i) all
overdue interest, if any, on all Securities,
(ii) the
principal of any Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates prescribed
therefor in such Securities,
(iii) to
the extent that payment of such interest is lawful, interest upon any overdue
principal and overdue interest at the rate or rates prescribed therefor in such
Securities, and
(iv) all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel;
and
(b) all
Events of Default with respect to Securities, other than the non-payment of the
principal of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section
5.13.
No such
rescission shall affect any subsequent Default or impair any right consequent
thereon.
Section
5.3 Collection of Indebtedness
and Suits for Enforcement by Trustee.
The
Company covenants that if:
(a)
default is made in the payment of any interest on any Security when such
interest becomes due and payable and such default continues for a period of 30
days, or
(b)
default is made in the payment of principal of any Security at the Maturity
thereof, then the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal and interest and, to the extent that payment of
such interest shall be legally enforceable, interest on any overdue principal or
any overdue interest, at the rate or rates prescribed therefor in such
Securities, and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
If the
Company fails to pay such amounts forthwith upon such demand, the Trustee, in
its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same against the
Company or any other obligor upon such Securities and collect the moneys
adjudged or deemed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Securities, wherever
situated.
18
If an
Event of Default with respect to any Securities occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its right`s and the
rights of the Holders of Securities by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
Section
5.4 Trustee May
File Proofs of Claim.
In case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(a) to
file and prove a claim for the whole amount of principal and interest owing and
unpaid in respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the Holders allowed
in such judicial proceeding, and
(b) to
collect and receive any moneys or other property payable or deliverable on any
such claims and to distribute the same, and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.7.
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
5.5 Trustee May
Enforce Claims Without Possession of Securities.
All
rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
Section
5.6 Application
of Money Collected.
Any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
First: To
the payment of all amounts due the Trustee under Section 6.7; and
Second:
To the payment of the amounts then due and unpaid for principal of and interest
on the Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal and interest,
respectively; and
Third: To
the Company.
19
Section
5.7 Limitation
on Suits.
No Holder
of any Security shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless
(a) such
▇▇▇▇▇▇ has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Securities;
(b) the
Holders of not less than 25% in principal amount of the outstanding Securities
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee
hereunder;
(c) such
Holder or Holders have offered to the Trustee reasonable indemnity against the
losses, expenses or liabilities to be incurred in compliance with such
request;
(d) the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(e) no
direction inconsistent with such written request has been given to the Trustee
during such 60 day period by the Holders of at least 66-2/3% of the then
outstanding aggregate principal amount of the Securities;
it being
understood and intended that no one or more of such Holders shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all such
Holders.
Section
5.8 Unconditional Right of
Holders to Receive Principal and Interest and to Convert
Securities.
Except
as set forth in Section 5.7, the Holder of any Security shall have the right,
which is absolute and unconditional, to receive payment of the principal of and
interest, if any, on such Security on the Stated Maturity or Stated Maturities
expressed in such Security, to convert any Security into shares of Common Stock
in accordance with the terms of such Security and, to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
Section
5.9 Restoration
of Rights and Remedies.
If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section
5.10 Rights and Remedies
Cumulative.
Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section
5.11 Delay or
Omission Not Waiver.
No delay
or omission of the Trustee or of any Holder of any Securities to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may
be.
20
Section
5.12 Control
by Holders.
The
Holders of 66-2/3% of the then outstanding aggregate principal amount of the
Securities shall 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, with respect to the Securities,
provided that:
(a) such
direction shall not be in conflict with any rule of law or with this
Indenture,
(b) the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction, and
(c)
subject to the provisions of Section 6.1, the Trustee shall have the right to
decline to follow any such direction if the Trustee in good faith shall, by a
Responsible Officer of the Trustee, determine that the proceeding so directed
would involve the Trustee in personal liability.
Section
5.13 Waiver of
Past Defaults.
Subject
to Section 5.2, the Holders of not less than two-thirds in principal amount of
the outstanding Securities may on behalf of the Holders of all the Securities
waive any past Default hereunder with respect the Securities and its
consequences, except (a) a Default in the payment of the principal of or
interest on any Security, (b) a Default with respect to a Holder’s right to
convert Securities, or (c) a Default with respect to any covenant the amendment
of which would require the consent of each Holder (provided, however, that the
Holders of at least two-thirds in principal amount of the outstanding Securities
may rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
Section
5.14 Undertaking
for Costs.
All
parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, 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,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the outstanding Securities, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of or interest on any
Security on or after the Stated Maturity or Stated Maturities expressed in such
Security (or, in the case of redemption, on the redemption date).
Section
5.15 Prepayment.
Notwithstanding
anything to the contrary contained herein, upon the occurrence of an Event of
Default set forth in Section 5.1, the Holders shall have the right, at their
option, to require the Company to prepay all or a portion of the Securities in
cash at a price equal to the sum of (i) the greater of (A) one hundred percent
(100%) of the aggregate principal amount of the Securities plus all accrued and
unpaid interest and (B) the aggregate principal amount of the Securities plus
all accrued but unpaid interest hereon, divided by the Conversion Price on (x)
the date the Prepayment Price (as defined below) is demanded or otherwise due or
(y) the date the Prepayment Price is paid in full, whichever is less, multiplied
by the Daily VWAP on (x) the date the Prepayment Price is demanded or otherwise
due, and (y) the date the Prepayment Price is paid in full, whichever is
greater; provided that if the Event of Default is under Section 5.1(l) or (k),
the Daily VWAP shall be as of the date immediately prior to the occurrence of
such Event of Default, and (ii) all other amounts, costs, expenses and
liquidated damages due in respect of the Indenture, the Securities, the Warrants
or the Securities Purchase Agreement (the “Prepayment
Price”).
21
No
sooner than fifteen (15) days nor later than ten (10) days prior to the
consummation of a Change of Control, but not prior to the public announcement of
such Change of Control, the Company shall deliver written notice thereof via
facsimile and overnight courier (“Notice of Change of
Control”) to the Holders with a copy to the Trustee. At any time after
receipt of a Notice of Change of Control (or, in the event a Notice of Change of
Control is not delivered at least ten (10) days prior to a Change of Control, at
any time within ten (10) days prior to a Change of Control), any Holder of the
Securities then outstanding may require the Company to prepay, effective
immediately prior to the consummation of such Change of Control, all of the
Holder’s Securities then outstanding by delivering written notice thereof via
facsimile and overnight courier (“Notice of Prepayment at
Option of Holder Upon Change of Control”) to the Company with a copy to
the Trustee, which Notice of Prepayment at Option of Holder Upon Change of
Control shall indicate (i) the principal amount of the Securities that such
holder is electing to have prepaid and (ii) the applicable Prepayment Price, as
calculated above. In the event the Company receives a Notice of Prepayment at
Option of Holder Upon Change of Control from more than one Holder and the
Company can prepay some, but not all, of the Securities pursuant to this
Section, the Company shall prepay from each Holder electing to have its
Securities prepaid at such time an amount equal to such Holder’s pro-rata amount
(based on the principal amount of the Securities held by such Holder relative to
the principal amount of the Securities outstanding) of all the Securities being
prepaid at such time.
Within
one (1) business day after the occurrence of an Event of Default other than a
Change of Control, the Company shall deliver written notice thereof via
facsimile and overnight courier (“Notice of Event of
Default”) to each Holder with a copy to the Trustee. At any time after
the earlier of a Holder’s receipt of a Notice of Event of Default and such
Holder becoming aware of an Event of Default, any Holder may require the Company
to prepay all (but not less than all) of the Securities held by such Holder by
delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at
Option of Holder Upon Event of Default”) to the Company with a copy to
the Trustee, which Notice of Prepayment at Option of Holder Upon Event of
Default shall indicate the applicable Prepayment Price, as calculated above. In
the event the Company receives a Notice of Prepayment at Option of Holder Upon
Event of Default from more than one Holder and the Company can prepay some, but
not all, of the Securities pursuant to this Section, the Company shall prepay
from each Holder electing to have its Securities prepaid at such time an amount
equal to such Holder’s pro-rata amount (based on the principal amount of the
Securities held by such Holder relative to the principal amount of the
Securities outstanding) of all the Securities being prepaid at such
time.
Upon
the Company’s receipt of a Notice(s) of Prepayment at Option of Holder Upon
Event of Default or a Notice(s) of Prepayment at Option of Holder Upon Change of
Control from any Holder, the Company shall immediately notify each Holder and
the Trustee by facsimile of the Company’s receipt of such Notice(s) of
Prepayment at Option of Holder Upon Event of Default or Notice(s) of Prepayment
at Option of Holder Upon Change of Control and each Holder which has sent such a
notice shall promptly submit to the Company such ▇▇▇▇▇▇’s original Securities
that are to be prepaid. The Company shall deliver the applicable Prepayment
Price, in the case of a prepayment at option of Holder upon Event of Default
(not a Change of Control), to such Holder within five (5) business days after
the Company’s receipt of a Notice of Prepayment at Option of Holder Upon Event
of Default and, in the case of a prepayment at option of holder upon Change of
Control, the Company shall deliver the applicable Prepayment Price immediately
prior to the consummation of the Change of Control; provided that a Holder’s
original Securities shall have been so delivered to the Company; provided
further that if the Company is unable to prepay all of the Securities to be
prepaid, the Company shall prepay an amount from each Holder being prepaid equal
to such Holder’s pro-rata amount (based on the number of Securities held by such
Holder relative to the number of Securities outstanding) of all Securities being
prepaid. If the Company shall fail to prepay all of the Securities submitted for
prepayment (including as a result of a dispute as to the calculation of the
Prepayment Price), in addition to any remedy such Holder may have under the
Securities and the Securities Purchase Agreement, the applicable Prepayment
Price payable in respect of such Securities not prepaid shall bear interest at
the rate of two percent (2%) per month (prorated for partial months) until paid
in full. Until the Company pays such unpaid applicable Prepayment Price in full
to a Holder submitted for prepayment, such Holder shall have the option to, in
lieu of prepayment, require the Company to promptly return to such Holder(s) all
of the Securities that were submitted for prepayment by such holder(s) under
this Section 5.15 and for which the applicable Prepayment Price has not been
paid, by sending written notice thereof to the Company via facsimile (the “Void Optional Prepayment
Notice”). Company shall promptly send a copy of such Void Optional
Prepayment Notice to each of the other Holders. Upon the Company’s receipt of
such Void Optional Prepayment Notice(s) and prior to payment of the full
applicable Prepayment Price to such Holder, (i) the Notice(s) of Prepayment at
Option of Holder Upon Event of Default or the Notice(s) of Prepayment at Option
of Holder Upon Change of Control, as the case may be, shall be null and void
with respect to those Securities submitted for prepayment and for which the
applicable Prepayment Price has not been paid, (ii) the Company shall
immediately return any Securities submitted to the Company by each Holder for
prepayment under this Section and for which the applicable Prepayment Price has
not been paid and (iii) the Conversion Price of such returned Securities shall
be adjusted to the lesser of (A) the Conversion Price as in effect on the date
on which the Void Optional Prepayment Notice(s) is delivered to the Company and
(B) the lowest Closing Price during the period beginning on the date on which
the Notice(s) of Prepayment of Option of Holder Upon Change of Control or the
Notice(s) of Prepayment at Option of Holder Upon Event of Default, as the case
may be, is delivered to the Company and ending on the date on which the Void
Optional Prepayment Notice(s) is delivered to the Company; provided that no adjustment
shall be made if such adjustment would result in an increase of the Conversion
Price then in effect. A Holder’s delivery of a Void Optional Prepayment Notice
and exercise of its rights following such notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such
notice. Payments provided for in this Section 5.15 shall have priority to
payments to other creditors and stockholders in connection with a Change of
Control.
