EXHIBIT 4.04
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HNC SOFTWARE INC.
5.25% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 1, 2008
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INDENTURE
DATED AS OF AUGUST 24, 2001
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STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
AS TRUSTEE
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.............................................1
SECTION 1.1. DEFINITIONS............................................................1
SECTION 1.2. OTHER DEFINITIONS......................................................6
SECTION 1.3. TRUST INDENTURE ACT PROVISIONS.........................................7
SECTION 1.4. RULES OF CONSTRUCTION..................................................7
ARTICLE 2 THE SECURITIES.........................................................................8
SECTION 2.1. FORM AND DATING........................................................8
SECTION 2.2. EXECUTION AND AUTHENTICATION...........................................9
SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT..........................10
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST...................................11
SECTION 2.5. SECURITYHOLDER LISTS..................................................11
SECTION 2.6. TRANSFER AND EXCHANGE.................................................11
SECTION 2.7. REPLACEMENT SECURITIES................................................12
SECTION 2.8. OUTSTANDING SECURITIES................................................13
SECTION 2.9. TREASURY SECURITIES...................................................13
SECTION 2.10. TEMPORARY SECURITIES..................................................13
SECTION 2.11. CANCELLATION..........................................................14
SECTION 2.12. LEGEND; ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS.................14
SECTION 2.13. CUSIP NUMBERS.........................................................16
ARTICLE 3 REDEMPTION AND PURCHASES..............................................................17
SECTION 3.1. RIGHT TO REDEEM; NOTICE TO TRUSTEE....................................17
SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED................................18
SECTION 3.3. NOTICE OF REDEMPTION..................................................18
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION........................................19
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE...........................................19
SECTION 3.6. SECURITIES REDEEMED IN PART...........................................19
SECTION 3.7. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.........................19
SECTION 3.8. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE IN
CONTROL...............................................................20
SECTION 3.9. EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE...........................23
SECTION 3.10. DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE...........................23
SECTION 3.11. SECURITIES PURCHASED IN PART..........................................24
SECTION 3.12. COMPLIANCE WITH SECURITIES LAWS UPON PURCHASE OF SECURITIES...........24
SECTION 3.13. REPAYMENT TO THE COMPANY..............................................24
ARTICLE 4 CONVERSION............................................................................25
SECTION 4.1. CONVERSION PRIVILEGE..................................................25
SECTION 4.2. CONVERSION PROCEDURE..................................................25
SECTION 4.3. FRACTIONAL SHARES.....................................................26
TABLE OF CONTENTS
(CONTINUED)
PAGE
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SECTION 4.4. TAXES ON CONVERSION...................................................27
SECTION 4.5. COMPANY TO PROVIDE STOCK..............................................27
SECTION 4.6. ADJUSTMENT OF CONVERSION PRICE........................................27
SECTION 4.7. NO ADJUSTMENT.........................................................32
SECTION 4.8. ADJUSTMENT FOR TAX PURPOSES...........................................32
SECTION 4.9. NOTICE OF ADJUSTMENT..................................................32
SECTION 4.10. NOTICE OF CERTAIN TRANSACTIONS........................................33
SECTION 4.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON
CONVERSION PRIVILEGE..................................................33
SECTION 4.12. TRUSTEE'S DISCLAIMER..................................................34
SECTION 4.13. VOLUNTARY REDUCTION...................................................34
ARTICLE 5 SUBORDINATION.........................................................................34
SECTION 5.1. AGREEMENT OF SUBORDINATION............................................34
SECTION 5.2. PAYMENTS TO HOLDERS...................................................35
SECTION 5.3. SUBROGATION OF SECURITIES.............................................37
SECTION 5.4. AUTHORIZATION TO EFFECT SUBORDINATION.................................38
SECTION 5.5. NOTICE TO TRUSTEE.....................................................38
SECTION 5.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.............................39
SECTION 5.7. NO IMPAIRMENT OF SUBORDINATION........................................39
SECTION 5.8. CERTAIN CONVERSIONS DEEMED PAYMENT....................................40
SECTION 5.9. ARTICLE APPLICABLE TO PAYING AGENTS...................................40
SECTION 5.10. SENIOR INDEBTEDNESS ENTITLED TO RELY..................................40
ARTICLE 6 COVENANTS.............................................................................41
SECTION 6.1. PAYMENT OF SECURITIES.................................................41
SECTION 6.2. SEC REPORTS...........................................................41
SECTION 6.3. COMPLIANCE CERTIFICATES...............................................41
SECTION 6.4. FURTHER INSTRUMENTS AND ACTS..........................................42
SECTION 6.5. MAINTENANCE OF CORPORATE EXISTENCE....................................42
SECTION 6.6. RULE 144A INFORMATION REQUIREMENT.....................................42
SECTION 6.7. STAY, EXTENSION AND USURY LAWS........................................42
SECTION 6.8. PAYMENT OF ADDITIONAL INTEREST........................................43
ARTICLE 7 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE..................................43
SECTION 7.1. COMPANY MAY CONSOLIDATE, ETC, ONLY ON CERTAIN TERMS...................43
SECTION 7.2. SUCCESSOR SUBSTITUTED.................................................44
ARTICLE 8 DEFAULT AND REMEDIES..................................................................44
SECTION 8.1. EVENTS OF DEFAULT.....................................................44
SECTION 8.2. ACCELERATION..........................................................46
SECTION 8.3. OTHER REMEDIES........................................................46
SECTION 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT..............................46
iii
TABLE OF CONTENTS
(CONTINUED)
PAGE
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SECTION 8.5. CONTROL BY MAJORITY...................................................47
SECTION 8.6. LIMITATIONS ON SUITS..................................................47
SECTION 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT...................47
SECTION 8.8. COLLECTION SUIT BY TRUSTEE............................................48
SECTION 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM......................................48
SECTION 8.10. PRIORITIES............................................................48
SECTION 8.11. UNDERTAKING FOR COSTS.................................................49
ARTICLE 9 TRUSTEE...............................................................................49
SECTION 9.1. DUTIES OF TRUSTEE.....................................................49
SECTION 9.2. RIGHTS OF TRUSTEE.....................................................50
SECTION 9.3. INDIVIDUAL RIGHTS OF TRUSTEE..........................................51
SECTION 9.4. TRUSTEE'S DISCLAIMER..................................................51
SECTION 9.5. NOTICE OF DEFAULT OR EVENTS OF DEFAULT................................51
SECTION 9.6. REPORTS BY TRUSTEE TO HOLDERS.........................................51
SECTION 9.7. COMPENSATION AND INDEMNITY............................................52
SECTION 9.8. REPLACEMENT OF TRUSTEE................................................53
SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC......................................53
SECTION 9.10. ELIGIBILITY; DISQUALIFICATION.........................................54
SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.....................54
ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE..............................................54
SECTION 10.1. SATISFACTION AND DISCHARGE OF INDENTURE...............................54
SECTION 10.2. APPLICATION OF TRUST MONEY............................................55
SECTION 10.3. REPAYMENT TO COMPANY..................................................55
SECTION 10.4. REINSTATEMENT.........................................................56
ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND WAIVERS..................................................56
SECTION 11.1. WITHOUT CONSENT OF HOLDERS............................................56
SECTION 11.2. WITH CONSENT OF HOLDERS...............................................56
SECTION 11.3. COMPLIANCE WITH TRUST INDENTURE ACT...................................57
SECTION 11.4. REVOCATION AND EFFECT OF CONSENTS.....................................58
SECTION 11.5. NOTATION ON OR EXCHANGE OF SECURITIES.................................58
SECTION 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC.......................................58
ARTICLE 12 MISCELLANEOUS........................................................................58
SECTION 12.1. TRUST INDENTURE ACT CONTROLS..........................................58
SECTION 12.2. NOTICES...............................................................59
SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS..........................59
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT....................59
SECTION 12.5. RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS....................60
SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT........60
iv
TABLE OF CONTENTS
(CONTINUED)
PAGE
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SECTION 12.7. LEGAL HOLIDAYS........................................................61
SECTION 12.8. GOVERNING LAW.........................................................61
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.........................61
SECTION 12.10. NO RECOURSE AGAINST OTHERS............................................61
SECTION 12.11. SUCCESSORS............................................................61
SECTION 12.12. MULTIPLE COUNTERPARTS.................................................61
SECTION 12.13. SEPARABILITY..........................................................61
SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC......................................62
v
CROSS-REFERENCE TABLE*
TIA INDENTURE
SECTION SECTION
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Section 310(a)(1)................................................... 9.10
(a)(2)...................................................... 9.10
(a)(3)...................................................... N.A.**
(a)(4)...................................................... N.A.
(a)(5)...................................................... 9.10
(b)......................................................... 9.8; 9.10
(c)......................................................... N.A.
Section 311(a)...................................................... 9.11
(b)......................................................... 9.11
(c)......................................................... N.A.
Section 312(a)...................................................... 2.5
(b)......................................................... 12.3
(c)......................................................... 12.3
Section 313(a)...................................................... 9.6
(b)(1)...................................................... N.A.
(b)(2)...................................................... 9.6
(c)......................................................... 9.6; 12.2
(d)......................................................... 9.6
Section 314(a)...................................................... 6.2; 6.4; 12.2
(b)......................................................... N.A.
(c)(1)...................................................... 12.4(a)
(c)(2)...................................................... 12.4(a)
(c)(3)...................................................... N.A.
(d)......................................................... N.A.
(e)......................................................... 12.4(b)
(f)......................................................... N.A.
Section 315(a)...................................................... 9.1(b)
(b)......................................................... 9.5; 12.2
(c)......................................................... 9.1(a)
(d)......................................................... 9.1(c)
(e)......................................................... 8.11
Section 316(a)(last sentence)....................................... 2.9
(a)(1)(A)................................................... 8.5
(a)(1)(B)................................................... 8.4
(a)(2)...................................................... N.A.
(b)......................................................... 8.7
(c)......................................................... 12.5
Section 317(a)(1)................................................... 8.8
(a)(2)...................................................... 8.9
(b)......................................................... 2.4
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* This Cross-Reference Table shall not, for any purpose, be deemed a part of
this Indenture.
** N.A. means Not Applicable.
THIS INDENTURE dated as of August 24, 2001 is between HNC Software Inc.,
a corporation duly organized under the laws of the State of Delaware (the
"Company"), and State Street Bank and Trust Company of California, N.A., a
national banking association organized and existing under the laws of the United
States, as Trustee (the "Trustee").
In consideration of the premises and the purchase of the Securities by
the Holders thereof, both parties agree as follows for the benefit of the other
and for the equal and ratable benefit of the registered Holders of the Company's
5.25% Convertible Subordinated Notes Due September 1, 2008.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Additional Interest" has the meaning specified in Section 5(a) of the
Registration Rights Agreement. All references herein to interest accrued or
payable as of any date shall include any Additional Interest accrued or payable
as of such date as provided in the Registration Rights Agreement.
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent or Conversion Agent.
"Applicable Procedures" means, with respect to any transfer or exchange
of beneficial ownership interests in a Global Security, the rules and procedures
of the Depositary that are applicable to such transfer or exchange.
"Board of Directors" means either the board of directors of the Company
or any committee of the Board of Directors authorized to act for it with respect
to this Indenture.
"Business Day" means each day that is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, but excluding any debt
securities convertible into such equity.
"Cash" or "cash" means such coin or currency of the United States as at
any time of payment is legal tender for the payment of public and private debts.