22
ARTICLE
6
TRUSTEE
Section
6.1 Duties of
Trustee.
(a) If an
Event of Default has occurred and is continuing, the Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b)
Except
during the continuance of an Event of Default:
(i) The
Trustee need perform only those duties that are specifically set forth in this
Indenture and no others.
(ii) 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 Officers’ Certificates or Opinions of Counsel furnished to the
Trustee and conforming to the requirements of this Indenture; however, in the case
of any such Officers’ Certificates or Opinions of Counsel which by any
provisions hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine such Officers’ Certificates and Opinions of Counsel to
determine whether or not they conform to the requirements of this
Indenture.
(c) The
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except
that:
(i) This
paragraph does not limit the effect of paragraph (b) of this
Section.
(ii) The
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(iii) The
Trustee shall not be liable with respect to any action taken, suffered or
omitted to be taken by it with respect to Securities in good faith in accordance
with the direction of the Holders of at least two-thirds in principal amount of
the outstanding Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture with respect to the
Securities.
23
(d) Every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraph (a), (b) and (c) of this Section.
(e) The
Trustee may refuse to perform any duty or exercise any right or power unless it
receives indemnity satisfactory to it against any loss, liability or
expense.
(f) The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree 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.
(g) No
provision of this Indenture shall require the Trustee to risk its own funds or
otherwise incur any financial liability in the performance of any of its duties,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk is not reasonably assured to it.
(h) The
Paying Agent, the Registrar and any authenticating agent shall be entitled to
the protections and immunities as are set forth in paragraphs (a), (b) and (c)
of this Section with respect to the Trustee; provided that such
protections and immunities shall not apply to the Company in its role as Paying
Agent or Registrar.
Section
6.2 Rights of
Trustee.
(a) The
Trustee may rely on and shall be protected in acting or refraining from acting
upon any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b)
Before the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel.
(c) The
Trustee may act through agents and shall not be responsible for the misconduct
or negligence of any agent appointed with due care. No Depository shall be
deemed an agent of the Trustee and the Trustee shall not be responsible for any
act or omission by any Depository.
(d) The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or powers
conferred upon it under this Indenture.
(e) The
Trustee may consult with counsel 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.
(f) The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders
of Securities unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
Section
6.3 Individual
Rights of Trustee.
The
Trustee in its individual or any other capacity may become the owner or pledgee
of Securities and may otherwise deal with the Company or an Affiliate with the
same rights it would have if it were not Trustee. Any Agent may do the same with
like rights. The Trustee is also subject to Sections 6.10 and 6.11.
Section
6.4 Trustee’s
Disclaimer.
The
Trustee makes no representation as to the validity or adequacy of this Indenture
or the Securities, or the recitals contained herein or therein, 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
authentication.
24
Section
6.5 Notice of
Defaults.
If a
Default or Event of Default occurs and is continuing with respect to the
Securities and if it is known to a Responsible Officer of the Trustee, the
Trustee shall mail to each Securityholder of the Securities notice of a Default
or Event of Default within 30 days after it occurs or, if later, after a
Responsible Officer of the Trustee has knowledge of such Default or Event of
Default. Except in the case of a Default or Event of Default in payment of
principal of or interest on any Security, the Trustee may withhold the notice if
and so long as its corporate trust committee or a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
Section
6.6 Reports by Trustee to
Holders.
Within 60
days after May 15 in each year, the Trustee shall transmit by mail to all
Securityholders, as their names and addresses appear on the register kept by the
Registrar, a brief report dated as of such May 15, in accordance with, and to
the extent required under, TIA Section 313.
A copy of
each report at the time of its mailing to Securityholders shall be filed with
the SEC and each stock exchange on which the Securities are listed. The Company
shall promptly notify the Trustee when Securities are listed on any stock
exchange.
Section
6.7 Compensation
and Indemnity.
The
Company shall pay to the Trustee from time to time reasonable compensation for
its services. The Trustee’s compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred by it.
Such expenses shall include the reasonable compensation and expenses of the
Trustee’s agents and counsel.
The
Company shall indemnify and hold harmless the Trustee (including the cost
of defending itself) against any loss, liability or expense incurred by it
except as set forth in the next paragraph in the performance of its duties under
this Indenture as Trustee or Agent. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. The Company shall defend
the claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld. This indemnification
shall apply to officers, directors, employees, shareholders and agents and
counsel of the Trustee.
The
Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee or by any officer, director, employee,
shareholder or agent of the Trustee through negligence or bad
faith.
To secure
the Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the
Trustee, except that held in trust to pay principal and interest on particular
Securities.
When the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 5.1(k) or Section 5.1(l) occurs, the expenses and the compensation
for the services are intended to constitute expenses of administration under any
Bankruptcy Law.
The provisions of this Section shall survive resignation or
removal of the Trustee and termination of this Indenture.
Section
6.8 Replacement of
Trustee.
A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section.
The
Trustee may resign with respect to the Securities by so notifying the Company.
The Holders of at least two-thirds in principal amount of the Securities may
remove the Trustee by so notifying the Trustee and the Company. The Company may
remove the Trustee with respect to Securities if:
(a) the
Trustee fails to comply with Section 6.10;
25
(b) the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered
with respect to the Trustee under any Bankruptcy Law;
(c) a
Custodian or public officer takes charge of the Trustee or its property;
or
(d)
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 at least
two-thirds in principal amount of the then outstanding Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the
Company.
If a
successor Trustee with respect to the Securities does not take office within 60
days after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the
Trustee with respect to the Securities fails to comply with Section 6.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee subject to the lien provided for in Section 6.7, 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 with respect
to the Securities for which it is acting as Trustee under this Indenture. A
successor Trustee shall mail a notice of its succession to each Securityholder.
Notwithstanding replacement of the Trustee pursuant to this Section 6.8, the
Company’s obligations under Section 6.7 hereof shall continue for the benefit of
the retiring trustee with respect to expenses and liabilities incurred by it
prior to such replacement.
Section
6.9 Successor
Trustee by ▇▇▇▇▇▇, 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.
Section
6.10 Eligibility;
Disqualification.
This
Indenture shall always have a Trustee who satisfies the requirements of TIA
Section 310(a)(1), (2) and (5). The Trustee shall always have a combined capital
and surplus of at least $25,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA Section
310(b).
Section
6.11 Preferential
Collection of Claims Against Company.
The
Trustee is subject to TIA Section 311(a), excluding any creditor relationship
listed in TIA Section 311(b). A Trustee who has resigned or been removed shall
be subject to TIA Section 311(a) to the extent indicated.
ARTICLE
7
SATISFACTION
AND DISCHARGE
Section
7.1 Satisfaction
and Discharge of Indenture.
This
Indenture shall upon Company Order cease to be of further effect (except as
hereinafter provided in this Section 7.1), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(a)
either
26
(i) all
Securities theretofore authenticated and delivered (other than Securities that
have been destroyed, lost or stolen and that have been replaced or paid) have
been delivered to the Trustee for cancellation; or
(ii) all
such Securities not theretofore delivered to the Trustee for cancellation have
become due and payable;
and the
Company has deposited or caused to be deposited with the Trustee as trust funds
in trust an amount sufficient for the purpose of paying and discharging the
entire indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation, for principal and interest to the date of such deposit (in the
case of Securities which have become due and payable on or prior to the date of
such deposit) or to the Stated Maturity, as the case may be;
(b) the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and
(c) the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied
with.
Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the Company
to the Trustee under Section 6.7, and, if money shall have been deposited with
the Trustee pursuant to clause (a) of this Section, the provisions of Section
2.4, Section 2.7, Section 2.8, Section 6.1, Section 6.2, and Section 6.5 shall
survive.
Section
7.2 Application
of Trust Funds.
(a) All
funds deposited with the Trustee pursuant to Section 7.1 and all interest earned
on such funds, shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with or
received by the Trustee.
(b) The
Trustee shall deliver or pay to the Company from time to time upon Company
Request any funds held by Trustee which, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, are then in excess of
the amount thereof which then would have been required to be deposited for the
purpose for which such funds were deposited or received.
Section
7.3 Repayment
to Company.
The
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal and interest that remains unclaimed
for two years. Thereafter, the Trustee and Paying Agent may withhold paying any
such money to the Company until the Trustee, at the expense of the Company,
publishes in an Authorized newspaper, or mails to each Holder, a notice
stating that the money will be paid to the Company if unclaimed after a date no
less than 30 days from the publication or mailing. After that, Securityholders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another person, and all
liability of the Trustee and the Paying agent with respect to the money will
cease.
Section
7.4 Reinstatement.
If the
Trustee or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with Section 7.1, 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 7.1, 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 7.1; provided, however, that
if the Company makes any payment of principal of, premium, if any, or interest
on any Securities because of 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.
27
ARTICLE
8
AMENDMENTS
AND WAIVERS
Section
8.1 Without
Consent of Holders.
The
Company, with the consent of the Trustee, may amend or supplement this Indenture
or the Securities without notice to or the consent of any
Securityholder:
(a)
to
comply with Section 4.2 and Section 9.13;
(b) to
add to the covenants of the Company described in this Indenture for the benefit
of the Holders;
(c)
to
surrender any right or power conferred upon the Company; and
(d) to
make provisions with respect to adjustments to the Conversion Rate as required
by this Indenture.
In
addition, the Company and the Trustee, may enter into a supplemental indenture
without the consent of Holders of the Securities to cure any ambiguity, defect,
omission or inconsistency in this Indenture in a manner that does not,
individually or in the aggregate with all other modifications made or to be made
to the Indenture, adversely affect the rights of any Holder, subject to the
Trustee’s right to receive an Opinion of Counsel pursuant to Section 8.6
herein.
Section
8.2 With
Consent of Holders.
The
Company, with the consent of the Trustee, may amend or supplement this Indenture
or the Securities with the written consent of the Holders of at least two-thirds
of the aggregate principal amount of the then outstanding Securities. Subject to
Section 5.2, Section 5.8 and Section 5.13, the Holders of at least two-thirds in
aggregate principal amount of the outstanding Securities may, by notice to the
Trustee, waive compliance by the Company with any provision of this Indenture or
the Securities without notice to any other Securityholder. Notwithstanding
anything herein to the contrary, without the consent of each Holder of each
outstanding Security affected, an amendment, supplement or waiver, including a
waiver pursuant to Section 5.2, Section 5.3 or Section 5.13, may
not:
(a)
impair the right to institute suit for the enforcement of any payment on, or
with respect to, or of the conversion of, any Security;
(b)
modify
the provisions of Section 2.16 in a manner adverse to
Holders;
(c)
adversely affect the right of Holders to convert Securities in accordance with
ARTICLE IX;
(d)
reduce the percentage of the aggregate principal amount of the outstanding
Securities whose Holders must consent to a modification to or amendment of any
provision of this Indenture or the Securities;
(e)
reduce the percentage of the aggregate principal amount of the outstanding
Securities whose Holders must consent to a waiver of compliance with any
provision of this Indenture or the Securities or a waiver of any Default or
Event of Default; or
(f)
modify the provisions of this Indenture with respect to modification and waiver
(including waiver of a Default or an Event of Default), except to increase the
percentage required for modification or waiver or to provide for the consent of
each affected Holder.
Promptly
after an amendment, supplement or waiver under Section 8.1 or this Section 8.2
becomes effective, the Company shall mail, or cause to be mailed, at its sole
cost and expense, to Securityholders a notice briefly describing such
amendment, supplement or waiver. Any failure of the Company to mail such notice
shall not in any way impair or affect the validity of such amendment, supplement
or waiver.
28
It
shall not be necessary for the consent of the Holders under this Section 8.2 to
approve the particular form of any proposed supplemental indenture or waiver,
but it shall be sufficient if such consent approves the substance thereof. Any
failure by the Company to mail or publish such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture or waiver.
Section
8.3 Compliance
with Trust Indenture Act.
Every
amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture hereto that complies with the TIA as then in
effect.
Section
8.4 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 such amendment, supplement or
waiver makes a change that requires, pursuant to Section 8.2, the consent of
each Holder affected. 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
8.5 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 such amendment, supplement or
waiver 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
8.6 Trustee
Protected.
The
Trustee shall sign any amendment, supplemental indenture or waiver authorized
pursuant to this ARTICLE VIII; provided, however, that the
Trustee need not sign any amendment, supplement or waiver authorized pursuant to
this ARTICLE VIII that adversely affects the Trustee’s rights, duties,
liabilities or immunities. The Trustee shall be entitled to receive and
conclusively rely upon an Opinion of Counsel as to legal matters (including,
without limitation, that any such amendment, supplemental indenture or waiver
does not, individually or in the aggregate with all other modifications,
adversely affect the rights of any Holder) and an Officers’ Certificate as to
factual matters that any supplemental indenture, amendment or waiver is
permitted or authorized pursuant to this Indenture and that all conditions
precedent to the execution of such supplemental indenture have been
fulfilled.
ARTICLE
9
CONVERSION
Section
9.1 Conversion
Privilege; Restrictive Legends.
9.1.1 Subject to the
provisions of ARTICLE IX, the Securities shall be convertible, at any time, in
integral multiples of $1,000 principal amount, into shares of Common Stock in
accordance with this ARTICLE IX.
29
9.1.2 Notwithstanding anything
herein to the contrary, the right to convert the Securities pursuant to this
ARTICLE IX shall terminate at the close of business on the Maturity
Date.
9.1.3 The initial Conversion
Rate shall be 10,000 shares of Common Stock per $1,000 principal amount of
Securities. The Conversion Rate shall be subject to adjustment in accordance
with Section 9.7 through Section 9.15.
9.1.4 A Holder may convert a
portion of the principal amount of a Security if such portion is $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 such Security.
Section
9.2 Limitation
on the Right to Convert.
9.2.1 The Securities may only
be converted by a Holder (or Beneficial Holder) or by the Company in any
mandatory conversion on any day to the extent that, together with all prior
conversions under such Security, the total amount of such Security that has been
converted does not exceed the product of (A) 10% of the original principal
amount of the Securities held by such Holder (or Beneficial Holder) on the Issue
Date, and (B) the number of whole or partial weeks since the date that is two
weeks from the Issue Date.
9.2.2 At no time may the
Company effect the conversion of any Securities or issue to a Holder (or
Beneficial Holder) shares of Common Stock, or a Holder (or Beneficial Holder)
convert all or a portion of the Securities into shares of Common Stock, if
following such issuance or conversion, the aggregate number of shares of Common
Stock held by any Holder (or Beneficial Holder) of such Securities would exceed,
when aggregated with all other shares of Common Stock then-owned by such Holder
(or Beneficial Holder) and all shares of Common Stock that such Holder (or
Beneficial Holder) is then the beneficial owner of (as determined in accordance
with Section 13(d) of the Exchange Act and the rules thereunder), the number of
shares of Common Stock that would result in such Holder (or Beneficial Holder)
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules thereunder) more than 9.999% of all of the Common
Stock outstanding following such conversion.
Section
9.3 Conversion.
9.3.1 Subject to the
provisions of this ARTICLE IX, the Securities shall be convertible (in whole or
in part), at the option of the Holder, into such number of fully paid and
non-assessable shares of Common Stock as is determined by dividing (x) that
portion of the outstanding principal balance and accrued and unpaid interest on
the portion of the outstanding principal balance that the Holder elects to
convert by (y) the Conversion Price then in effect on the date on which the
Holder faxes a notice of conversion (the “Conversion Notice”),
duly executed, to the Company (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇) (the “Voluntary Conversion
Date”).
9.3.2 Subject to Section 9.2,
the Company may elect to cause all or a portion of the principal amount of the
Securities to convert into a number of fully paid and nonassessable shares of
Common Stock equal to the quotient of (i) the principal amount of the Securities
divided by (ii) the Conversion Price in effect on the date of such conversion by
providing five (5) days prior written notice of such Mandatory Conversion
Date. Any such conversion shall be made pro-rata amongst all Holders
of Securities. As used herein, a “Mandatory Conversion
Date” shall be a date on which the Daily VWAP equals or has exceeded
$0.50 (as appropriately adjusted for stock splits, stock dividends,
reorganizations, recapitalizations, stock combinations and the like) for each of
the ten (10) consecutive prior Trading Days ending on the Trading Day
immediately prior to such date; provided, that the Equity
Conditions shall have been satisfied and the Common Stock shall have been
Tradable on each Trading Day during the period beginning on the first day of
such ten (10) day period and ending on the date of the delivery of such shares
of Common Stock pursuant to the mandatory conversion. The Mandatory Conversion
Date and the Voluntary Conversion Date collectively are referred to in this
Indenture as the “Conversion Date”;
provided, however, that if such date is not a Trading Day, then the Conversion
Date shall be deemed to be the next day that is a Trading Day. The
Company shall publicly disclose the mandatory conversion of the Securities
pursuant to this paragraph in a Form 8-K within one business day of the date on
which it delivers written notice to the Holders of the
Securities.
30
9.3.3 In the case of a dispute
as to the determination of the Closing Price, Daily VWAP or the arithmetic
calculation of the Conversion Price, any adjustment to the Conversion Price,
liquidated damages amount, interest or dividend calculation, or any redemption
price, redemption amount, adjusted Conversion Price, or similar calculation, or
as to whether a subsequent issuance of securities is prohibited hereunder or
would lead to an adjustment to the Conversion Price, the Company shall submit
the disputed determinations or arithmetic calculations via facsimile within two
(2) business days of receipt, or deemed receipt, of the Conversion Notice, any
redemption notice, default notice or other event giving rise to such dispute, as
the case may be, to the Holders. If the Company and holders of at least
two-thirds of the aggregate principal amount of then outstanding securities are
unable to agree upon such determination or calculation within two (2) business
days of such disputed determination or arithmetic calculation being submitted to
such Holders, then the Company shall, within two (2) business days submit via
facsimile (a) the disputed determination of the Closing Price or the Daily VWAP
to an independent, reputable investment bank selected by the Company and
approved by the holders of at least two-thirds of the aggregate principal amount
of then outstanding securities , which approval shall not be unreasonably
withheld, (b) the disputed arithmetic calculation of the Conversion Price,
adjusted Conversion Price or any redemption price, redemption amount or default
amount to the Company’s independent, outside accountant or (c) the disputed
facts regarding whether a subsequent issuance of securities is prohibited
hereunder or would lead to an adjustment to the Conversion Price (or any of the
other above described facts not expressly designated to the investment bank or
accountant), to an expert attorney from a nationally recognized outside law firm
(having at least one hundred (100) attorneys and having with no prior
relationship with the Company) selected by the Company and approved by the
holders of at least two-thirds of the aggregate principal amount of then
outstanding securities ). The Company, at the Company’s expense, shall cause the
investment bank, the accountant, the law firm, or other expert, as the case may
be, to perform the determinations or calculations and notify the Company and the
holders of at least two-thirds of the aggregate principal amount of then
outstanding securities of the results no later than five (5) business days from
the time it receives the disputed determinations or calculations. Such
investment bank’s, accountant’s or attorney’s determination or calculation, as
the case may be, shall be binding upon all parties absent demonstrable error.
The Company shall notify the Trustee of any determination or calculation made in
accordance with this Section 9.3.3.
Section
9.4 Conversion
Procedure and Payment Upon Conversion.
9.4.1 Not later than three (3)
Trading Days after any Conversion Date (the “Delivery Date”), the
Company or its designated transfer agent, as applicable, shall issue and deliver
to the DTC account on the Holder’s behalf
via the Deposit Withdrawal Agent Commission System (“DWAC”) as specified
in the Conversion Notice, registered in the name of the Holder or its designee,
the number of shares of Common Stock to which the Holder is entitled, free from
any restrictive legend. If in the case of any Conversion Notice such
shares are not delivered to or as directed by the applicable Holder by the
Delivery Date, the Holder shall be entitled by written notice to the Company at
any time on or before its receipt of such shares, to rescind such conversion, in
which event the Company shall immediately return its Securities tendered for
conversion, whereupon the Company and the Holder shall each be restored to their
respective positions immediately prior to the delivery of such notice of
revocation, except that any amounts described in this Section 9.4 shall be
payable through the date notice of rescission is given to the
Company.
The
Company understands that a delay in the delivery of the shares of Common Stock
upon conversion of the Securities beyond the Delivery Date could result in
economic loss to the Holder. If the Company fails to deliver to the
Holder such shares via DWAC by the Delivery Date, the Company shall pay to such
Holder, in cash, an amount per Trading Day for each Trading Day until such
shares are delivered via DWAC, together with interest on such amount at a rate
of 15% per annum, accruing until such amount and any accrued interest thereon is
paid in full, equal to the greater of (A) (i) 1% of the aggregate principal
amount of the Securities requested to be converted for each of the first five
(5) Trading Days after the Delivery Date and (ii) 2% of the aggregate principal
amount of the Securities requested to be converted for each Trading Day
thereafter and (B) $2,000 per day (which amount shall be paid as liquidated
damages and not as a penalty). Nothing herein shall limit a Holder’s
right to pursue actual damages for the Company’s failure to deliver certificates
representing shares of Common Stock upon conversion within the period specified
herein and such Holder shall have the right to pursue all remedies available to
it at law or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief). Notwithstanding anything to
the contrary contained herein, the Holder shall be entitled to withdraw a
Conversion Notice, and upon such withdrawal the Company shall only be obligated
to pay the liquidated damages accrued in accordance with this Section through
the date the Conversion Notice is withdrawn.