"Certificated Security" means a Security that is in substantially the
form attached hereto as Exhibit A and that does not include the information or
the schedule called for by footnotes 1, 3 and 4 thereof.
1
"Common Stock" means the common stock of the Company, $0.001 par value,
as it exists on the date of this Indenture and any shares of any class or
classes of capital stock of the Company resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to redemption
by the Company; provided, however, that if at any time there shall be more than
one such resulting class, the shares of each such class then so issuable on
conversion of Securities shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means the
successor.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at the date of the execution of this Indenture is located at ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration (HNC Software Inc. -- 5.25% Convertible Subordinated Notes Due
September 1, 2008) or at any other time at such other address as the Trustee may
designate from time to time by notice to the Company.
"Default" or "default" means, when used with respect to the Securities,
any event which is or, after notice or passage of time or both, would be an
Event of Default.
"Designated Senior Indebtedness" means (i) the Company's obligations in
respect of that certain Credit Agreement, dated as of July 11, 1997 between the
Company and ▇▇▇▇▇ Fargo Bank, N.A., as amended, modified or supplemented from
time to time, and (ii) any particular Senior Indebtedness of the Company in
which the instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the Company is a
party) expressly provides that such Senior Indebtedness shall be "Designated
Senior Indebtedness" for purposes of this Indenture (provided that such
instrument, agreement or other document may place limitations and conditions on
the right of such Senior Indebtedness to exercise the rights of Designated
Senior Indebtedness). If any payment made to any holder of any Designated Senior
Indebtedness or its Representative with respect to such Designated Senior
Indebtedness 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 Designated Senior Indebtedness
effective as of the date of such rescission or return.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as in effect from
time to time.
"Final Maturity Date" means September 1, 2008.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of this Indenture, including those
set forth in (1) the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants, (2) the
statements and pronouncements of the Financial Accounting Standards Board, (3)
such other statements by such other entity as approved by a significant segment
of the accounting profession and (4) the rules and regulations of the SEC
governing the inclusion of financial statements (including pro forma financial
statements) in registration statements filed under the Securities Act and
periodic reports required to be filed pursuant to Section 13 of the
2
Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the SEC.
"Global Security" means a permanent Global Security that is in
substantially the form attached hereto as Exhibit A and that includes the
information and schedule called for by footnotes 1, 3 and 4 thereof and which is
deposited with the Depositary or its custodian and registered in the name of the
Depositary or its nominee.
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Primary Registrar's books.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all indebtedness, obligations and other liabilities (contingent or
otherwise) of such Person for borrowed money (including obligations of such
Person in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or evidenced by
credit or loan agreements, bonds, debentures, notes or similar instruments
(whether or not the recourse of the lender is to the whole of the assets of such
Person or to only a portion thereof) (other than any trade accounts payable or
other accrued current liability or obligation incurred in the ordinary course of
business in connection with the obtaining of materials or services), (b) all
reimbursement obligations and other liabilities (contingent or otherwise) of
such Person with respect to letters of credit, bank guarantees or bankers'
acceptances, (c) all obligations and liabilities (contingent or otherwise) of
such Person in respect of leases of such Person required, in conformity with
GAAP, to be accounted for as capitalized lease obligations on the balance sheet
of such Person (as determined by the Company), or (ii) under any lease or
related document (including a purchase agreement, conditional sale or other
title retention agreement) in connection with the lease of real property (or any
personal property included as part of any such lease) which provides that such
Person is contractually obligated to purchase or cause a third party to purchase
the leased property and thereby guarantee a minimum residual value of the leased
property to the lessor and the obligations of such Person under such lease or
related document to purchase or to cause a third party to purchase such leased
property (whether or not such lease transaction is characterized as an operating
lease or a capitalized lease in accordance with GAAP), (d) all obligations
(contingent or otherwise) of such Person with respect to any interest rate,
currency or other swap, cap, floor or collar agreement, hedge agreement, forward
contract, or other similar instrument or agreement or foreign currency hedge,
exchange, purchase or similar instrument or agreement; (e) all direct or
indirect guaranties, agreements to be jointly liable or similar agreements by
such Person in respect of, and obligations or liabilities (contingent or
otherwise) of such Person to purchase or otherwise acquire or otherwise assure a
creditor against loss in respect of, indebtedness, obligations or liabilities of
another Person of the kind described in clauses (a) through (d), (f) any
indebtedness or other obligations described in clauses (a) through (d) secured
by any mortgage, pledge, lien or other encumbrance existing on property which is
owned or held by such Person, regardless of whether the indebtedness or other
obligation secured thereby shall have been assumed by such Person and (g) any
and all deferrals, renewals, extensions, refinancings and refundings of, or
amendments, modifications or supplements to, any indebtedness, obligation or
liability of the kind described in clauses (a) through (f).
"Indenture" means this Indenture as amended or supplemented from time to
time pursuant to the terms of this Indenture.
"Initial Purchasers" means Credit Suisse First Boston Corporation,
▇▇▇▇▇▇▇, Sachs & Co. and U. S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
3
"Officer" means the Chairman or any Co-Chairman of the Board, any Vice
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Secretary or any
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers;
provided, however, that for purposes of Sections 4.11 and 6.3, "Officers'
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company and
by one other Officer.
"Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.
"Person" or "person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Principal" or "principal" of a debt security, including the Securities,
means the principal of the security plus, when appropriate, the premium, if any,
on the security.
"Redemption Date" when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to this Indenture, including
any Provisional Redemption Date.
"Redemption Price" when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture,
as set forth in the form of Security annexed as Exhibit A hereto.
"Registration Rights Agreement" means the Registration Rights Agreement
dated, as of August __, 2001, between the Company and the Initial Purchasers.
"Representative" means the (a) indenture trustee or other trustee, agent
or representative for any Senior Indebtedness or (b) with respect to any Senior
Indebtedness that does not have any such trustee, agent or other representative,
(i) in the case of such Senior Indebtedness issued pursuant to an agreement
providing for voting arrangements as among the holders or owners of such Senior
Indebtedness, any holder or owner of such Senior Indebtedness acting with the
consent of the required persons necessary to bind such holders or owners of such
Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness,
the holder or owner of such Senior Indebtedness.
"Restricted Global Security" means a Global Security that is a
Restricted Security.
"Restricted Security" means a Security required to bear the restricted
legend set forth in the form of Security set forth in Exhibit A of this
Indenture.
"Rule 144" means Rule 144 under the Securities Act or any successor to
such Rule.
"Rule 144A" means Rule 144A under the Securities Act or any successor to
such Rule.
"SEC" means the Securities and Exchange Commission.
"Securities" means the 5.25% Convertible Subordinated Notes Due
September 1, 2008 or any of them (each, a "Security"), as amended or
supplemented from time to time, that are issued under this Indenture.
4
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as in effect from time to time.
"Securities Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor thereto.
"Senior Indebtedness" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
in connection with, and all fees, costs, expenses and other amounts accrued or
due on or in connection with, Indebtedness of the Company, whether outstanding
on the date of this Indenture or thereafter created, incurred, assumed,
guaranteed or in effect guaranteed by the Company (including all deferrals,
renewals, extensions or refundings of, or amendments, modifications or
supplements to, the foregoing), unless in the case of any particular
Indebtedness the instrument creating or evidencing the same or the assumption or
guarantee thereof expressly provides that such Indebtedness shall not be senior
in right of payment to the Securities or expressly provides that such
Indebtedness is "pari passu" or "junior" to the Securities. Notwithstanding the
foregoing, the term Senior Indebtedness shall not include any (i) Indebtedness
of the Company to any Subsidiary of the Company or (ii) the Securities. If any
payment made to any holder of any Senior Indebtedness or its Representative with
respect to such Senior Indebtedness 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
Indebtedness effective as of the date of such rescission or return.
"Significant Subsidiary" means, in respect of any Person, a Subsidiary
of such Person that would constitute a "significant subsidiary" as such term is
defined under Rule 1-02 of Regulation S-X under the Securities Act and the
Exchange Act.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, general partners or
trustees thereof is at the time owned or controlled, directly or indirectly, by
(i) such Person; (ii) such Person and one or more Subsidiaries of such Person;
or (iii) one or more Subsidiaries of such Person.
"TIA" means the Trust Indenture Act of 1939, as amended, and the rules
and regulations thereunder as in effect on the date of this Indenture, except as
provided in Section 11.3, and except to the extent any amendment to the Trust
Indenture Act expressly provides for application of the Trust Indenture Act as
in effect on another date.
"Trading Day" means, with respect to any security, each Monday, Tuesday,
Wednesday, Thursday and Friday, other than any day on which securities are not
generally traded on the principal exchange or market in which such security is
traded.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means the successor.
5
"Trust Officer" means, with respect to the Trustee, any officer assigned
to the Corporate Trust Office, and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Unrestricted Certificated Security" means a Certificated Security that
is not a Transfer Restricted Security.
"Unrestricted Global Security" means a Global Security that is not a
Transfer Restricted Security.
"Vice President" when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
SECTION 1.2. OTHER DEFINITIONS.
TERM DEFINED IN SECTION
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"Agent Members"........................................................ 2.1
"Bankruptcy Law"....................................................... 8.1
"Change in Control".................................................... 3.8
"Change in Control Purchase Date"...................................... 3.8
"Change in Control Purchase Notice".................................... 3.8
"Change in Control Purchase Price"..................................... 3.8
"Closing Price"........................................................ 4.6(d)
"Company Order"........................................................ 2.2
"Conversion Agent"..................................................... 2.3
"Conversion Date"...................................................... 4.2
"Conversion Price"..................................................... 4.6
"Current Market Price"................................................. 4.6(d)
"Custodian"............................................................ 8.1
"DTC".................................................................. 2.1
"Depositary"........................................................... 2.1
"Determination Date"................................................... 4.6(c)
"Event of Default"..................................................... 8.1
"Expiration Date"...................................................... 4.6(c)
"Expiration Time"...................................................... 4.6(c)
"Legal Holiday"........................................................ 12.7
"Legend" .............................................................. 2.12
"Make-Whole Payment" .................................................. 3.1(a)
"New Rights Plan" ..................................................... 4.6(c)
"NNM".................................................................. 4.6(d)
"Notice Date" ......................................................... 3.1
"Paying Agent"......................................................... 2.3
"Payment Blockage Notice".............................................. 5.2
6
TERM DEFINED IN SECTION
---- ------------------
"Primary Registrar".................................................... 2.3
"Provisional Redemption" .............................................. 3.1(a)
"Provisional Redemption Date" ......................................... 3.1(a)
"Provisional Redemption Price" ........................................ 3.1(a)
"Purchase Agreement"................................................... 2.1
"Purchased Shares"..................................................... 4.6(c)
"QIB".................................................................. 2.1
"Registrar"............................................................ 2.3
"Rights Plan" ......................................................... 4.6(c)
"Triggering Distribution".............................................. 4.6(c)
"Trigger Event" ....................................................... 4.6(c)
SECTION 1.3. TRUST INDENTURE ACT PROVISIONS.
Whenever this Indenture refers to a provision of the TIA, that provision
is incorporated by reference in and made a part of this Indenture. The Indenture
shall also include those provisions of the TIA required to be included herein by
the provisions of the Trust Indenture Reform Act of 1990. The following TIA
terms used in this Indenture have the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company or any other obligor on
the Securities.