31
In
addition to any other rights available to the Holder, if the Company fails to
cause its transfer agent to transmit via DWAC the shares of Common Stock
issuable upon conversion of this Note on or before the Delivery Date, and if
after such date the Holder is required by its broker to purchase (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the shares of Common Stock issuable upon
conversion of the Securities which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the
Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Common Stock issuable upon conversion of the Securities that
the Company was required to deliver to the Holder in connection with such
conversion times (B) the price at which the sell order giving rise to such
purchase obligation was executed, and (2) at the option of the Holder, either
reinstate the portion of the Securities and equivalent number of shares of
Common Stock for which such conversion was not honored or deliver to the Holder
the number of shares of Common Stock that would have been issued had the Company
timely complied with its conversion and delivery obligations hereunder. For
example, if the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of shares of
Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately preceding sentence
the Company shall be required to pay the Holder $1,000. The Holder shall provide
the Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In, together with applicable confirmations and other evidence
reasonably requested by the Company. Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver shares
of Common Stock upon conversion of the Securities as required pursuant to the
terms hereof.
9.4.2 If a Security
is tendered for conversion or upon a mandatory conversion pursuant to Section
9.3 in accordance with this ARTICLE IX, then:
(a) the
Company shall deliver, through the Conversion Agent, the following to the Holder
of such Security:
(i) a
certificate for, or to the extent permissible, in book entry form through DTC,
the number of full shares of Common Stock into which the Securities are
converted (the “Conversion Shares”);
and
(ii) any
cash payment for fractional shares (the “Cash
Payment”).
(b)
the Company shall deliver such Conversion Shares and such cash interest Payment
or Securities in lieu of interest as soon as practicable following the
Conversion Date applicable to such conversion, but in no event more than two (2)
Business Days after the Conversion Date; and
(c) at
and after the close of business on the Conversion Date, the person in whose name
such certificate representing such Conversion Shares is to be registered shall
be treated as a stockholder of record with respect to such Conversion Shares,
and all rights of the Holder of such Security shall terminate, other than the
right to receive the consideration deliverable upon conversion of such Security
as provided herein.
9.4.3 If any Holder surrenders
a Security for conversion after the close of business on the Record Date for the
payment of an installment of interest and prior to the related Interest Payment
Date, then, notwithstanding such conversion, the interest payable with respect
to such Security on such Interest Payment Date shall be paid on such Interest
Payment Date to the Holder of record of such Security at the close of business
on such Record Date.
9.4.4 If a Holder converts
more than one Security at the same time, the number of full shares of Common
Stock issuable upon such conversion, if any, shall be based on the total
principal amount of all Securities converted.
9.4.5 Upon surrender of a
Security that is converted in part, the Trustee, upon receipt of a Company
order, shall authenticate for the Holder a new Security equal in principal
amount to the unconverted portion of the Security surrendered.
32
9.4.6 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
9.5 Taxes
on Conversion.
If a
Holder converts its Security, the Company shall pay any documentary, stamp or
similar issue or transfer tax or duty due on the issue, if any, of shares of
Common Stock upon the conversion. However, such Holder shall pay any such tax or
duty which is due because such shares are issued in a name other than such
▇▇▇▇▇▇’s name. The Conversion Agent may refuse to deliver a certificate
representing the shares of Common Stock to be issued in a name other than such
▇▇▇▇▇▇’s name until the Conversion Agent receives a sum sufficient to pay any
tax or duty which will be due because such shares are to be issued in a name
other than such ▇▇▇▇▇▇’s name. Nothing herein shall preclude any tax withholding
required by law or regulation.
Section
9.6 Company to
Provide Stock.
9.6.1 The Company shall at all
times reserve out of its authorized but unissued Common Stock or Common Stock
held in its treasury enough shares of Common Stock to permit the conversion, in
accordance herewith, of all of the Securities into shares of Common
Stock.
All
shares of Common Stock which may be issued upon conversion of the Securities
shall be validly issued, fully paid and non-assessable and shall be free of
preemptive or similar rights and free of any lien or adverse claim.
The
Company shall comply with all securities laws regulating the offer and delivery
of shares of Common Stock upon conversion of Securities and shall list such
shares on each national securities exchange or automated quotation system on
which the Common Stock is listed.
9.6.2 If, upon the Company’s
receipt of a Conversion Notice, the Company cannot issue shares of Common Stock
for any reason, including, without limitation, because the Company (x) does not
have a sufficient number of shares of Common Stock authorized and available or
(y) is otherwise prohibited by applicable law or by the rules or regulations of
any stock exchange, interdealer quotation system or other self-regulatory
organization with jurisdiction over the Company or any of its securities from
issuing all of the Common Stock which is to be issued to the Holder pursuant to
a Conversion Notice, then the Company shall issue as many shares of Common Stock
as it is able to issue in accordance with the Holder’s Conversion Notice and,
with respect to the unconverted portion of the Security, the Holder, solely at
Holder’s option, can elect to:
(a)
require the Company to prepay that portion of the Security for which the Company
is unable to issue Common Stock in accordance with the Holder’s Conversion
Notice (the “Mandatory
Prepayment”) at a price equal to the Prepayment Price as of such
Conversion Date (the “Mandatory Prepayment
Price”);
(b) void
its Conversion Notice and retain or have returned, as the case may be, the
Security that was to be converted pursuant to the Conversion Notice (provided
that the Holder’s voiding its Conversion Notice shall not effect the Company’s
obligations to make any payments which have accrued prior to the date of such
notice); or
(c)
exercise its Buy-In rights pursuant to and in accordance with the terms and
provisions of Section 9.4.1.
Section
9.7 Adjustment
of Conversion Rate.
Until the
Securities have been paid in full or converted in full, the Conversion Rate
shall be subject to adjustment from time to time as follows (but shall not be
increased, other than pursuant to Section 9.7 hereof):
9.7.1 If the Company shall at
any time after the Issue Date effect a stock split of the outstanding Common
Stock, the applicable Conversion Rate in effect immediately prior to the stock
split shall be proportionately decreased. If the Company shall at any
time or from time to time after the Issue Date, combine the outstanding shares
of Common Stock, the applicable Conversion Rate in effect immediately prior to
the combination shall be proportionately increased. Any adjustments
under this Section shall be effective at the close of business on the date the
stock split or combination occurs.
33
9.7.2 If the Company shall at
any time or from time to time after the Issue Date make or issue or set a record
date for the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Conversion Rate in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such
record date shall have been fixed, as of the close of business on such record
date, by multiplying the applicable Conversion Rate then in effect by a
fraction:
(a) the
numerator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date; and
(b) the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock issuable
in payment of such dividend or distribution.
9.7.3 If the Company
shall at any time or from time to time after the Issue Date make or issue or set
a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than shares of Common
Stock, then, and in each event, an appropriate revision to the applicable
Conversion Rate shall be made and provision shall be made (by adjustments of the
Conversion Rate or otherwise) so that the Holders shall receive upon conversions
of their Securities, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company or other issuer (as
applicable) or other property that they would have received had the Securities
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the Conversion
Date, retained such securities (together with any distributions payable thereon
during such period) or assets, giving application to all adjustments called for
during such period under this Section with respect to the rights of the Holder;
provided, however, that
if such record date shall have been fixed and such dividend is not fully paid or
if such distribution is not fully made on the date fixed therefor, the
Conversion Rate shall be adjusted pursuant to this paragraph as of the time of
actual payment of such dividends or distributions.
9.7.4 If the Common Stock at
any time or from time to time after the Issue Date shall be changed to the same
or different number of shares or other securities of any class or classes of
stock or other property, whether by reclassification, exchange, substitution or
otherwise (other than by way of a stock split or combination of shares or stock
dividends or a reorganization, merger, consolidation, or sale of assets), then,
and in each event, an appropriate revision to the Conversion Rate shall be made
and provisions shall be made (by adjustments of the Conversion Rate or
otherwise) so that the Holder shall have the right thereafter to convert its
Securities into the kind and amount of shares of stock or other securities or
other property receivable upon reclassification, exchange, substitution or other
change, by holders of the number of shares of Common Stock into which such
Securities might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.
9.7.5 If at any time or from
time to time after the Issue Date there shall be a Change of Control, then as a
part of such Change of Control the Holder shall have the right to demand
prepayment pursuant to Section 5.15.
9.7.6 In the event the Company
shall at any time or from time to time after the Issue Date issue or sell any
additional shares of Common Stock (otherwise than as provided in the foregoing
subsections or pursuant to Common Stock Equivalents (hereafter defined) granted
or issued prior to the Issuance Date) (“Additional Shares of Common
Stock”), at an effective price per share less than the Conversion Rate
then in effect or without consideration, then the Conversion Rate upon each such
issuance shall be reduced to a price equal to the consideration per share paid
for such Additional Shares of Common Stock. For purposes of
clarification, the amount of consideration received for such Additional Shares
of Common Stock shall not include the value of any additional securities or
other rights received in connection with such issuance of Additional Shares of
Common Stock (i.e. warrants, rights of first refusal or other similar
rights)
34
9.7.7 The provisions of this
Section shall apply if (a) the Company, at any time after the Issue Date, shall
issue any securities convertible into or exercisable or exchangeable for,
directly or indirectly, Common Stock (“Convertible
Securities”), other than the Securities, or (b) any rights or warrants or
options to purchase any such Common Stock or Convertible Securities
(collectively with the Convertible Securities the “Common Stock
Equivalents”) shall be issued or sold. If the price per share
for which Additional Shares of Common Stock may be issuable pursuant to any such
Common Stock Equivalent shall be less than the applicable Conversion Rate then
in effect, or if, after any such issuance of Common Stock Equivalents, the price
per share for which Additional Shares of Common Stock may be issuable thereafter
is amended or adjusted, and such price as so amended or adjusted shall be less
than the applicable Conversion Rate in effect at the time of such amendment or
adjustment, then the applicable Conversion Rate upon each such issuance or
amendment or adjustment shall be adjusted as provided in subsection (ix) of this
Section as if the maximum number of shares of Common Stock issuable upon
conversion, exercise or exchange of such Common Stock Equivalents had been
issued on the date of such issuance or amendment or adjustment.
9.7.8 In case any shares
of Common Stock or any Common Stock Equivalents shall be issued or
sold:
(a) in
connection with any merger or consolidation in which the Company is the
surviving corporation (other than any consolidation or merger in which the
previously outstanding shares of Common Stock of the Company shall be changed to
or exchanged for the stock or other securities of another corporation), the
amount of consideration therefor shall be, deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors and approved
by holders of at least two-thirds of the aggregate principal amount of then
outstanding Securities, of such portion of the assets and business of the
non-surviving corporation as such Board may determine to be attributable to such
shares of Common Stock, convertible securities, rights or warrants or options,
as the case may be; or
(b) in
the event of any consolidation or merger of the Company in which the Company is
not the surviving corporation or in which the previously outstanding shares of
Common Stock of the Company shall be changed into or exchanged for the stock or
other securities of another corporation, or in the event of any sale of all or
substantially all of the assets of the Company for stock or other securities of
any corporation, the Company shall be deemed to have issued a number of shares
of its Common Stock for stock or securities or other property of the other
corporation computed on the basis of the actual exchange ratio on which the
transaction was predicated, and for a consideration equal to the fair market
value on the date of such transaction of all such stock or securities or other
property of the other corporation. If any such calculation results in adjustment
of the applicable Conversion Rate, or the number of shares of Common Stock
issuable upon conversion of the Securities, the determination of the applicable
Conversion Rate or the number of shares of Common Stock issuable upon conversion
of the Securities immediately prior to such merger, consolidation or sale, shall
be made after giving effect to such adjustment of the number of shares of Common
Stock issuable upon conversion of the Securities. In the event Common Stock is
issued with other shares or securities or other assets of the Company for
consideration which covers both, the consideration computed as provided in this
Section shall be allocated among such securities and assets as determined in
good faith by the Board of Directors, and approved by holders of at least
two-thirds of the aggregate principal amount of then outstanding
Securities.