All other terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by any SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
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 GAAP;
(C) words in the singular include the plural, and words in the plural
include the singular;
(D) provisions apply to successive events and transactions;
(E) the term "merger" includes a statutory share exchange and the term
"merged" has a correlating meaning;
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(F) the masculine gender includes the feminine and the neuter;
(G) references to agreements and other instruments include subsequent
amendments thereto; and
(H) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE 2.
THE SECURITIES
SECTION 2.1. FORM AND DATING.
The Securities and the Trustee's certificate of authentication shall be
substantially in the respective forms set forth in Exhibit A, which Exhibit is
incorporated in and made 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 are being offered and sold by the Company pursuant to a Purchase
Agreement, dated August 20, 2001 (the "Purchase Agreement"), between the Company
and the Initial Purchasers, in transactions exempt from, or not subject to, the
registration requirements of the Securities Act.
(a) Restricted Global Securities. All of the Securities are initially
being offered and sold to qualified institutional buyers as defined in Rule 144A
(collectively, "QIBs" or individually, each a "QIB") in reliance on Rule 144A
under the Securities Act and shall be issued initially in the form of one or
more Restricted Global Securities, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Trustee, at its
Corporate Trust Office, as custodian for the depositary, The Depository Trust
Company ("DTC") (such depositary, or any successor thereto, being hereinafter
referred to as the "Depositary"), and registered in the name of its nominee,
Cede & Co., duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Restricted Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Securities Custodian as hereinafter provided, subject in each
case to compliance with the Applicable Procedures.
(b) Global Securities In General. Each Global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, redemptions, purchases or
conversions of such Securities. Any adjustment of the aggregate principal amount
of a Global Security to reflect the amount of any increase or decrease in the
amount of outstanding Securities represented thereby shall be made by the
Trustee in accordance with instructions given by the Holder thereof as required
by Section 2.12 hereof and shall be made on the records of the Trustee and the
Depositary.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or under the Global Security, and the Depositary
(including, for this purpose, its nominee) may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner and
Holder of such Global
8
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall (A) prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or (B) impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Security.
(c) Book Entry Provisions. The Company shall execute and the Trustee
shall, in accordance with this Section 2.1(c), authenticate and deliver
initially one or more Global Securities that (i) shall be registered in the name
of the Depositary, (ii) shall be delivered by the Trustee to the Depositary or
pursuant to the Depositary's instructions and (iii) shall bear legends
substantially to the following effect:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO HNC SOFTWARE INC. (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 THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF THE DEPOSITORY
TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF."
SECTION 2.2. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Securities for the Company by manual or
facsimile signature attested by the manual or facsimile signature of the
Secretary or an Assistant Secretary of the Company. Typographic and other minor
errors or defects in any such facsimile signature shall not affect the validity
or enforceability of any Security which has been authenticated and delivered by
the Trustee.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities for original issue in the aggregate principal amount of up to
$150,000,000 upon receipt of a written order or orders of the Company signed by
two Officers of the Company (a "Company Order"). The Company Order shall specify
the amount of Securities to be authenticated, shall provide that all such
Securities will be represented by a Restricted Global Security and the date on
which each original issue of Securities is to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$150,000,000 except as provided in Section 2.7.
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The Trustee shall act as the initial authenticating agent. Thereafter,
the Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT.
The Company shall maintain one or more offices or agencies where
Securities may be presented for registration of transfer or for exchange (each,
a "Registrar"), one or more offices or agencies where Securities may be
presented for payment (each, a "Paying Agent"), one or more offices or agencies
where Securities may be presented for conversion (each, a "Conversion Agent")
and one or more offices or agencies where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will at all times maintain a Paying Agent, Conversion Agent, Registrar
and an office or agency where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served in the Borough of
Manhattan, The City of New York. One of the Registrars (the "Primary Registrar")
shall keep a register of the Securities and of their transfer and exchange.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any Agent not a party to this Indenture.
If the Company fails to maintain a Registrar, Paying Agent, Conversion Agent or
agent for service of notices and demands in any place required by this
Indenture, or fails to give the foregoing notice, the Trustee shall act as such.
The Company or any Affiliate of the Company may act as Paying Agent (except for
the purposes of Section 6.1 and Article 10).
The Company hereby initially designates the Trustee as Paying Agent,
Registrar, Custodian and Conversion Agent, and each of the Corporate Trust
Office of the Trustee and the office or agency of the Trustee in the Borough of
Manhattan, The City of New York, New York (which shall initially be State Street
Bank and Trust Company, N.A., an Affiliate of the Trustee, as agent of the
Trustee located at ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate
Trust Administration (HNC Software Inc. - 5.25% Convertible Subordinated Notes
Due September 1, 2008)), one such office or agency of the Company for each of
the aforesaid purposes.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
Prior to 11:00 a.m., New York City time, on each due date of the
principal of or interest, if any, on any Securities, the Company shall deposit
with a Paying Agent a sum sufficient to pay such principal or interest, if any,
so becoming due. Subject to Section 5.2, a Paying Agent shall hold in trust for
the benefit of Securityholders or the Trustee all money held by the Paying Agent
for the payment of principal of or interest, if any, on the Securities, and
shall notify the Trustee of any default by the Company (or any other obligor on
the Securities) in making any such payment. If the Company or an Affiliate of
the Company acts as Paying Agent, it shall, before 11:00 a.m., New York City
time, on each due date of the principal of or interest on any Securities,
segregate the money and hold it as a separate trust fund. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee, and
the Trustee may at any time during the
10
continuance of any default, upon written request to a Paying Agent, require such
Paying Agent to pay forthwith to the Trustee all sums so held in trust by such
Paying Agent. Upon doing so, the Paying Agent (other than the Company) shall
have no further liability for the money.
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
Securityholders. If the Trustee is not the Primary Registrar, the Company shall
furnish to the Trustee on or before each semiannual 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 Securityholders.
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) Subject to compliance with any applicable additional requirements
contained in Section 2.12, when a Security is presented to a Registrar with a
request to register a transfer thereof or to exchange such Security for an equal
principal amount of Securities of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested; provided,
however, that every Security presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by an assignment form
and, if applicable, a transfer certificate each in the form included in Exhibit
A, and in form satisfactory to the Registrar duly executed by the Holder thereof
or its attorney duly authorized in writing. To permit registration of transfers
and exchanges, upon surrender of any Security for registration of transfer or
exchange at an office or agency maintained pursuant to Section 2.3, the Company
shall execute and the Trustee shall authenticate Securities of a like aggregate
principal amount at the Registrar's request. Any exchange or transfer shall be
without charge, except that the Company or the Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto, and provided, that this sentence shall not apply to
any exchange pursuant to Section 2.7, 2.10, 2.12(a), 3.6, 3.11, 4.2 (last
paragraph) or 11.5.
Neither the Company, any Registrar nor the Trustee shall be required to
exchange or register a transfer of (i) any Securities for a period of 15 days
next preceding any mailing of a notice of Securities to be redeemed, (ii) any
Securities or portions thereof selected or called for redemption (except, in the
case of redemption of a Security in part, the portion not to be redeemed) or
(iii) any Securities or portions thereof in respect of which a Change in Control
Purchase Notice has been delivered and not withdrawn by the Holder thereof
(except, in the case of the purchase of a Security in part, the portion not to
be purchased).
All Securities issued upon any transfer or exchange of Securities shall
be valid obligations of the Company, evidencing the same debt and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
(b) Any Registrar appointed pursuant to Section 2.3 hereof shall
provide to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Securities upon transfer or
exchange of Securities.
(c) Each Holder of a Security agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.
11
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Agent Members or other
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 2.7. REPLACEMENT SECURITIES.
If any mutilated Security is surrendered to the Company, a Registrar or
the Trustee, or the Company, a Registrar and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Security, and there
is delivered to the Company, the applicable Registrar and the Trustee such
Security or indemnity as will be required by them to save each of them harmless,
then, in the absence of notice to the Company, such Registrar or the Trustee
that such Security has been acquired by a bona fide purchaser, the Company shall
execute, and upon its written request the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be redeemed or
purchased by the Company pursuant to Article 3, the Company in its discretion
may, instead of issuing a new Security, pay, redeem or purchase such Security,
as the case may be.
Upon the issuance of any new Securities under this Section 2.7, 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
reasonable expenses (including the reasonable fees and expenses of the Trustee
or the Registrar) in connection therewith.
Every new Security issued pursuant to this Section 2.7 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 benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section 2.7 are (to the extent lawful) 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 2.8. OUTSTANDING SECURITIES.
Securities outstanding at any time are all Securities authenticated by
the Trustee, except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.8 as not outstanding.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Company receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If a Paying Agent (other than the Company or an Affiliate of the
Company) holds on a Redemption Date, a Change in Control Purchase Date or the
Final Maturity Date money sufficient to pay the principal of (including premium,
if any) and accrued interest on Securities (or portions thereof) payable on that
date, then
12
on and after that date such Securities (or portions thereof, as the case may be)
cease to be outstanding and interest on them ceases to accrue.
Subject to the restrictions contained in Section 2.9, a Security does
not cease to be outstanding because the Company or an Affiliate of the Company
holds the Security.
SECTION 2.9. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Company or any other obligor on the Securities or by any
Affiliate of the Company or of such other obligor shall be disregarded, except
that, for purposes of determining whether the Trustee shall be protected in
relying on any such notice, direction, waiver or consent, only Securities which
a Trust Officer of the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith shall not
be disregarded if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to the Securities and that the pledgee is
not the Company or any other obligor on the Securities or any Affiliate of the
Company or of such other obligor.
SECTION 2.10. TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the Company may
prepare and execute, and, upon receipt of a Company Order, the Trustee shall
authenticate and deliver, temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company with the consent of the Trustee considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate and deliver definitive Securities in exchange for
temporary Securities.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee or its agent any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee and no one else shall
cancel, in accordance with its standard procedures, all Securities surrendered
for transfer, exchange, redemption, payment, conversion or cancellation and
shall deliver the canceled Securities to the Company. All Securities which are
redeemed, purchased or otherwise acquired by the Company or any of its
Subsidiaries prior to the Final Maturity Date shall be delivered to the Trustee
for cancellation and the Company may not hold or resell such Securities or issue
any new Securities to replace any such Securities or any Securities that any
Holder has converted pursuant to Article 4. Without limitation to the foregoing,
any Securities acquired by any investment bankers or other purchasers pursuant
to Section 3.7 shall be surrendered for conversion and thereafter cancelled, and
may not be reoffered, sold or otherwise transferred.
SECTION 2.12. LEGEND; ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS.
(a) If Securities are issued upon the transfer, exchange or
replacement of Securities subject to restrictions on transfer and bearing the
legends set forth on the forms of Securities attached hereto as Exhibit A
setting forth such restrictions (collectively, the "Legend"), or if a request is
made to remove the Legend on a Security, the Securities so issued shall bear the
Legend, or the Legend shall not be removed, as
13
the case may be, unless there is delivered to the Company and the Registrar such
satisfactory evidence, which shall include an Opinion of Counsel if requested by
the Company or such Registrar, as may be reasonably required by the Company and
the Registrar, that neither the Legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A or Rule 144 under the Securities Act or that such
Securities are not "restricted" within the meaning of Rule 144 under the
Securities Act; provided that no such evidence need be supplied in connection
with the sale of such Security pursuant to a registration statement that is
effective at the time of such sale. Upon (i) provision of such satisfactory
evidence if requested, or (ii) notification by the Company to the Trustee and
registrar of the sale of such Security pursuant to a registration statement that
is effective at the time of such sale, the Trustee, at the written direction of
the Company, shall authenticate and deliver a Security that does not bear the
Legend. If the Legend is removed from the face of a Security and the Security is
subsequently held by an Affiliate of the Company, the Legend shall be
reinstated.
(b) A Global Security may not be transferred, in whole or in part, to
any Person other than the Depositary or a nominee or any successor thereof, and
no such transfer to any such other Person may be registered; provided that the
foregoing shall not prohibit any transfer of a Security that is issued in
exchange for a Global Security but is not itself a Global Security. No transfer
of a Security to any Person shall be effective under this Indenture or the
Securities unless and until such Security has been registered in the name of
such Person. Notwithstanding any other provisions of this Indenture or the
Securities, transfers of a Global Security, in whole or in part, shall be made
only in accordance with this Section 2.12.
(c) Subject to the succeeding paragraph, every Security shall be
subject to the restrictions on transfer provided in the Legend other than a
Restricted Global Security. Whenever any Restricted Security other than a
Restricted Global Security is presented or surrendered for registration of
transfer or for exchange for a Security registered in a name other than that of
the Holder, such Security must be accompanied by a certificate in substantially
the form set forth in Exhibit B, dated the date of such surrender and signed by
the Holder of such Security, as to compliance with such restrictions on
transfer. The Registrar shall not be required to accept for such registration of
transfer or exchange any Security not so accompanied by a properly completed
certificate.
(d) The restrictions imposed by the Legend upon the transferability
of any Security shall cease and terminate when such Security has been sold
pursuant to an effective registration statement under the Securities Act or
transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or, if earlier, upon the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision). Any Security as to which such restrictions on
transfer shall have expired in accordance with their terms or shall have
terminated may, upon a surrender of such Security for exchange to the Registrar
in accordance with the provisions of this Section 2.12 (accompanied, in the
event that such restrictions on transfer have terminated by reason of a transfer
in compliance with Rule 144 or any successor provision, by, if requested, an
opinion of counsel reasonably acceptable to the Company, addressed to the
Company and in form acceptable to the Company, to the effect that the transfer
of such Security has been made in compliance with Rule 144 or such successor
provision), be exchanged for a new Security, of like tenor and aggregate
principal amount, which shall not bear the restrictive Legend. The Company shall
inform the Trustee of the effective date of any registration statement
registering the Securities under the Securities Act. The Trustee shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the aforementioned opinion of counsel or registration statement.
14
(e) As used in the preceding two paragraphs of this Section 2.12, the
term "transfer" encompasses any sale, pledge, transfer, hypothecation or other
disposition of any Security.
(f) The provisions of clauses (i), (ii), (iii) and (iv) below shall
apply only to Global Securities:
(i) Notwithstanding any other provisions of this Indenture or
the Securities, a Global Security shall not be exchanged in whole or in
part for a Security registered in the name of any Person other than the
Depositary or one or more nominees thereof, provided that a Global
Security may be exchanged for Securities registered in the names of any
person designated by the Depositary in the event that (A) the Depositary
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or such Depositary has ceased to be
a "clearing agency" registered under the Exchange Act, and a successor
Depositary is not appointed by the Company within 90 days, (iB) the
Company has provided the Depositary with written notice that it has
decided to discontinue use of the system of book entry transfer through
the Depositary or any successor Depositary or (C) an Event of Default
has occurred and is continuing with respect to the Securities. Any
Global Security exchanged pursuant to clauses (A) or (B) above shall be
so exchanged in whole and not in part, and any Global Security exchanged
pursuant to clause (C) above may be exchanged in whole or from time to
time in part as directed by the Depositary. Any Security issued in
exchange for a Global Security or any portion thereof shall be a Global
Security; provided that any such Security so issued that is registered
in the name of a Person other than the Depositary or a nominee thereof
shall not be a Global Security.
(ii) Securities issued in exchange for a Global Security or any
portion thereof shall be issued in definitive, fully registered form,
without interest coupons, shall have an aggregate principal amount equal
to that of such Global Security or portion thereof to be so exchanged,
shall be registered in such names and be in such authorized
denominations as the Depositary shall designate and shall bear the
applicable legends provided for herein. Any Global Security to be
exchanged in whole shall be surrendered by the Depositary to the
Trustee, as Registrar. With regard to any Global Security to be
exchanged in part, either such Global Security shall be so surrendered
for exchange or, if the Trustee is acting as custodian for the
Depositary or its nominee with respect to such Global Security, the
principal amount thereof shall be reduced, by an amount equal to the
portion thereof to be so exchanged, by means of an appropriate
adjustment made on the records of the Trustee. Upon any such surrender
or adjustment, the Trustee shall authenticate and deliver the Security
issuable on such exchange to or upon the order of the Depositary or an
authorized representative thereof.
(iii) Subject to the provisions of clause (v) below, the
registered Holder may grant proxies and otherwise authorize any Person,
including Agent Members and persons that may hold interests through
Agent Members, to take any action which a holder is entitled to take
under this Indenture or the Securities.
(iv) In the event of the occurrence of any of the events
specified in clause (i) above, the Company will promptly make available
to the Trustee a reasonable supply of Certificated Securities in
definitive, fully registered form, without interest coupons.
(v) Neither Agent Members nor any other Persons on whose
behalf Agent Members may act shall have any rights under this Indenture
with respect to any Global
15
Security registered in the name of the Depositary or any nominee
thereof, or under any such Global Security, and the Depositary or such
nominee, as the case may be, may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner and
holder of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company,
the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization
furnished by the Depositary or such nominee, as the case may be, or
impair, as between the Depositary, its Agent Members and any other
person on whose behalf an Agent Member may act, the operation of
customary practices of such Persons governing the exercise of the rights
of a holder of any Security.
SECTION 2.13. CUSIP NUMBERS.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption or purchase 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 or purchase and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption or
purchase shall not be affected by any defect in or omission of such numbers. The
Company will promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE 3.
REDEMPTION AND PURCHASES
SECTION 3.1. RIGHT TO REDEEM; NOTICE TO TRUSTEE.
(a) The Securities may be redeemed at the election of the Company, as
a whole or in parts from time to time, at any time prior to September 5, 2004 (a
"Provisional Redemption"), at a Redemption Price equal to $1,000 per $1,000
principal amount of the Securities redeemed (such amount, together with the
Make-Whole Payment described below, the "Provisional Redemption Price"), on the
date of redemption (the "Provisional Redemption Date") if (1) the Closing Price
of the Common Stock has exceeded 150% of the Conversion Price for at least 20
Trading Days within a period of any 30 consecutive Trading Days ending on the
Trading Day prior to the date of mailing of the provisional notice of redemption
(the "Notice Date"), and (2) a shelf registration statement covering resales of
the Securities and the Common Stock issuable upon conversion thereof is
effective and available for use and is expected to remain effective for the 30
days following the Provisional Redemption Date, unless registration is no longer
required.
Upon any such Provisional Redemption, the Company shall make an
additional payment, at its option, in cash or Common Stock (the "Make-Whole
Payment") with respect to the Securities called for redemption to holders on the
Notice Date in an amount equal to the total value of the aggregate amount of
interest that would have been payable on the Securities from the last day
through which interest was paid on the Securities (or August 24, 2001 if no
interest has been paid) through September 1, 2004. Payments made in Common Stock
will be valued at 95% of the average Closing Prices of the Common Stock for the
five trading days ending on the day prior to the Provisional Redemption Date.
The Company shall make the Make-Whole Payment on all Securities called for
Provisional Redemption, including those Securities converted into Common Stock
between the Notice Date and the Provisional Redemption Date.
16
(b) The Securities may be redeemed at the election of the Company, as
a whole or from time to time in part, at any time on or after September 5, 2004,
at the Redemption Prices specified in paragraph 5 of the form of Security
attached hereto as Exhibit A, together with accrued interest up to, but not
including, the Redemption Date; provided that if the Redemption Date is an
interest payment date, interest will be payable to the Holders in whose name the
Securities are registered at the close of business on the Redemption Date.
If the Company elects to redeem Securities pursuant to this Section
3.1(a) or Section 3.1(b) and paragraph 5 of the Securities, it shall notify the
Trustee at least 45 days prior to the Redemption Date as fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee) of the Redemption
Date and the principal amount of Securities to be redeemed. If fewer than all of
the Securities are to be redeemed, the record date relating to such redemption
shall be selected by the Company and given to the Trustee, which record date
shall not be less than ten days after the date of notice to the Trustee.
SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed, the Trustee
shall, not more than 60 days prior to the Redemption Date, select the Securities
to be redeemed. The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption, by lot, or in its
discretion, on a pro rata basis. Securities in denominations of $1,000 may only
be redeemed in whole. The Trustee may select for redemption portions (equal to
$1,000 or any multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed to
be the portion selected for redemption. Securities which have been converted
during a selection of Securities to be redeemed shall be treated by the Trustee
as outstanding for the purpose of such selection.
SECTION 3.3. NOTICE OF REDEMPTION.
At least 20 days but not more than 60 days before a Redemption Date or
Provisional Redemption Date, the Company shall mail or cause to be mailed a
notice of redemption to each Holder of Securities to be redeemed at such
Holder's address as it appears on the Primary Registrar's books.
The notice shall identify the Securities (including CUSIP numbers) to be
redeemed and shall state:
(1) the Redemption Date or the Provisional Redeption Date, as
the case may be;
(2) the Redemption Price or Provisional Redemption Price, as
the case may be;
(3) the then current Conversion Price;
(4) the name and address of each Paying Agent and Conversion
Agent;
(5) that Securities called for redemption must be presented
and surrendered to a Paying Agent to collect the Redemption Price or Provisional
Redemption Price, as the case may be;
17
(6) that Holders who wish to convert Securities must surrender
such Securities for conversion no later than the close of business on the
Business Day immediately preceding the Redemption Date and must satisfy the
other requirements in paragraph 8 of the Securities;
(7) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption shall cease accruing on
and after the Redemption Date and the only remaining right of the Holder shall
be to receive payment of the Redemption Price or Provisional Redemption Price,
as the case may be, plus accrued interest, if any upon presentation and
surrender to a Paying Agent of the Securities;
(8) the type of consideration for the Make-Whole Payment, if
applicable; and
(9) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after the
Redemption Date, upon presentation and surrender of such Security, a new
Security or Securities in aggregate principal amount equal to the unredeemed
portion thereof will be issued.
If any of the Securities to be redeemed is in the form of a Global
Security, then the Company shall modify such notice to the extent necessary to
accord with the procedures of the Depositary applicable to redemptions. At the
Company's written request, which request shall (i) be irrevocable once given and
(ii) set forth all relevant information required by clauses (1) through (9) of
the preceding paragraph, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the Redemption Price stated
in the notice, together with accrued interest, if any, except for Securities
that are converted in accordance with the provisions of Article 4. Upon
presentation and surrender to a Paying Agent, Securities called for redemption
shall be paid at the Redemption Price, plus accrued interest up to but not
including the Redemption Date; provided that if the Redemption Date is an
interest payment date, interest will be payable to the Holders in whose names
the Securities are registered on the Redemption Date.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.
Prior to 11:00 a.m. New York City time, on the Redemption Date, the
Company shall deposit with a Paying Agent (or, if the Company acts as Paying
Agent, shall segregate and hold in trust) money sufficient to pay the Redemption
Price of and accrued interest on all Securities to be redeemed on that date,
other than Securities or portions thereof called for redemption on that date
which have been delivered by the Company to the Trustee for cancellation or have
been converted. The Paying Agent shall return to the Company any money not
required for that purpose because of the conversion of Securities pursuant to
Article 4 or, if such money is then held by the Company in trust and is not
required for such purpose, it shall be discharged from the trust.