9.7.9 In case the Company
shall take record of the holders of its Common Stock for the purpose of
entitling them to subscribe for or purchase Common Stock or Convertible
Securities, then the date of the issue or sale of the shares of Common Stock
shall be deemed to be such record date.
9.7.10 Anything herein to the
contrary notwithstanding, the Company shall not be required to make any
adjustment to the Conversion Rate in connection with any of the transactions
described in clauses (1), (2) and (3) of the definition of Permitted
Financings.
35
9.7.11 The Company shall not,
by amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the Holder
against impairment. In the event a Holder shall elect to convert any Securities
as provided herein, the Company cannot refuse conversion based on any claim that
such Holder or any one associated or affiliated with such Holder has been
engaged in any violation of law, violation of an agreement to which such Holder
is a party or for any reason whatsoever, unless, an injunction from a court, or
notice, restraining and or adjoining conversion of all or of said Notes shall
have issued and the Company posts a surety bond for the benefit of such Holder
in an amount equal to one hundred fifty percent (150%) of the amount of the
Securities the Holder has elected to convert, which bond shall remain in effect
until the completion of arbitration/litigation of the dispute and the proceeds
of which shall be payable to such Holder (as liquidated damages) in the event it
obtains judgment.
9.7.12 Upon occurrence of each
adjustment or readjustment of the Conversion Rate or number of shares of Common
Stock issuable upon conversion of the Securities pursuant to this Section, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to the Holder a certificate setting
forth such adjustment and readjustment, showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, upon written
request of the Holder, at any time, furnish or cause to be furnished to the
Holder a like certificate setting forth such adjustments and readjustments, the
applicable Conversion Rate in effect at the time, and the number of shares of
Common Stock and the amount, if any, of other securities or property which at
the time would be received upon the conversion of the Securities.
Notwithstanding the foregoing, the Company shall not be obligated to deliver a
certificate unless such certificate would reflect an increase or decrease of at
least one percent (1%) of such adjusted amount.
9.7.13 The Company shall pay
any and all issue and other taxes, excluding federal, state or local income
taxes, that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of the Securities pursuant thereto; provided, however, that the
Company shall not be obligated to pay any transfer taxes resulting from any
transfer requested by the Holder in connection with any such
conversion.
9.7.14 No fractional shares of
Common Stock shall be issued upon conversion of the Securities. In lieu of any
fractional shares to which the Holder would otherwise be entitled, the Company
shall pay cash equal to the product of such fraction multiplied by the Daily
VWAP of the of the Common Stock for the five (5) consecutive Trading Days
immediately preceding the Conversion Date.
Section
9.8 No
Adjustment.
If any
rights, options or warrants issued by the Company and requiring an adjustment to
the Conversion Rate in accordance with Section 9.7 are only exercisable upon the
occurrence of certain triggering events, then the Conversion Rate will not be
adjusted as provided in Section 9.7 until the earliest of such triggering event
occurs. Upon the expiration or termination of any such rights, options or
warrants without the exercise of such rights, options or warrants, the
Conversion Rate then in effect shall be adjusted immediately to the Conversion
Rate which would have been in effect at the time of such expiration or
termination had such rights, options or warrants, to the extent outstanding
immediately prior to such expiration or termination, never been issued. However,
if prior to the occurrence of such a triggering event, the Holder of a Security
converts into Common Stock, in addition to the issuance of the Common Stock,
upon conversion the Company will also issue such Holder the rights, options or
warrants subject to such triggering events that such Holder would have received
if the Holder had converted into Common Stock prior to the issuance of such
rights, options or warrants.
If any
dividend or distribution is declared and the Conversion Rate is adjusted
pursuant to Section 9.7 on account of such dividend or distribution, but such
dividend or distribution is thereafter not paid or made, the Conversion Rate
shall again be adjusted to the Conversion Rate which would then be in effect had
such dividend or distribution not been declared.
No
adjustment to the Conversion Rate need be made pursuant to Section 9.7 for a
transaction if Holders are to participate in the transaction without conversion
on a basis and with notice that the Board of Directors determines in good faith
to be fair and appropriate in light of the basis and notice on which holders of
Common Stock participate in the transaction (which determination shall be
described in a Board Resolution).
36
Section
9.9 Other
Adjustments.
In the
event that, as a result of an adjustment made pursuant to this ARTICLE IX, the
Holder of any Security thereafter surrendered for conversion shall become
entitled to receive any shares of Capital Stock other than shares of Common
Stock, thereafter the Conversion Rate of such other shares so receivable upon
conversion of any Security shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in this ARTICLE IX.
Section
9.10 Adjustments
for Tax Purposes.
Except as
prohibited by law or by the rules of the OTC Bulletin Board or any other stock
exchange on which the Company’s Common Stock is then traded, the Company may
make such increases in the Conversion Rate, in addition to those required by
Section 9.7 hereof, as it determines to be advisable in order that any stock
dividend, subdivision of shares, distribution of rights to purchase stock or
securities or distribution of securities convertible into or exchangeable for
stock made by the Company or to its stockholders will not be taxable to the
recipients thereof.
Section
9.11 Notice of
Adjustment.
Whenever
the Conversion Rate is adjusted, the Company shall promptly mail to Holders at
the addresses appearing on the Registrar’s books a notice of the adjustment and
file with the Trustee an Officers’ Certificate briefly stating the facts
requiring the adjustment and the manner of computing it. The certificate shall
be conclusive evidence of the correctness of such adjustment.
Section
9.12 Notice of
Certain Transactions.
In the
event that:
(a) the
Company takes any action, or becomes aware of any event, which would require an
adjustment in the Conversion Rate,
(b) the
Company takes any action that would require a supplemental indenture pursuant to
Section 9.13, or
(c) there
is a dissolution or liquidation of the Company,
the
Company shall mail to Holders at the addresses appearing on the Registrar’s
books and the Trustee a written notice stating the proposed record, effective or
expiration date, as the case may be, of any transaction referred to in clause
(a), (b) or (c) of this Section 9.12. The Company shall mail such notice at
least twenty (20) days before such date; however, failure to mail such notice or
any defect therein shall not affect the validity of any transaction referred to
in clause (a), (b) or (c) of this Section 9.12.
37
Section
9.13 Effect of Reclassifications,
Consolidations, Mergers, Binding Share Exchanges or Sale on Conversion
Privilege.
If any of
the following shall occur, namely: (i) any reclassification or change in the
Common Stock issuable upon conversion of Securities (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 of Common Stock), (ii) any
consolidation, merger or binding share exchange to which the Company is a party
other than a merger in which the Company is the continuing Person and which does
not result in any reclassification of, or change (other than a change in name,
or 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) in, the Common Stock or
(iii) any sale, transfer, lease, conveyance or other disposition of all or
substantially all of the Company’s property or assets, in each case pursuant to
which the Common Stock would be converted into or exchanged for, or would
constitute solely the right to receive, cash, securities or other property, then
the Company or such successor or purchasing Person, as the case may be, shall,
as a condition precedent to such reclassification, change, consolidation,
merger, binding share exchange, sale, transfer, lease, conveyance or
disposition, execute and deliver to the Trustee a supplemental indenture in form
reasonably satisfactory to the Trustee providing that, at and after the
effective time of such reclassification, change, consolidation, merger, binding
share exchange, sale, transfer, lease, conveyance or disposition, the Holder of
each Security then outstanding shall have the right to convert such Security (if
otherwise convertible pursuant to this ARTICLE IX) into the kind and amount of
cash, securities or other property (collectively, “Reference Property”)
receivable upon such reclassification, change, consolidation, merger, binding
share exchange, sale, transfer, lease, conveyance or disposition which a Holder
of such Security would have received if the Holder had converted the Security
immediately before the transaction (assuming, if holders of Common Stock shall
have the opportunity to elect the form of consideration to receive pursuant to
such reclassification, change, consolidation, merger, binding share exchange,
sale, transfer, lease, conveyance or disposition, that the Collective Election
shall have been made with respect to such election). If holders of Common Stock
shall have the opportunity to elect the form of consideration to receive
pursuant to such reclassification, change, consolidation, merger, binding share
exchange, sale, transfer, lease, conveyance or disposition, then the Company
shall make adequate provision to give Holders, treated as a single class, a
reasonable opportunity to elect (the “Collective Election”)
the form of such consideration for purposes of determining the composition of
the Reference Property referred to in the immediately preceding sentence, and
once such election is made, such election shall apply to all Holders after the
effective time of such reclassification, change, consolidation, merger, binding
share exchange, sale, transfer, lease, conveyance or disposition. The
supplemental indenture referred to in the first sentence of this paragraph shall
provide for adjustments of the Conversion Rate which shall be as nearly
equivalent as may be practicable to the adjustments of the Conversion Rate
provided for in this ARTICLE IX. The foregoing, however, shall not in any way
affect the right a Holder of a Security may otherwise have, pursuant to Section
9.7 or Section 9.15, to receive rights or warrants upon conversion of a
Security. If, in the case of any such consolidation, merger, binding share
exchange, sale, transfer, lease, conveyance or disposition, the stock or other
securities and property (including cash) receivable thereupon by a holder of
Common Stock includes shares of stock or other securities and property of a
Person other than the successor or purchasing Person, as the case may be, in
such consolidation, merger, binding share exchange, sale, transfer, lease,
conveyance or disposition, 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 of the Securities as the Board of Directors
in good faith shall reasonably determine necessary by reason of the foregoing
(which determination shall be described in a Board Resolution). The provisions
of this Section 9.13 shall similarly apply to successive consolidations,
mergers, binding share exchanges, sales, transfers, leases, conveyances or
dispositions.
In the
event the Company shall execute a supplemental indenture pursuant to this
Section 9.13, the Company shall promptly file with the Trustee an Officers’
Certificate briefly stating the reasons therefor, the kind or amount of shares
of stock or securities or property (including cash) receivable by Holders of the
Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, binding share exchange, sale,
transfer, lease, conveyance or disposition and any adjustment to be made with
respect thereto and an Opinion of Counsel satisfactory to the
Trustee.
The
Company shall not become a party to any such reclassification, change,
consolidation, merger, binding share exchange, sale, transfer, lease, conveyance
or disposition unless the terms thereof are consistent with this Section
9.13.
Section
9.14 Trustee’s
Disclaimer.