SECTION 3.6. SECURITIES REDEEMED IN PART.
Upon presentation and surrender of a Security that is redeemed in part,
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder a new Security equal in principal amount to the unredeemed portion of the
Security surrendered.
18
SECTION 3.7. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of Securities, the Company may arrange
for the purchase and conversion of any Securities called for redemption by an
agreement with one or more investment bankers or other purchasers to purchase
such Securities by paying to a Paying Agent (other than the Company or any of
its Affiliates) in trust for the Holders, on or before 11:00 a.m. New York City
time on the Redemption Date, an amount that, together with any amounts deposited
with such Paying Agent by the Company for the redemption of such Securities, is
not less than the Redemption Price, together with interest accrued to, but not
including, the Redemption Date, of such Securities. Notwithstanding anything to
the contrary contained in this Article 3, the obligation of the Company to pay
the Redemption Price of such Securities, including all accrued interest, shall
be deemed to be satisfied and discharged to the extent such amount is so paid by
such purchasers; provided, however, that nothing in this Section 3.7 shall
relieve the Company of its obligation to pay the Redemption Price, plus accrued
interest to but excluding the relevant Redemption Date, on Securities called for
redemption. If such an agreement with one or more investment banks or other
purchasers is entered into, any Securities called for redemption and not
surrendered for conversion by the Holders thereof prior to the relevant
Redemption Date may, at the option of the Company upon written notice to the
Trustee, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article 4) surrendered by such purchasers for conversion, all as of
11:00 a.m. New York City time on the Redemption Date, subject to payment of the
above amount as aforesaid. The Paying Agent shall hold and pay to the Holders
whose Securities are selected for redemption any such amount paid to it for
purchase in the same manner as it would money deposited with it by the Company
for the redemption of Securities. Without the Paying Agent's prior written
consent, no arrangement between the Company and such purchasers for the purchase
and conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Paying Agent as set forth
in this Indenture, and the Company agrees to indemnify the Paying Agent from,
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Paying Agent in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
SECTION 3.8. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE
IN CONTROL.
(a) If at any time that Securities remain outstanding there shall
occur a Change in Control, Securities shall be purchased by the Company at the
option of the Holders, as of the date that is 30 Business Days after the
occurrence of the Change in Control (the "Change in Control Purchase Date") at a
purchase price equal to the principal amount of the Securities, plus accrued and
unpaid interest to, but excluding, the Change in Control Purchase Date (the
"Change in Control Purchase Price"), subject to satisfaction by or on behalf of
any Holder of the requirements set forth in subsection (c) of this Section 3.8.
A "Change in Control" shall be deemed to have occurred if any of the
following occurs after the date hereof:
(1) any "person" or "group" (as such terms are defined below)
is or becomes the "beneficial owner" (as defined below), directly or indirectly,
of shares of Voting Stock of the Company representing 50% or more of the total
voting power of all outstanding classes of Voting Stock of the Company
19
or has
the power, directly or indirectly, to elect a majority of the members of the
Board of Directors of the Company; or
(2) the Company consolidates with, or merges with or into,
another Person or the Company sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of the assets of the Company, or
any Person consolidates with, or merges with or into, the Company, in any such
event other than pursuant to a transaction in which the Persons that
"beneficially owned" (as defined below), directly or indirectly, shares of
Voting Stock of the Company immediately prior to such transaction "beneficially
own" (as defined below), directly or indirectly, shares of Voting Stock of the
Company representing at least a majority of the total voting power of all
outstanding classes of Voting Stock of the surviving or transferee Person; or
(3) the holders of capital stock of the Company approve any
plan or proposal for the liquidation or dissolution of the Company (whether or
not otherwise in compliance with the terms hereof).
For the purpose of the definition of "Change in Control", (i) "person" and
"group" have the meanings given such terms under Section 13(d) and 14(d) of the
Exchange Act or any successor provision to either of the foregoing, and the term
"group" includes any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act (or any successor provision thereto), (ii) a "beneficial owner"
shall be determined in accordance with Rule 13d-3 under the Exchange Act, as in
effect on the date of this Indenture, except that the number of shares of Voting
Stock of the Company shall be deemed to include, in addition to all outstanding
shares of Voting Stock of the Company and Unissued Shares deemed to be held by
the "person" or "group" (as such terms are defined above) or other Person with
respect to which the Change in Control determination is being made, all Unissued
Shares deemed to be held by all other Persons, and (iii) the terms "beneficially
owned" and "beneficially own" shall have meanings correlative to that of
"beneficial owner". The term "Unissued Shares" means shares of Voting Stock not
outstanding that are subject to options, warrants, rights to purchase or
conversion privileges exercisable within 60 days of the date of determination of
a Change in Control.
Notwithstanding anything to the contrary set forth in this Section 3.8,
a Change in Control will not be deemed to have occurred if either:
(1) the Closing Price (determined in accordance with Section
4.6(d) of this Indenture) of the Common Stock for any five Trading Days during
the ten Trading Days immediately preceding the Change in Control is at least
equal to 105% of the Conversion Price in effect on such Trading Day; or
(2) in the case of a merger or consolidation, at least 90% of
the consideration (excluding cash payments for fractional shares and cash
payments pursuant to dissenters' appraisal rights) in the merger or
consolidation constituting the Change in Control consists of common stock traded
on a United States national securities exchange or quoted on the Nasdaq National
Market (or which will be so traded or quoted when issued or exchanged in
connection with such Change in Control) and as a result of such transaction or
transactions the Securities become convertible solely into such common stock.
(b) Within 10 Business Days after the occurrence of a Change in
Control, the Company shall mail a written notice of the Change in Control to the
Trustee and to each Holder (and to beneficial owners as required by applicable
law). The notice shall include the form of a Change in Control Purchase Notice
to be completed by the Holder and shall state:
20
(1) the date of such Change in Control and, briefly, the
events causing such Change in Control;
(2) the date by which the Change in Control Purchase Notice
pursuant to this Section 3.8 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the Holder's right to require the Company to purchase the
Securities;
(6) briefly, the conversion rights of the Securities;
(7) the name and address of each Paying Agent and Conversion
Agent;
(8) the Conversion Price and any adjustments thereto;
(9) that Securities as to which a Change in Control Purchase
Notice has been given may be converted into Common Stock pursuant to Article 4
of this Indenture only to the extent that the Change in Control Purchase Notice
has been withdrawn in accordance with the terms of this Indenture;
(10) the procedures that the Holder must follow to exercise
rights under this Section 3.8;
(11) the procedures for withdrawing a Change in Control
Purchase Notice, including a form of notice of withdrawal; and
(12) that the Holder must satisfy the requirements set forth in
the Securities in order to convert the Securities.
If any of the Securities is in the form of a Global Security, then the
Company shall modify such notice to the extent necessary to accord with the
procedures of the Depositary applicable to the repurchase of Global Securities.
(c) A Holder may exercise its rights specified in subsection (a) of
this Section 3.8 upon delivery of a written notice (which shall be in
substantially the form included in Exhibit A hereto and which may be delivered
by letter, overnight courier, hand delivery, facsimile transmission or in any
other written form and, in the case of Global Securities, may be delivered
electronically or by other means in accordance with the Depositary's customary
procedures) of the exercise of such rights (a "Change in Control Purchase
Notice") to any Paying Agent at any time prior to the close of business on the
Business Day next preceding the Change in Control Purchase Date.
The delivery of such Security to any Paying Agent (together with all
necessary endorsements) at the office of such Paying Agent shall be a condition
to the receipt by the Holder of the Change in Control Purchase Price therefor.
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of the
21
Indenture that apply to the purchase of all of a Security pursuant to Sections
3.8 through 3.13 also apply to the purchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder delivering
to a Paying Agent the Change in Control Purchase Notice contemplated by this
subsection (c) shall have the right to withdraw such Change in Control Purchase
Notice in whole or in a portion thereof that is a principal amount of $1,000 or
in an integral multiple thereof at any time prior to the close of business on
the Business Day next preceding the Change in Control Purchase Date by delivery
of a written notice of withdrawal to the Paying Agent in accordance with Section
3.9.
A Paying Agent shall promptly notify the Company of the receipt by it of
any Change in Control Purchase Notice or written withdrawal thereof.
Anything herein to the contrary notwithstanding, in the case of Global
Securities, any Change in Control Purchase Notice may be delivered or withdrawn
and such Securities may be surrendered or delivered for purchase in accordance
with the Applicable Procedures as in effect from time to time.
SECTION 3.9. EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE.
Upon receipt by any Paying Agent of the Change in Control Purchase
Notice specified in Section 3.8(c), the Holder of the Security in respect of
which such Change in Control Purchase Notice was given shall (unless such Change
in Control Purchase Notice is withdrawn as specified below) thereafter be
entitled to receive the Change in Control Purchase Price with respect to such
Security. Such Change in Control Purchase Price shall be paid to such Holder
promptly following the later of (a) the Change in Control Purchase Date with
respect to such Security (provided the conditions in Section 3.8(c) have been
satisfied) and (b) the time of delivery of such Security to a Paying Agent by
the Holder thereof in the manner required by Section 3.8(c). Securities in
respect of which a Change in Control Purchase Notice has been given by the
Holder thereof may not be converted into shares of Common Stock on or after the
date of the delivery of such Change in Control Purchase Notice unless such
Change in Control Purchase Notice has first been validly withdrawn.
A Change in Control Purchase Notice may be withdrawn by means of a
written notice (which may be delivered by letter, overnight courier, hand
delivery, facsimile transmission or in any other written form and, in the case
of Global Securities, may be delivered electronically or by other means in
accordance with the Depositary's customary procedures) of withdrawal delivered
by the Holder to a Paying Agent at any time prior to the close of business on
the Business Day immediately preceding the Change in Control Purchase Date,
specifying the principal amount of the Security or portion thereof (which must
be a principal amount of $1,000 or an integral multiple of $1,000 in excess
thereof) with respect to which such notice of withdrawal is being submitted.
SECTION 3.10. DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE.
On or before 11:00 a.m. New York City time on the Change in Control
Purchase Date, the Company shall deposit with the Trustee or with a Paying Agent
(other than the Company or an Affiliate of the Company) an amount of money (in
immediately available funds if deposited on such Business Day) sufficient to pay
the aggregate Change in Control Purchase Price of all the Securities or portions
thereof that are to be purchased as of such Change in Control Purchase Date. The
manner in which the deposit required by this Section 3.10 is made by the Company
shall be at the option of the Company, provided that such deposit shall
22
be made in a manner such that the Trustee or a Paying Agent shall have
immediately available funds on the Change in Control Purchase Date.
If a Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Change in Control Purchase Price of any Security for which
a Change in Control Purchase Notice has been tendered and not withdrawn in
accordance with this Indenture then, on the Change in Control Purchase Date,
such Security will cease to be outstanding and the rights of the Holder in
respect thereof shall terminate (other than the right to receive the Change in
Control Purchase Price as aforesaid). The Company shall publicly announce the
principal amount of Securities purchased as a result of such Change in Control
on or as soon as practicable after the Change in Control Purchase Date.
SECTION 3.11. SECURITIES PURCHASED IN PART.
Any Security that is to be purchased only in part shall be surrendered
at the office of a Paying Agent and promptly after the Change in Control
Purchase Date the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge, a new Security
or Securities, of such authorized denomination or denominations as may be
requested by such Holder, in aggregate principal amount equal to, and in
exchange for, the portion of the principal amount of the Security so surrendered
that is not purchased.
SECTION 3.12. COMPLIANCE WITH SECURITIES LAWS UPON PURCHASE OF
SECURITIES.
In connection with any offer to purchase or purchase of Securities under
Section 3.8, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1 (or any
successor to either such Rule), if applicable, under the Exchange Act, (b) file
the related Schedule TO (or any successor or similar schedule, form or report)
if required under the Exchange Act, and (c) otherwise comply with all federal
and state securities laws in connection with such offer to purchase or purchase
of Securities, all so as to permit the rights of the Holders and obligations of
the Company under Sections 3.8 through 3.11 to be exercised in the time and in
the manner specified therein.
SECTION 3.13. REPAYMENT TO THE COMPANY.
To the extent that the aggregate amount of cash deposited by the Company
pursuant to Section 3.10 exceeds the aggregate Change in Control Purchase Price
together with interest, if any, thereon of the Securities or portions thereof
that the Company is obligated to purchase, then promptly after the Change in
Control Purchase Date the Trustee or a Paying Agent, as the case may be, shall
return any such excess cash to the Company.
ARTICLE 4.
CONVERSION
SECTION 4.1. CONVERSION PRIVILEGE.
Subject to the further provisions of this Section 4.1, a Holder of a
Security may convert the principal amount of such Security (or any portion
thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof)
into Common Stock at any time prior to the close of business on the Final
Maturity Date, at the Conversion Price then in effect; provided, however, that,
if such Security is called for redemption or
23
submitted for presented for purchase pursuant to Article 3, such conversion
right shall terminate at the close of business on the Business Day immediately
preceding the Redemption Date or Change in Control Purchase Date, as the case
may be, for such Security or such earlier date as the Holder presents such
Security for redemption or for purchase (unless the Company shall default in
making the redemption payment or Change in Control Purchase Price payment when
due, in which case the conversion right shall terminate at the close of business
on the date such default is cured and such Security is redeemed or purchased, as
the case may be). The number of shares of Common Stock issuable upon conversion
of a Security shall be determined by dividing the principal amount of the
Security or portion thereof surrendered for conversion by the Conversion Price
in effect on the Conversion Date. The initial Conversion Price is set forth in
paragraph 8 of the Securities and is subject to adjustment as provided in this
Article 4.
Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of a Security.
A Security in respect of which a Holder has delivered a Change in
Control Purchase Notice pursuant to Section 3.8(c) exercising the option of such
Holder to require the Company to purchase such Security may be converted only if
such Change in Control Purchase Notice is withdrawn by a written notice of
withdrawal delivered to a Paying Agent prior to the close of business on the
Business Day immediately preceding the Change in Control Purchase Date in
accordance with Section 3.9.
A Holder of Securities is not entitled to any rights of a holder of
Common Stock until such Holder has converted its Securities to Common Stock, and
only to the extent such Securities are deemed to have been converted into Common
Stock pursuant to this Article 4.
SECTION 4.2. CONVERSION PROCEDURE.
To convert a Security, a Holder must (a) complete and manually sign the
conversion notice on the back of the Security and deliver such notice to a
Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish
appropriate endorsements and transfer documents if required by a Registrar or a
Conversion Agent, and (d) pay any transfer or similar tax, if required. The date
on which the Holder satisfies all of those requirements is the "Conversion
Date." As soon as practicable after the Conversion Date, the Company shall
deliver to the Holder through a Conversion Agent a certificate for the number of
whole shares of Common Stock issuable upon the conversion and cash in lieu of
any fractional shares pursuant to Section 4.3. Anything herein to the contrary
notwithstanding, in the case of Global Securities, conversion notices may be
delivered and such Securities may be surrendered for conversion in accordance
with the Applicable Procedures as in effect from time to time.
The person in whose name the Common Stock certificate is registered
shall be deemed to be a stockholder of record on the Conversion Date; provided,
however, that no surrender of a Security on any date when the stock transfer
books of the Company shall be closed shall be effective to constitute the person
or persons entitled to receive the shares of Common Stock upon such conversion
as the record holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the person or persons entitled
to receive such shares of Common Stock as the record holder or holders thereof
for all purposes at the close of business on the next succeeding day on which
such stock transfer books are open; provided, further, that such conversion
shall be at the Conversion Price in effect on the Conversion Date as if the
stock transfer books of the Company had not been closed. Upon conversion of a
Security, such person shall no longer be a Holder of such Security. No payment
or adjustment will be made for dividends or distributions on shares of Common
Stock issued upon conversion of a Security.
24
Securities so surrendered for conversion (in whole or in part) during
the period from the close of business on any regular record date to the opening
of business on the next succeeding interest payment date (excluding Securities
or portions thereof called for redemption or presented for purchase upon a
Change in Control on a Redemption Date or Change in Control Purchase Date, as
the case may be, during the period beginning at the close of business on a
regular record date and ending at the opening of business on the first Business
Day after the next succeeding interest payment date, or if such interest payment
date is not a Business Day, the second such Business Day) shall also be
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest payable on such interest payment date on the principal amount of
such Security then being converted, and such interest shall be payable to such
registered Holder notwithstanding the conversion of such Security, subject to
the provisions of this Indenture relating to the payment of defaulted interest
by the Company. Except as otherwise provided in this Section 4.2, no payment or
adjustment will be made for accrued interest on a converted Security. If the
Company defaults in the payment of interest payable on such interest payment
date, the Company shall promptly repay such funds to such Holder.
Nothing in this Section shall affect the right of a Holder in whose name
any Security is registered at the close of business on a record date to receive
the interest payable on such Security on the related interest payment date in
accordance with the terms of this Indenture and the Securities. If a Holder
converts more than one Security at the same time, the number of shares of Common
Stock issuable upon the conversion shall be based on the aggregate principal
amount of Securities converted.
Upon surrender of a Security that is converted in part, the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder, a
new Security equal in principal amount to the unconverted portion of the
Security surrendered.
SECTION 4.3. FRACTIONAL SHARES.
The Company will not issue fractional shares of Common Stock upon
conversion of Securities. In lieu thereof, the Company will pay an amount in
cash based upon the Closing Price (determined as set forth in Section 4.6(d)) of
the Common Stock on the Trading Day immediately prior to the Conversion Date.
SECTION 4.4. TAXES ON CONVERSION.
If a Holder converts a Security, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon such conversion. However, the Holder shall pay any such tax which is
due because the Holder requests the shares to be issued in a name other than the
Holder's name. The Conversion Agent may refuse to deliver the certificate
representing the Common Stock being issued in a name other than the Holder's
name until the Conversion Agent receives a sum sufficient to pay any tax which
will be due because the shares are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any tax withholding required by law
or regulation.
SECTION 4.5. COMPANY TO PROVIDE STOCK.
The Company shall, prior to issuance of any Securities hereunder, and
from time to time as may be necessary, reserve, out of its authorized but
unissued Common Stock, a sufficient number of shares of Common Stock to permit
the conversion of all outstanding Securities into shares of Common Stock.
25
All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares, shall be duly authorized, validly issued, fully
paid and nonassessable and shall be free from preemptive rights and free of any
lien or adverse claim.
The Company will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of Securities, if any, and will list or cause to have quoted such
shares of Common Stock on each national securities exchange or on the Nasdaq
National Market or other over-the-counter market or such other market on which
the Common Stock is then listed or quoted; provided, however, that if rules of
such automated quotation system or exchange permit the Company to defer the
listing of such Common Stock until the first conversion of the Notes into Common
Stock in accordance with the provisions of this Indenture, the Company covenants
to list such Common Stock issuable upon conversion of the Notes in accordance
with the requirements of such automated quotation system or exchange at such
time. Any Common Stock issued upon conversion of a Security hereunder which at
the time of conversion was a Restricted Security will also be a Restricted
Security.
SECTION 4.6. ADJUSTMENT OF CONVERSION PRICE.
The conversion price as stated in paragraph 8 of the Securities (the
"Conversion Price") shall be adjusted from time to time by the Company as
follows:
(a) In case the Company shall (i) pay a dividend on its Common Stock
in shares of Common Stock, (ii) make a distribution on its Common Stock in
shares of Common Stock, (iii) subdivide its outstanding Common Stock into a
greater number of shares, or (iv) combine its outstanding Common Stock into a
smaller number of shares, the Conversion Price in effect immediately prior
thereto shall be adjusted so that the Holder of any Security thereafter
surrendered for conversion shall be entitled to receive that number of shares of
Common Stock which it would have owned had such Security been converted
immediately prior to the happening of such event. An adjustment made pursuant to
this subsection (a) shall become effective immediately after the record date in
the case of a dividend or distribution and shall become effective immediately
after the effective date in the case of subdivision or combination.
(b) In case the Company shall issue rights or warrants to all or
substantially all holders of its Common Stock entitling them (for a period
commencing no earlier than the record date described below and expiring not more
than 60 days after such record date) to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price per share
(or having a conversion price per share) less than the Current Market Price per
share of Common Stock (as determined in accordance with subsection (d) of this
Section 4.6) on the record date for the determination of stockholders entitled
to receive such rights or warrants, the Conversion Price in effect immediately
prior thereto shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
which the aggregate offering price of the total number of shares of Common Stock
so offered (or the aggregate conversion price of the convertible securities so
offered, which shall be determined by multiplying the number of shares of Common
Stock issuable upon conversion of such convertible securities by the conversion
price per share of Common Stock pursuant to the terms of such convertible
securities) would purchase at the Current Market Price per share (as defined in
subsection (d) of this Section 4.6) of Common Stock on such record date, and of
which the denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock offered
(or into which the convertible securities so offered are convertible). Such
adjustment shall be made successively whenever any such rights or warrants are
issued, and shall become effective immediately
26
after such record date. If at the end of the period during which such rights or
warrants are exercisable not all rights or warrants shall have been exercised,
the adjusted Conversion Price shall be immediately readjusted to what it would
have been based upon the number of additional shares of Common Stock actually
issued (or the number of shares of Common Stock issuable upon conversion of
convertible securities actually issued).
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock any shares of capital stock of the Company (other
than Common Stock), evidences of indebtedness or other non-cash assets
(including securities of any person other than the Company but excluding (1)
dividends or distributions paid exclusively in cash or (2) dividends or
distributions referred to in subsection (a) of this Section 4.6), or shall
distribute to all or substantially all holders of its Common Stock rights or
warrants to subscribe for or purchase any of its securities (excluding those
rights and warrants referred to in subsection (b) of this Section 4.6 and also
excluding the distribution of rights to all holders of Common Stock pursuant to
the adoption of a stockholders rights plan or the detachment of such rights
under the terms of such stockholder rights plan), then in each such case the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the current Conversion Price by a fraction of which
the numerator shall be the Current Market Price per share (as defined in
subsection (d) of this Section 4.6) of the Common Stock on the record date
mentioned below less the fair market value on such record date (as determined by
the Board of Directors, whose determination shall be conclusive evidence of such
fair market value and which shall be evidenced by an Officers' Certificate
delivered to the Trustee) of the portion of the capital stock, evidences of
indebtedness or other non-cash assets so distributed or of such rights or
warrants applicable to one share of Common Stock (determined on the basis of the
number of shares of Common Stock outstanding on the record date), and of which
the denominator shall be the Current Market Price per share (as defined in
subsection (d) of this Section 4.6) of the Common Stock on such record date.