The
Trustee has no duty to determine when an adjustment under this ARTICLE IX should
be made, how it should be made or what such adjustment should be, but may accept
as conclusive evidence of the correctness of any such adjustment (or
determination not to make an adjustment), and shall be protected in relying
upon, the Officers’ Certificate with respect thereto which the Company is
obligated to file with the Trustee pursuant to Section 9.11 hereof. The Trustee
makes no representation as to the validity or value of any securities or assets
issued upon conversion of Securities, and the Trustee shall not be responsible
for the failure by the Company to comply with any provisions of this ARTICLE IX.
The Trustee shall not be deemed to have any knowledge of a trigger event that
would require or cause a mandatory conversion without the written direction of
the Company. The Trustee or the Conversion Agent shall not be required to take
any action whatsoever with regard to any conversion without the written
direction of the Company.
The
Trustee shall not be under any responsibility to determine the correctness of
any provisions contained in any supplemental indenture executed pursuant to
Section 9.13, but may accept as conclusive evidence of the correctness thereof,
and shall be protected in relying upon, the Officers’ Certificate with respect
thereto which the Company is obligated to file with the Trustee pursuant to
Section 9.13 hereof and an Opinion of Counsel.
38
Section
9.15 Rights Distributions
Pursuant to the Stockholder Rights Plan.
Upon
conversion of any Security or a portion thereof, the Company shall make
provision for the Holder thereof, to the extent such Holder is to receive shares
of Common Stock upon such conversion, to receive, in addition to, and
concurrently with the delivery of, the consideration otherwise payable hereunder
upon such conversion, the rights described in the Rights Agreement or any other
stockholders’ rights plan the Company may have in effect at such time, unless
such rights have separated from the Common Stock at the time of such conversion,
in which case the Conversion Rate shall be adjusted upon such separation in
accordance with Section 9.7.
ARTICLE
10
SUBORDINATION
Section
10.1 Agreement
of Subordination.
The
Company covenants and agrees, and each holder of Securities issued hereunder by
its acceptance thereof likewise covenants and agrees, that all Securities shall
be issued subject to the provisions of this Article X, and each Holder, whether
upon original issue or upon registration of transfer, assignment or exchange
thereof, accepts and agrees to be bound by such provisions.
The
payment of the principal of and interest on all Securities issued hereunder
shall, to the extent and in the manner hereinafter set forth, be subordinated
and subject in right of payment to the prior payment in full of all Senior Debt,
whether outstanding at the date of this Indenture or thereafter
incurred.
No
provision of this Article X shall prevent the occurrence of any default or Event
of Default hereunder.
Section
10.2 Payments
to Holders.
No
payment shall be made with respect to the principal of or interest on the
Securities, except payments and distributions made by the Trustee as permitted
by the first or second paragraph of Section 10.5, if:
(A) a
default in the payment of principal, interest, rent or other obligations in
respect of Senior Debt occurs and is continuing beyond any applicable period of
grace (a “Payment
Default”), unless and until such Payment Default shall have been cured or
waived or shall have ceased to exist; or
(B) a
default, other than a Payment Default, on any Senior Debt occurs and is
continuing that then permits holders of such Senior Debt or a Representative
thereof to accelerate its maturity (or in the case of any lease, a default
occurs and is continuing that permits the lessor to either terminate the lease
or require the Company to make an irrevocable offer to terminate the lease
following an event of default thereunder) (a “Non-Payment
Default”), unless and until such Non-Payment Default shall have been
cured or waived or shall have ceased to exist.
The
Company may and shall resume payments on and distributions in respect of the
Securities upon the date upon which any such Payment Default or Non-Payment is
cured or waived or ceases to exist.
Upon any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution or winding up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due or to become due upon all Senior Debt shall
first be paid in full in cash or other payment satisfactory to the holders of
such Senior Debt or provision is made for such payment thereof in accordance
with its terms provided for in cash or other payment satisfactory to the holders
of such Senior Debt before any payment is made on account of the principal of or
interest on the Securities (except payments made pursuant to Article VII from
monies deposited with the Trustee pursuant thereto prior to commencement of
proceedings for such dissolution, winding up, liquidation or reorganization),
and upon any such dissolution or winding up or liquidation or reorganization of
the Company or bankruptcy, insolvency, receivership or other similar proceeding,
any payment by the Company, or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the holders of
the Securities or the Trustee would be entitled, except for the provisions of
this Article X, shall (except as aforesaid) be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the holders of the Securities or by
the Trustee under this Indenture if received by them or it, directly to the
holders of Senior Debt (pro rata to such holders on the basis of the respective
amounts of Senior Debt held by such holders, or as otherwise required by law or
a court order) or their Representative or Representatives, as their respective
interests may appear, to the extent necessary to pay all Senior Debt in full, in
cash or other payment satisfactory to the holders of such Senior Debt, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Debt, before any payment or distribution is made to the holders of the
Securities or to the Trustee.
39
For
purposes of this Article X, the words, “cash, property or securities” 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 X with respect to
the Securities to the payment of all Senior Debt which may at the time be
outstanding provided that (i) the Senior Debt is assumed by the new corporation,
if any, resulting from any reorganization or readjustment, and (ii) the rights
of the holders of Senior Debt (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
corporation 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
Section 9.13 shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 10.2 if such other Person shall,
as a part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Section 9.13.
In the
event of the acceleration of the Securities because of an Event of Default, no
payment or distribution shall be made to the Trustee or any holder of Securities
in respect of the principal of or interest on the Securities except payments and
distributions made by the Trustee as permitted by the first or second paragraph
of Section 10.5, until all Senior Debt has been paid in full in cash or other
payment satisfactory to the holders of Senior Debt. If payment of the Securities
is accelerated because of an Event of Default, the Company shall promptly notify
holders of Senior Debt of the acceleration.
In the
event that, notwithstanding the foregoing provisions, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing provisions in this Section 10.2, shall
be received by the Trustee or the holders of the Securities before all Senior
Debt is paid in full in cash or other payment satisfactory to the holders of
such Senior Debt, or provision is made for such payment thereof in accordance
with its terms in cash or other payment satisfactory to the holders of such
Senior Debt, such payment or distribution shall be held in trust for the benefit
of and shall be paid over or delivered to the holders of Senior Debt or their
Representative or Representatives, as their respective interests may appear, as
calculated by the Company, for application to the payment of any Senior Debt
remaining unpaid to the extent necessary to pay all Senior Debt in full in cash
or other payment satisfactory to the holders of such Senior Debt, after giving
effect to any concurrent payment or distribution to or for the holders of such
Senior Debt.
Nothing
in this Section 10.2 shall apply to claims of, or payments to, the Trustee or
its agents under or pursuant to Section 6.7. This Section 10.2 shall be subject
to the further provisions of Section 10.5.
Section
10.3 Subrogation
of Securities.
Subject
to the payment in full of all Senior Debt, the rights of the holders of the
Securities shall be subrogated to the extent of the payments or distributions
made to the holders of such Senior Debt pursuant to the provisions of this
Article X (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to other indebtedness of the
Company to substantially the same extent as the Securities are subordinated and
is entitled to like rights of subrogation) to the rights of the holders of
Senior Debt to receive payments or distributions of cash, property or securities
of the Company applicable to the Senior Debt until the principal and interest on
the Securities shall be paid in full, and, for the purposes of such subrogation,
no payments or distributions to the holders of the Senior Debt of any cash,
property or securities to which the holders of the Securities would be entitled
except for the provisions of this Article X, and no payment over pursuant to the
provisions of this Article X, to or for the benefit of the holders of Senior
Debt by holders of the Securities or the Trustee, shall, as among the Company,
its creditors other than holders of Senior Debt, and the holders of the
Securities, be deemed to be a payment by the Company to or on account of the
Senior Debt, and no payments or distributions of cash, property or securities to
or for the benefit of the holders of the Securities pursuant to the subrogation
provisions of this Article X, which would otherwise have been paid to the
holders of Senior Debt, shall be deemed to be a payment by the Company to or for
the account of the Securities. It is understood that the provisions of this
Article X are and are intended solely for the purposes of defining the relative
rights of the holders of the Securities, on the one hand, and the holders of the
Senior Debt, on the other hand.
40
Nothing
contained in this Article X or elsewhere in this Indenture or in the Securities
is intended to or shall impair, as among the Company, its creditors other than
the holders of Senior Debt, 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 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 the Senior Debt, nor shall
anything herein or therein prevent the Trustee or the holder of any Securities
from exercising all remedies otherwise permitted by applicable law upon a
Default or an Event of Default under this Indenture, subject to the rights, if
any, under this Article X of the holders of Senior Debt in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any
payment or distribution of assets of the Company referred to in this Article X,
the Trustee, subject to the provisions of Section 6.1, 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 such bankruptcy, dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such 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 distribution, the holders of the Senior Debt and other
indebtedness of the Company, the amount thereof or payable thereon and all other
facts pertinent thereto or to this Article X.
Section
10.4 Authorization
to Effect Subordination.
Each
holder of a Security by the holder’s acceptance thereof authorizes and directs
the Trustee on the holder’s behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article X and
appoints the Trustee to act as the holder’s attorney-in-fact for any and all
such purposes. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 5.4 hereof at
least thirty (30) days before the expiration of the time to file such claim, the
holders of any Senior Debt or their Representatives are hereby authorized to
file an appropriate claim for and on behalf of the holders of the
Securities.
Section
10.5 Notice to
Trustee.
The
Company shall give prompt written notice in the form of an Officers’ Certificate
to a Responsible Officer of the Trustee and to any paying agent of any fact
known to the Company that would prohibit the making of any payment of monies to
or by the Trustee or any paying agent in respect of the Securities pursuant to
the provisions of this Article X. Notwithstanding the provisions of this Article
X or any other provision of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Securities pursuant
to the provisions of this Article X, unless and until a Responsible Officer of
the Trustee shall have received written notice thereof at the Corporate Trust
Office from the Company (in the form of an Officers’ Certificate) or a
Representative or a holder or holders of Senior Debt as to which it may rely,
and before the receipt of any such written notice, the Trustee, subject to the
provisions of Section 6.1, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if on a date not less than one
Business Day prior to the date upon which by the terms hereof any such monies
may become payable for any purpose (including, without limitation, the payment
of the principal of or interest on any Security) the Trustee shall not have
received, with respect to such monies, the notice provided for in this Section
10.5, then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to apply monies received to the
purpose for which they were received, and shall not be affected by any notice to
the contrary that may be received by it on or after such prior
date.
41
Notwithstanding
anything in this Article X to the contrary, nothing shall prevent any payment by
the Trustee to the Holders of monies deposited with it pursuant to Section 7.1,
if a Responsible Officer of the Trustee shall not have received written notice
at the Corporate Trust Office on or before three Business Days prior to the date
such payment is due that such payment is not permitted under Section 10.1 or
10.2.
The
Trustee, subject to the provisions of Section 6.1, shall be entitled to rely on
the delivery to it of a written notice by a Representative or a person
representing himself to be a holder of Senior Debt (or a trustee on behalf of
such holder) to establish that such notice has been given by a Representative or
a holder of Senior Debt or a trustee on behalf of any such holder or holders.
The Trustee shall not be required to make any payment or distribution to or on
behalf of a holder of Senior Debt pursuant to this Article X unless it has
received satisfactory evidence as to the amount of Senior Debt held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article X.