Such adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such distribution.
In the event the then fair market value (as so determined) of the
portion of the capital stock, evidences of indebtedness or other non-cash assets
so distributed or of such rights or warrants applicable to one share of Common
Stock is equal to or greater than the Current Market Price per share of the
Common Stock on such record date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of a Security shall have the right
to receive upon conversion the amount of capital stock, evidences of
indebtedness or other non-cash assets so distributed or of such rights or
warrants such holder would have received had such holder converted each Security
on such record date. In the event that such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared. If the Board of Directors determines the fair market value of any
distribution for purposes of this Section 4.6(c) by reference to the actual or
when issued trading market for any securities, it must in doing so consider the
prices in such market over the same period used in computing the Current Market
Price of the Common Stock.
In the event that the Company implements a preferred shares rights plan
("Rights Plan"), upon conversion of the Securities into Common Stock, to the
extent that the Rights Plan has been implemented and is still in effect upon
such conversion, the holders of Securities will receive, in addition to the
Common Stock, the rights described therein (whether or not the rights have
separated from the Common Stock at the time of conversion), subject to the
limitations set forth in the Rights Plan. Any distribution of rights or warrants
pursuant to a Rights Plan complying with the requirements set forth in the
immediately preceding sentence of this paragraph shall not constitute a
distribution of rights or warrants pursuant to this Section 4.6(c).
27
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's Capital Stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 4.6 (and no adjustment to the Conversion Price under
this Section 4.6 will be required) until the occurrence of the earliest Trigger
Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the Conversion
Price shall be made under this Section 4.6(c). If any such right or warrant,
including any such existing rights or warrants distributed prior to the date of
this Indenture, are subject to events, upon the occurrence of which such rights
or warrants become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any and each
such event shall be deemed to be the date of distribution and record date with
respect to new rights or warrants with such rights (and a termination or
expiration of the existing rights or warrants without exercise by any of the
holders thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 4.6 was made, (1) in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Stock as of
the date of such redemption or repurchase, and (2) in the case of such rights or
warrants which shall have expired or been terminated without exercise by any
holders thereof, the Conversion Price shall be readjusted as if such rights and
warrants had not been issued.
(1) In case the Company shall, by dividend or otherwise, at
any time distribute (a "Triggering Distribution") to all or substantially all
holders of its Common Stock cash in an aggregate amount that, together with the
aggregate amount of (A) any cash and the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive evidence thereof and
which shall be evidenced by an Officers' Certificate delivered to the Trustee)
of any other consideration payable in respect of any tender offer by the Company
or a Subsidiary of the Company for Common Stock consummated within the 12 months
preceding the date of payment of the Triggering Distribution and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been made
and (B) all other cash distributions to all or substantially all holders of its
Common Stock made within the 12 months preceding the date of payment of the
Triggering Distribution and in respect of which no Conversion Price adjustment
pursuant to this Section 4.6 has been made, exceeds an amount equal to 10.0% of
the product of the Current Market Price per share of Common Stock (as determined
in accordance with subsection (d) of this Section 4.6) on the Business Day (the
"Determination Date") immediately preceding the day on which such Triggering
Distribution is declared by the Company multiplied by the number of shares of
Common Stock outstanding on the Determination Date (excluding shares held in the
treasury of the Company), the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying such Conversion Price in effect
immediately prior to the Determination Date by a fraction of which the numerator
shall be the Current Market Price per share of the Common Stock (as determined
in accordance with subsection (d) of this Section 4.6) on the Determination Date
less the sum of the aggregate amount of cash and the aggregate fair market value
(determined as aforesaid in this Section 4.6(c)(1)) of any such other
consideration so distributed, paid or payable within such 12 months (including,
without limitation, the Triggering Distribution) applicable to one share of
Common Stock (determined on the basis of the number of shares of Common Stock
outstanding on
28
the Determination Date) and the denominator shall be such Current Market Price
per share of the Common Stock (as determined in accordance with subsection (d)
of this Section 4.6) on the Determination Date, such reduction to become
effective immediately prior to the opening of business on the day following the
date on which the Triggering Distribution is paid.
(2) In case any tender offer made by the Company or any of its
Subsidiaries for Common Stock shall expire and such tender offer (as amended
upon the expiration thereof) shall involve the payment of aggregate
consideration in an amount (determined as the sum of the aggregate amount of
cash consideration and the aggregate fair market value (as determined by the
Board of Directors, whose determination shall be conclusive evidence thereof and
which shall be evidenced by an Officers' Certificate delivered to the Trustee
thereof) of any other consideration) that, together with the aggregate amount of
(A) any cash and the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive evidence thereof and which shall be
evidenced by an Officers' Certificate delivered to the Trustee) of any other
consideration payable in respect of any other tender offers by the Company or
any Subsidiary of the Company for Common Stock consummated within the 12 months
preceding the date of the Expiration Date (as defined below) and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been made
and (B) all cash distributions to all or substantially all holders of its Common
Stock made within the 12 months preceding the Expiration Date and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been made,
exceeds an amount equal to 10.0% of the product of the Current Market Price per
share of Common Stock (as determined in accordance with subsection (d) of this
Section 4.6) as of the last date (the "Expiration Date") tenders could have been
made pursuant to such tender offer (as it may be amended) (the last time at
which such tenders could have been made on the Expiration Date is hereinafter
sometimes called the "Expiration Time") multiplied by the number of shares of
Common Stock outstanding (including tendered shares but excluding any shares
held in the treasury of the Company) at the Expiration Time, then, immediately
prior to the opening of business on the day after the Expiration Date, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
close of business on the Expiration Date by a fraction of which the numerator
shall be the product of the number of shares of Common Stock outstanding
(including tendered shares but excluding any shares held in the treasury of the
Company) at the Expiration Time multiplied by the Current Market Price per share
of the Common Stock (as determined in accordance with subsection (d) of this
Section 4.6) on the Trading Day next succeeding the Expiration Date and the
denominator shall be the sum of (x) the aggregate consideration (determined as
aforesaid) payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of all shares validly tendered and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares and excluding any shares held in the treasury of the Company) at the
Expiration Time and the Current Market Price per share of Common Stock (as
determined in accordance with subsection (d) of this Section 4.6) on the Trading
Day next succeeding the Expiration Date, such reduction to become effective
immediately prior to the opening of business on the day following the Expiration
Date. In the event that the Company is obligated to purchase shares pursuant to
any such tender offer, but the Company is permanently prevented by applicable
law from effecting any or all such purchases or any or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price which would have been in effect based upon the number of shares actually
purchased. If the application of this Section 4.6(c)(2) to any tender offer
would result in an increase in the Conversion Price, no adjustment shall be made
for such tender offer under this Section 4.6(c)(2).
(3) For purposes of this Section 4.6(c), the term "tender
offer" shall mean and include both tender offers and exchange offers, all
references to "purchases" of shares in tender offers (and all similar
29
references) shall mean and include both the purchase of shares in tender offers
and the acquisition of shares pursuant to exchange offers, and all references to
"tendered shares" (and all similar references) shall mean and include shares
tendered in both tender offers and exchange offers.
(d) For the purpose of any computation under subsections (b) and (c)
of this Section 4.6, the current market price (the "Current Market Price") per
share of Common Stock on any date shall be deemed to be the average of the daily
closing prices for the 30 consecutive Trading Days commencing 45 Trading Days
before (i) the Determination Date or the Expiration Date, as the case may be,
with respect to distributions or tender offers under subsection (c) of this
Section 4.6 or (ii) the record date with respect to distributions, issuances or
other events requiring such computation under subsection (b) or (c) of this
Section 4.6. The closing price (the "Closing Price") for each day shall be the
last reported sales price or, in case no such reported sale takes place on such
date, the average of the reported closing bid and asked prices in either case on
the Nasdaq National Market (the "NNM") or, if the Common Stock is not listed or
admitted to trading on the NNM, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading or, if not listed or
admitted to trading on the NNM or any national securities exchange, the last
reported sales price of the Common Stock as quoted on NASDAQ or, in case no
reported sales takes place, the average of the closing bid and asked prices as
quoted on NASDAQ or any comparable system or, if the Common Stock is not quoted
on NASDAQ or any comparable system, the closing sales price or, in case no
reported sale takes place, the average of the closing bid and asked prices, as
furnished by any two members of the National Association of Securities Dealers,
Inc. selected from time to time by the Company for that purpose. If no such
prices are available, the Current Market Price per share shall be the fair value
of a share of Common Stock as determined by the Board of Directors (which shall
be evidenced by an Officers' Certificate delivered to the Trustee).
(e) In any case in which this Section 4.6 shall require that an
adjustment be made following a record date or a Determination Date or Expiration
Date, as the case may be, established for purposes of this Section 4.6, the
Company may elect to defer (but only until five Business Days following the
filing by the Company with the Trustee of the certificate described in Section
4.9) issuing to the Holder of any Security converted after such record date or
Determination Date or Expiration Date the shares of Common Stock and other
capital stock of the Company issuable upon such conversion over and above the
shares of Common Stock and other capital stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to adjustment; and,
in lieu of the shares the issuance of which is so deferred, the Company shall
issue or cause its transfer agents to issue due bills or other appropriate
evidence prepared by the Company of the right to receive such shares. If any
distribution in respect of which an adjustment to the Conversion Price is
required to be made as of the record date or Determination Date or Expiration
Date therefor is not thereafter made or paid by the Company for any reason, the
Conversion Price shall be readjusted to the Conversion Price which would then be
in effect if such record date had not been fixed or such effective date or
Determination Date or Expiration Date had not occurred.
SECTION 4.7. NO ADJUSTMENT.
No adjustment in the Conversion Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Price as last adjusted; provided, however, that any adjustments which
by reason of this Section 4.7 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article 4 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
30
No adjustment need be made for issuances of Common Stock pursuant to a
Company plan for reinvestment of dividends or interest or for a change in the
par value or a change to no par value of the Common Stock.
To the extent that the Securities become convertible into the right to
receive cash, no adjustment need be made thereafter as to the cash. Interest
will not accrue on the cash.
SECTION 4.8. ADJUSTMENT FOR TAX PURPOSES.
The Company shall be entitled to make such reductions in the Conversion
Price, in addition to those required by Section 4.6, as it in its discretion
shall determine to be advisable in order that any stock dividends, subdivisions
of shares, distributions of rights to purchase stock or securities or
distributions of securities convertible into or exchangeable for stock hereafter
made by the Company to its stockholders shall not be taxable.
SECTION 4.9. NOTICE OF ADJUSTMENT.
Whenever the Conversion Price or conversion privilege is adjusted, the
Company shall promptly mail to Securityholders 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. Unless and until the
Trustee shall receive an Officers' Certificate setting forth an adjustment of
the Conversion Price, the Trustee may assume without inquiry that the Conversion
Price has not been adjusted and that the last Conversion Price of which it has
knowledge remains in effect.
SECTION 4.10. NOTICE OF CERTAIN TRANSACTIONS.
In the event that:
(1) the Company takes any action which would require an
adjustment in the Conversion Price;
(2) the Company consolidates or merges with, or transfers all
or substantially all of its property and assets to, another corporation and
shareholders of the Company must approve the transaction; or
(3) there is a dissolution or liquidation of the Company,
the Company shall mail to Holders and file with the Trustee a notice stating the
proposed record or effective date, as the case may be. The Company shall mail
the notice at least ten days before such date. Failure to mail such notice or
any defect therein shall not affect the validity of any transaction referred to
in clause (1), (2) or (3) of this Section 4.10.