Section
10.6 Trustee’s
Relation to Senior Debt.
The
Trustee, in its individual capacity, shall be entitled to all the rights set
forth in this Article X in respect of any Senior Debt at any time held by it, to
the same extent as any other holder of Senior Debt, and nothing in Section 6.11
or elsewhere in this Indenture shall deprive the Trustee of any of its rights as
such holder.
With
respect to the holders of Senior Debt, the Trustee undertakes to perform or to
observe only such of its covenants and obligations as are specifically set forth
in this Article X, and no implied covenants or obligations with respect to the
holders of Senior Debt shall be read into this Indenture against the Trustee.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt and the Trustee shall not be liable to any holder of Senior Debt (i)
for any failure to make any payments or distributions to such holder or (ii) if
it shall pay over or deliver to holders of Securities, the Company or any other
Person money in compliance with this Article X.
Section
10.7 No
Impairment of Subordination.
No right
of any present or future holder of any Senior Debt to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Senior Debt may be created, renewed or extended and holders of Senior Debt may
exercise any rights under any instrument creating or evidencing such Senior
Debt, including, without limitation, any waiver of default thereunder, without
any notice to or consent 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 the Senior Debt or any terms or conditions of
any instrument creating or evidencing such Senior Debt shall in any way alter or
affect any of the provisions of this Article X or the subordination of the
Securities provided thereby.
Section
10.8 Certain
Conversions Not Deemed Payment.
For the
purposes of this Article X only, (1) the issuance and delivery of junior
securities upon conversion of Securities in accordance with Article IX shall not
be deemed to constitute a payment or distribution on account of the principal of
or interest on Securities or on account of the purchase or other acquisition of
Securities, (2) the issuance and delivery of Common Stock as payment of interest
in accordance with Section 2.7 shall not be deemed to constitute a payment or
distribution on account of the principal of or interest on Securities or on
account of the purchase or other acquisition of Securities and (3) the payment,
issuance or delivery of cash (except in satisfaction of fractional shares
pursuant to Section 9.4), property or securities (other than junior securities)
upon conversion of a Security shall be deemed to constitute payment on account
of the principal of or interest on such Security. For the purposes of this
Section 10.8, 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 Debt that may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Securities are so subordinated as provided in this
Article X. Nothing contained in this Article X 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 Debt) and the Holders, the right, which
is absolute and unconditional, of the Holder of any Security to convert such
Security in accordance with Article IX.
42
Section
10.9 Article
Applicable to Paying Agents.
If at any
time any paying agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term “Trustee” as used in this Article
X shall (unless the context otherwise requires) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article X in addition to or
in place of the Trustee; provided, however, that the
first paragraph of Section 10.5 shall not apply to the Company or any Affiliate
of the Company if it or such Affiliate acts as paying agent.
The
Trustee shall not be responsible for the actions or inactions of any other
paying agents (including the Company if acting as its own paying agent) and
shall have no control of any funds held by such other paying
agents.
Section
10.10 Senior Debt
Entitled to Rely.
The
holders of Senior Debt shall have the right to rely upon this Article X, and no
amendment or modification of the provisions contained herein shall diminish the
rights of such holders unless such holders shall have agreed in writing
thereto.
Section
10.11 Reliance
on Judicial Order or Certificate of Liquidating Agent.
Upon any
payment or distribution of assets of the Company referred to in this Article X,
the Trustee and the Holders shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, liquidating trustee, custodian, receiver, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
Senior Debt and other indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article X.
Section
10.12 Termination
of Subordination.
If at any
time prior to the Maturity Date of the Securities, the security interest granted
to the holders of Senior Debt is terminated, the provisions of this
Article 10 shall automatically terminate.
ARTICLE
11
MISCELLANEOUS
Section
11.1 Trust
Indenture Act Controls.
If any
provision of this Indenture limits, qualifies, or conflicts with another
provision which is required or deemed to be included in this Indenture by the
TIA, such required or deemed provision shall control.
Section
11.2 Notices.
Any
notice or communication by the Company or the Trustee to the other is duly given
if in writing and delivered in person or mailed by first-class
mail:
if to the
Company:
Genta
Incorporated
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
Berkeley
Heights, NJ 07922
Attention:
Chief Financial Officer
43
if to the
Trustee:
U.S.
Bank National Association
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, 3rd Floor
Morristown,
New Jersey 07930
The
Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any
notice or communication to a Securityholder shall be mailed by first-class mail
to his address shown on the register kept by the Registrar. Failure to mail a
notice or communication to a Securityholder or any defect in it shall not affect
its sufficiency with respect to other Securityholders.
If a
notice or communication is mailed or published in the manner provided above,
within the time prescribed, it is duly given, whether or not the Securityholder
receives it.
If the
Company mails a notice or communication to Securityholders, it shall mail a copy
to the Trustee and each Agent at the same time.
Section
11.3 Communication
by Holders with Other Holders.
Securityholders
may communicate pursuant to TIA Section 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).
Section
11.4 Certificate
and Opinion as to Conditions Precedent.
Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(a) an
Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(b) an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Section
11.5 Statements
Required in Certificate or Opinion.
Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(a) a
statement that the person making such certificate or opinion has read such
covenant or condition;
(b) 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;
(c) a
statement that, in the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and
44
(d) a
statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with.
Section
11.6 Rules by Trustee and
Agents.
The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
Any Agent may make reasonable rules and set reasonable requirements for its
functions.
Section
11.7 Legal
Holidays.
Unless
otherwise provided by Board Resolution, Officers’ Certificate or supplemental
indenture, a “Legal Holiday” is any day that is not a Business Day. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
Section
11.8 No Recourse
Against Others.
A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
Section
11.9 Counterparts.
This
Indenture 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.
Section
11.10 Governing
Laws.
THIS
INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT
REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF THAT WOULD REQUIRE THE
APPLICATION OF ANY OTHER LAW.
Section
11.11 No Adverse
Interpretation of Other Agreements.
This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section
11.12 Successors.
All
agreements of the Company in this Indenture and the Securities shall bind its
successor. All agreements of the Trustee in this Indenture shall bind its
successor.
Section
11.13 Severability.
In case
any provision in this Indenture or in the Securities shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section
11.14 Table of
Contents, Headings, Etc.
The Table
of Contents, 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.
45
Section
11.15 Calculations
in respect of the Securities.
The
Company and its agents shall make all calculations under this Indenture and the
Securities in good faith. In making its calculations hereunder, the Company
shall rely on information obtained from the Holders. In the absence of manifest
error, such calculations shall be final and binding on all Holders. The Company
shall provide a copy of such calculations to the Trustee as required hereunder,
and, absent such manifest error, the Trustee shall be entitled to rely on the
accuracy of any such calculation without independent verification. The Trustee
shall not be responsible for making any calculations required by the Indenture.
To the extent information is required from the Holders to make any
calculations under this Indenture, the Company shall be entitled to rely on
representations made by the Holders in making its calculations.
[
SIGNATURE PAGE TO FOLLOW ]
46
IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of the day and year first above written.
|
GENTA
INCORPORATED
|
||
|
By:
|
||
|
Name:
|
||
|
Its:
|
||
|
U.S.
BANK NATIONAL ASSOCIATION
|
||
|
By:
|
|
|
|
Name:
|
||
|
Its:
|
||
47
EXHIBIT
A
Form
of Security
FORM
OF SECURITY
[Face of
Security]
GENTA
INCORPORATED
Certificate
No.
[INSERT
GLOBAL SECURITY LEGEND AS REQUIRED]
8%
Unsecured Subordinated Convertible Note due 2011
CUSIP
No.
Genta
Incorporated, an Delaware corporation (the “Company”), for value received,
hereby promises to pay to [Cede & Co.] or its registered assigns,
the principal sum of _____________ dollars ($_____________) on [___], 2011 and
to pay interest thereon, as provided on the reverse hereof, until the principal
and any unpaid and accrued interest are paid or duly provided for.
Interest
Payment Dates: January 1 and July 1, with the first payment to be made on
January 1, 2010.
Regular
Record Dates: December 1 and June 1.
The
provisions on the back of this certificate are incorporated as if set forth on
the face hereof.
A-1
IN WITNESS WHEREOF, Genta
Incorporated has caused this instrument to be duly signed.
|
GENTA
INCORPORATED
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
Dated:
________________________
|
||
|
TRUSTEE’S
CERTIFICATE OF AUTHENTICATION
|
||
|
This
is one of the Securities of the series designated
|
||
|
therein
referred to in the within-mentioned Indenture.
|
||
|
U.S.
BANK NATIONAL ASSOCIATION, as Trustee
|
||
|
By:
|
||
|
Authorized
Signatory
|
||
|
Dated:
__________________________
|
||
2
[REVERSE
OF SECURITY]
GENTA
INCORPORATED
8%
Unsecured Subordinated Convertible Note due 2011
1. Interest. Genta Incorporated,
a Delaware 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, payable semi-annually on each interest payment date
set forth on the face of this Security, commencing January 1, 2010, or earlier
upon conversion, redemption or prepayment of this Security. Interest
shall be paid in cash or through the issuance of other Securities to the Holder
in the principal amount equal to the accrued interest as of the applicable
interest payment date or date of such earlier conversion, redemption or
prepayment of this Security, at the Company’s option. Interest shall
be computed on the basis of a 360-day year of twelve (12) thirty- (30) day
months and shall accrue commencing on the Issue Date (as defined in the
Indenture (defined below)). Furthermore, upon the occurrence of an Event of
Default (as defined in the Indenture), the Company will pay interest to the
Holder in cash, payable on demand, on the outstanding principal balance of and
unpaid interest on the Security from the date of the Event of Default until such
Event of Default is cured at the rate of the lesser of twenty percent (20%) and
the maximum applicable legal rate per annum.
2. Maturity. The Securities will
mature on August [___], 2011. On the Maturity Date or, if earlier upon
acceleration or redemption of this Security in accordance with the terms hereof,
the Company shall pay the Holder of this Security the principal amount of and
accrued and unpaid interest, if any, on this Security. Except as set forth in
Section 5.15 of the Indenture (as defined below), the Company may not prepay any
portion of the principal amount of this Security without the prior written
consent of the Holder, which may be withheld in the Holder’s sole and absolute
discretion.
3. Method of Payment. Except as
provided in the Indenture, the Company will pay interest on the Securities to
the persons who are Holders of record 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. Holders must surrender Securities to a Paying
Agent to collect the principal amount of the Securities, plus if applicable,
accrued and unpaid interest payable in cash or through the issuance of other
Securities to the Holder in the principal amount equal to the accrued interest
as of the applicable interest payment date or date of such earlier conversion,
redemption or prepayment of this Security, at the Company’s option. The Company
will pay, in money of the United States that at the time of payment is legal
tender for payment of public and private debts, all amounts due in cash with
respect to the Securities, which amounts shall be paid (A) in the case this
Security is in global form, by wire transfer of immediately available funds to
the account designated by the Depository for the Securities or its nominee; (B)
in the case of a Security that is held, other than global form, by a Holder of
Securities, by wire transfer of immediately available funds to the account
specified by such Holder or, if such Holder does not specify an account, by
mailing a check to the address of such Holder set forth in the register of the
Registrar; and (C) in the case of a Security that is held, other than global
form, by a Holder of Securities, by mailing a check to the address of such
Holder set forth in the register of the Registrar.
4. Paying Agent, Registrar, Conversion
Agent. Initially, U.S. Bank National Association (the “Trustee”) will act as Paying
Agent, Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar or Conversion Agent without notice.
5. Indenture. The Company issued
the Securities under an indenture dated as of the date hereof (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 §§ 77aaa-77bbbb) (the “TIA”) as amended and in effect
from time to time. The Securities are subject to all such terms, and Holders are
referred to the Indenture and the TIA for a statement of such terms. The
Securities will be subordinated to the Company’s senior secured indebtedness.
Terms used herein without definition and which are defined in the Indenture have
the meanings assigned to them in the Indenture.
6. Conversion. The Securities
shall be convertible, at any time, in integral multiples of $1,000 principal
amount, into cash, shares of Common Stock or a combination of cash and shares of
Common Stock in accordance with ARTICLE IX of the Indenture.
3
Notwithstanding
anything herein to the contrary, the right to convert the Securities pursuant to
ARTICLE IX of the Indenture shall terminate at the close of business on the
Maturity Date.
To
convert a Security (other than a mandatory conversion pursuant to Section 9.3.2
of the Indenture), a Holder must follow the procedures set forth in the
Indenture. 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.
If a
Security is tendered for conversion in accordance with the Indenture, then the
Holder of such Security shall be entitled to receive shares of Common Stock and
cash, if applicable, in accordance with Section 9.4.1 of the
Indenture.
The
initial Conversion Rate is 10,000 shares of Common Stock per $1,000 principal
amount of Securities subject to adjustment in the event of certain circumstances
as specified in the Indenture. The Company will deliver a check in lieu of any
fractional share. On conversion, the Company shall pay to Holder all unpaid and
accrued interest on the Securities. If any Holder surrenders a Security for
conversion after the close of business on the record date for the payment of an
installment of interest and prior to the related interest payment date, then,
notwithstanding such conversion, the interest payable with respect to such
Security on such interest payment date shall be paid on such interest payment
date to the Holder of record of such Security at the close of business on such
record date.
7. Mandatory Conversion. On any
Mandatory Conversion Date, subject to the limitations on conversion set forth in
Section 8, the Company may cause all of the principal amount of the Securities
to convert into a number of fully paid and nonassessable shares of Common Stock
equal to the quotient of (i) the principal amount of the Securities divided by
(ii) the Conversion Price in effect on the date of such conversion providing
five (5) days prior written notice of such Mandatory Conversion Date.
Notwithstanding the foregoing, the Company may not elect to cause all or a
portion of the Securities to convert into Common Stock, unless at such time the
Company shall have met the conditions set forth in Section 9.3.2 of the
Indenture.
8. Limitation on the Right to
Convert. The Security shall only be convertible by a Holder (or
Beneficial Holder) or by the Company pursuant to Section 9.3 of the Indenture on
any day to the extent that, together with all prior conversions under such
Security or, in the case of a Global Security held for the benefit of a
Beneficial Holder, the total amount of such Security that has been converted for
the benefit of (or Beneficial Holder) does not exceed the product of (A) 10% of
the original principal amount of all Securities held by such Holder (or
Beneficial Holder) on the Issue Date and (B) the number of whole or partial
weeks since date that is two weeks from the Issue Date.
At no time may the Company effect the
conversion of any Securities or issue to a Holder (or Beneficial Holder) shares
of Common Stock, or a Holder (or Beneficial Holder) convert all or a portion of
the Securities into shares of Common Stock, if following such issuance or
conversion, the aggregate number of shares of Common Stock held by any
Beneficial Holder of such Securities would exceed, when aggregated with all
other shares of Common Stock then-owned by such Beneficial Holder and all shares
of Common Stock that such Beneficial Holder is then the beneficial owner of (as
determined in accordance with Section 13(d) of the Exchange Act and the rules
thereunder), the number of shares of Common Stock that would result in such
Beneficial Holder beneficially owning (as determined in accordance with Section
13(d) of the Exchange Act and the rules thereunder) more than 9.999% of all of
the Common Stock outstanding following such conversion.
9. Denominations, Transfer,
Exchange. The Securities are in registered form, without coupons, in
denominations of $1,000 principal amount and integral 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 similar governmental charge that may be imposed in connection with
certain transfers or exchanges.
10. Persons Deemed Owners. The
registered Holder of a Security may be treated as the owner of such Security for
all purposes.
4
11. Merger or Consolidation. The
Company shall not consolidate with or merge into, or convey, transfer or lease
all or substantially all of its properties and assets to, any person (a
“successor person”), and may not permit any person to merge into, or convey,
transfer or lease its properties and assets substantially as an entirety to, the
Company, whether in a single transaction or a series of related transactions,
unless: (a) the successor person (if any) is a corporation organized and validly
existing under the laws of any U.S. domestic jurisdiction and expressly assumes
by supplemental indenture the Company’s obligations on the Securities and under
the Indenture; and (b) immediately after giving effect to the transaction, no
default or Event of Default (as defined in the Indenture), shall have occurred
and be 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 comply with the Indenture.
12. Amendments, Supplements and
Waivers. The Indenture or the Securities may be amended or supplemented
with the consent of the Holders of at least two-thirds of the aggregate
principal amount of the outstanding Securities, and certain existing Defaults or
Events of Default may be waived with the consent of the Holders of 66-2/3% of
the then outstanding aggregate principal amount of the Securities. In accordance
with the terms of the Indenture, the Company, with the consent of the Trustee,
may amend or supplement the Indenture or the Securities without notice to or the
consent of any Securityholder: (i) to comply with Section 4.2 and Section 9.13
of the Indenture; (ii) to surrender any right or power conferred upon the
Company; (iii) to add to the covenants of the Company described in the Indenture
for the benefit of the Holders; and (iv) to make provisions with respect to
adjustments to the Conversion Rate as required by the Indenture (but not to
increase the Conversion Rate). In addition, the Company and the Trustee may
enter into a Indenture without the consent of Holders of the Securities to cure
any ambiguity, defect, omission or inconsistency in the Indenture in a manner
that does not, individually or in the aggregate with all other modifications
made or to be made to the Indenture, adversely affect the rights of any
Holder.
13.
Defaults and Remedies.
If an Event of Default, with respect to Securities at the time outstanding
occurs and is continuing with respect to the Company, then in every such case,
the Trustee or the Holders may declare the principal amount of and accrued and
unpaid interest, if any, on all of the Securities to be due and payable
immediately, by a notice in writing to the Company, and upon any such
declaration such principal amount and accrued and unpaid interest, if any, shall
become immediately due and payable. In addition, upon the occurrence
of an Event of Default, the Trustee or the Holders, in their sole and
absolute discretion, may (a) demand the redemption of the Securities pursuant to
Section 5.15 of the Indenture; (b) demand that the principal amount of the
Securities then outstanding and all accrued and unpaid interest thereon shall be
converted into shares of Common Stock at the Conversion Price per share on the
Trading Day immediately preceding the date the Trustee or Holders demand
conversion, or (c) exercise or otherwise enforce any one or more of the holder’s
rights, powers, privileges, remedies and interests under the Securities, the
Securities Purchase Agreement, the Warrants or applicable law; provided further,
however, that upon the occurrence of an Event of Default described in Section
5.1 (l), the entire unpaid principal balance of such Securities, together with
all interest accrued hereon, shall automatically become due and payable, and
thereupon, the same shall be accelerated and so due and payable, without
presentment, demand, protest, or notice, all of which are hereby expressly
unconditionally and irrevocably waived by the Company. No course of delay on the
part of the Trustee or Holders shall operate as a waiver thereof or otherwise
prejudice the right of the Holder. No remedy conferred hereby shall be exclusive
of any other remedy referred to herein or now or hereafter available at law, in
equity, by statute or otherwise. Securities shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or Holders.
Holders
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity reasonably satisfactory to it
before it enforces the Indenture or the Securities. The Holders of at least
two-thirds in principal amount of the outstanding Securities shall 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
it. However, the Trustee may refuse to follow any direction that conflicts with
law or the Indenture, is unduly prejudicial to the rights of other Holders or
would involve the Trustee in personal liability unless the Trustee is offered
indemnity reasonably satisfactory to it; provided, that the Trustee
may take any other action deemed proper by the Trustee which is not inconsistent
with such direction.
5
If a
Default or Event of Default occurs and is continuing as to which the Trustee has
received notice pursuant to the provisions of the Indenture, or as to which a
Responsible Officer of the Trustee shall have actual knowledge, the Trustee
shall mail to each Holder a notice of the Default or Event of Default within
thirty (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 any amounts due with respect to 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 best interests of Holders. The Company must
deliver to the Trustee an annual compliance certificate.
14. Trustee Dealings with the
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.
15. No Recourse Against Others. No
past, present or future director, officer, employee or stockholder, 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.
16. Authentication. This Security
shall not be valid until authenticated by the manual signature of the Trustee or
an authenticating agent in accordance with the Indenture.
17. 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 HOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE A
COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:
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Genta
Incorporated
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▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
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Berkeley
Heights, NJ 07922
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Attention:
Chief Financial
Officer
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6
[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 constitute and
appoint
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Dated:
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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 a
guarantor institution participating in the Securities Transfer Agents
Medallion Program or in such other guarantee program acceptable to the
Trustee.
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Signature Guarantee:
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7
CONVERSION
NOTICE
To
convert this Security in accordance with the Indenture, check the box: £
To
convert only part of this Security, state the principal amount to be converted
(must be in multiples of $1,000):
$
[To be
completed by Beneficial Holders Only] State the number of shares of Common Stock
beneficially owned (as determined in accordance with Section 13(d) of the
Exchange Act and the rules thereunder) as of the date of this
Notice:
$
$
If you
want the stock certificate representing the shares of Common Stock, if any,
issuable upon conversion made out in another person’s name, fill in the form
below:
(Print or
type other person’s name, address and zip code)
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Date:
Signature(s):
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(Sign
exactly as your name(s) appear(s) on the other side of this
Security)
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Signature(s)
guaranteed by:
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(All
signatures must be guaranteed by a guarantor institution participating in
the Securities Transfer Agents Medallion Program or in such other
guarantee program acceptable to the
Trustee.)
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8
SCHEDULE
A
SCHEDULE OF EXCHANGES OF
INTERESTS IN THE GLOBAL SECURITY1
The
following exchanges of a part of this Global Security for an interest in another
Global Security or for Securities in certificated form, have been
made:
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Date of Exchange
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Amount of decrease
in Principal amount
of this Global
Security
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Amount of Increase
in Principal amount
of this Global
Security
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Principal amount of
this Global
Security following
such decrease
or increase
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Signature or
authorized signatory
of Trustee or Note
Custodian
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||||||||||||
____________
1
This is
included in Global Securities only.
A-1
EXHIBIT
B
FORM OF
LEGEND FOR GLOBAL SECURITY
Any
Global Security authenticated and delivered hereunder shall bear a legend 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 DEPOSITORY
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 THE
INDENTURE.
A-2