SECTION 4.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE
ON CONVERSION PRIVILEGE.
If any of the following shall occur, namely: (a) any reclassification or
change of shares of Common Stock issuable upon conversion of the 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, or any
other change for which an adjustment is provided in Section 4.6); (b) any
consolidation or merger or combination to which the Company is a party other
than a merger in which the Company is the continuing corporation and which
31
does not result in any reclassification of, or change (other than 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) in, outstanding shares of Common Stock;
or (c) any sale or conveyance as an entirety or substantially as an entirety of
the property and assets of the Company, directly or indirectly, to any person,
then the Company, or such successor, purchasing or transferee corporation, as
the case may be, shall, as a condition precedent to such reclassification,
change, combination, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then outstanding shall have the right to convert such Security
into the kind and amount of shares of stock and other securities and property
(including cash) receivable upon such reclassification, change, combination,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock deliverable upon conversion of such Security immediately prior to
such reclassification, change, combination, consolidation, merger, sale or
conveyance. Such supplemental indenture shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article 4. If, in
the case of any such consolidation, merger, combination, sale or conveyance, the
stock or other securities and property (including cash) receivable thereupon by
a holder of Common Stock include shares of stock or other securities and
property of a person other than the successor, purchasing or transferee
corporation, as the case may be, in such consolidation, merger, combination,
sale or conveyance, then such supplemental indenture shall also be executed by
such other person and shall contain such additional provisions to protect the
interests of the Holders of the Securities as the Board of Directors shall
reasonably consider necessary by reason of the foregoing. The provisions of this
Section 4.11 shall similarly apply to successive reclassifications, changes,
combinations, consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental indenture pursuant
to this Section 4.11, the Company shall promptly file with the Trustee (x) an
Officers' Certificate briefly stating the reasons therefor, the kind or amount
of shares of stock or other securities or property (including cash) receivable
by Holders of the Securities upon the conversion of their Securities after any
such reclassification, change, combination, consolidation, merger, sale or
conveyance, any adjustment to be made with respect thereto and that all
conditions precedent have been complied with and (y) an Opinion of Counsel that
all conditions precedent have been complied with, and shall promptly mail notice
thereof to all Holders.
SECTION 4.12. TRUSTEE'S DISCLAIMER.
The Trustee shall have no duty to determine when an adjustment under
this Article 4 should be made, how it should be made or what such adjustment
should be, but may accept as conclusive evidence of that fact or the correctness
of any such adjustment, and shall be protected in relying upon, an Officers'
Certificate including the Officers' Certificate with respect thereto which the
Company is obligated to file with the Trustee pursuant to Section 4.9. 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 Company's failure to comply with any provisions of this
Article 4.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.11, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 4.11.
32
SECTION 4.13. VOLUNTARY REDUCTION.
The Company from time to time may reduce the Conversion Price by any
amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period if our Board of Directors determines
that such reduction would be in the best interest of the Company or to avoid or
diminish income tax to holders of shares of our Common Stock in connection with
a dividend or distribution of stock or similar event, and the Company provides
15 days prior notice of any reduction in the Conversion Price; provided,
however, that in no event may the Company reduce the Conversion Price to be less
than the par value of a share of Common Stock.
ARTICLE 5.
SUBORDINATION
SECTION 5.1. 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 5; and each
Person holding any Security, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees to be bound by such
provisions.
The payment of the principal of, premium, if any, and interest
(including Additional Interest, if any) on all Securities (including, but not
limited to, the Redemption Price or Provisional Redemption Price, as the case
may be, with respect to the Securities called for redemption or the Change in
Control Purchase Price with respect to the Securities subject to purchase in
accordance with Article 3 as provided in this Indenture) 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 in cash or payment
satisfactory to the holders of Senior Indebtedness of all Senior Indebtedness,
whether outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article 5 shall prevent the occurrence of any
default or Event of Default hereunder.
SECTION 5.2. PAYMENTS TO HOLDERS.
No payment shall be made with respect to the principal of, or premium,
if any, or interest (including Additional Interest, if any) on the Securities
(including, but not limited to, the Redemption Price or the Provisional
Redemption Price, as the case may be, with respect to the Securities to be
called for redemption or the Change in Control Purchase Price with respect to
the Securities subject to purchase in accordance with Article 3 as provided in
this Indenture), except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 5.5, if:
(i) a default in the payment of principal, premium, interest, rent or
other obligations due on any Designated Senior Indebtedness occurs and is
continuing (or, in the case of Designated Senior Indebtedness for which there is
a period of grace, in the event of such a default that continues beyond the
period of grace, if any, specified in the instrument or lease evidencing such
Designated Senior Indebtedness), unless and until such default shall have been
cured or waived or shall have ceased to exist; or
(ii) a default, other than a payment default, on a Designated Senior
Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity and the
33
Trustee receives a notice of the default (a "Payment Blockage Notice") from a
Representative or holder of Designated Senior Indebtedness or the Company.
Subject to the provisions of Section 5.5, if the Trustee receives any
Payment Blockage Notice pursuant to clause (ii) above, no subsequent Payment
Blockage Notice shall be effective for purposes of this Section unless and until
at least 365 days shall have elapsed since the initial effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee (unless such default was waived, cured or otherwise ceased to exist and
thereafter subsequently reoccurred) shall be, or be made, the basis for a
subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Securities upon the earlier of:
(a) in the case of a default referred to in clause (i) above, the
date upon which the default is cured or waived or ceases to exist, or
(b) in the case of a default referred to in clause (ii) above, the
earlier of the date on which such default is cured or waived or ceases to exist
or 179 days pass after the date on which the applicable Payment Blockage Notice
is received, if the maturity of such Designated Senior Indebtedness has not been
accelerated, unless this Article 5 otherwise prohibits the payment or
distribution at the time of such payment or distribution.
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 similar proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash, or other payments
satisfactory to the holders of Senior Indebtedness before any payment is made on
account of the principal of, premium, if any, or interest (including Additional
Interest, if any) on the Securities (except payments made pursuant to Article 10
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 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 provision of this
Article 5, 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 Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, or as otherwise
required by law or a court order) or their representative or representatives, or
to the trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full in cash, or other payment satisfactory to the holders of Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness, before any payment or distribution is
made to the Holders of the Securities or to the Trustee.
For purposes of this Article 5, 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
34
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
5 with respect to the Securities to the payment of all Senior Indebtedness which
may at the time be outstanding; provided that (i) the Senior Indebtedness is
assumed by the new corporation, if any, resulting from any reorganization or
readjustment, and (ii) the rights of the holders of Senior Indebtedness (other
than leases which are not assumed by the Company or the new corporation, as the
case may be) are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another 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 corporation upon the
terms and conditions provided for in Article 7 shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 5.2 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article 7.
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, premium, if any, or
interest (including Additional Interest, if any) on the Securities by the
Company (including, but not limited to, the Redemption Price with respect to the
Securities called for redemption or the Change in Control Purchase Price with
respect to the Securities subject to purchase in accordance with Article 3 as
provided in this Indenture), except payments and distributions made by the
Trustee as permitted by Section 5.5, until all Senior Indebtedness has been paid
in full in cash or other payment satisfactory to the holders of Senior
Indebtedness or such acceleration is rescinded in accordance with the terms of
this Indenture. If payment of the Securities is accelerated because of an Event
of Default, the Company shall promptly notify holders of Senior Indebtedness of
such 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, shall be received by the Trustee or the
Holders of the Securities before all Senior Indebtedness is paid in full, in
cash or other payment satisfactory to the holders of Senior Indebtedness, or
provision is made for such payment thereof in accordance with its terms in cash
or other payment satisfactory to the holders of Senior Indebtedness, 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 Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full, in cash
or other payment satisfactory to the holders of Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the holders of
such Senior Indebtedness.
Nothing in this Section 5.2 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 9.7. This Section 5.2 shall be subject
to the further provisions of Section 5.5.
SECTION 5.3. SUBROGATION OF SECURITIES.
Subject to the payment in full, in cash or other payment satisfactory to
the holders of Senior Indebtedness, of all Senior Indebtedness, 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 Indebtedness pursuant to the
provisions of this Article 5 (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
35
Securities are subordinated and is entitled to like rights of subrogation) to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Indebtedness until the principal, premium, if any, and interest
(including Additional Interest, if any) on the Securities shall be paid in full
in cash or other payment satisfactory to the holders of Senior Indebtedness;
and, for the purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to which
the Holders of the Securities or the Trustee would be entitled except for the
provisions of this Article 5, and no payment over pursuant to the provisions of
this Article 5, to or for the benefit of the holders of Senior Indebtedness by
Holders of the Securities or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment by the Company to or on account of the
Senior Indebtedness; 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 5, which would otherwise have been
paid to the holders of Senior Indebtedness 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 5 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 Indebtedness, on the other hand.
Nothing contained in this Article 5 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 Indebtedness, and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of (and premium, if any)
and interest on the Securities as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of the Senior Indebtedness, nor shall anything herein or therein
prevent the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article 5 of the holders of Senior
Indebtedness 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 5, the Trustee, subject to the provisions of Section 9.1, 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
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article 5.
SECTION 5.4. 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 5 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
5.3 hereof at least 30 days before the expiration of the time to file such
claim, the holders of any Senior Indebtedness or their representatives are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Securities.
36
SECTION 5.5. NOTICE TO TRUSTEE.
The Company shall give prompt written notice in the form of an Officers'
Certificate to a Trust Officer of the Trustee and to any Paying Agent of any
fact known to the Company which 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 5. Notwithstanding the provisions of
this Article 5 or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts which 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 5, unless and until a
Trust 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 Indebtedness
or from any trustee thereof; and before the receipt of any such written notice,
the Trustee, subject to the provisions of Section 9.1, shall be entitled in all
respects to assume that no such facts exist; provided that if on a date not
fewer 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 premium, if any, or interest on any
Security) the Trustee shall not have received, with respect to such monies, the
notice provided for in this Section 5.5, then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such monies and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such prior date. Notwithstanding anything in this
Article 5 to the contrary, nothing shall prevent any payment by the Trustee to
the Holders of monies deposited with it pursuant to Article 10, and any such
payment shall not be subject to the provisions of Article 5.
The Trustee, subject to the provisions of Section 9.1, 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 Indebtedness (or a trustee
on behalf of such holder) to establish that such notice has been given by a
Representative or a holder of Senior Indebtedness or a trustee on behalf of any
such holder or holders. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article 5, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness 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 5, and if such
evidence is not furnished the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 5.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article 5 in respect of any Senior Indebtedness at any
time held by it, to the same extent as any other holder of Senior Indebtedness,
and nothing in Section 9.11 or elsewhere in this Indenture shall deprive the
Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 5, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 9.1, the Trustee shall not be liable to any holder of
Senior Indebtedness if it shall pay over or deliver to Holders of Securities,
the Company or any other person
37
money or assets to which any holder of Senior Indebtedness shall be entitled by
virtue of this Article 5 or otherwise.
SECTION 5.7. NO IMPAIRMENT OF SUBORDINATION.
No right of any present or future holder of any Senior Indebtedness 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.
SECTION 5.8. CERTAIN CONVERSIONS DEEMED PAYMENT.
For the purposes of this Article 5 only, (1) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article 4
shall not be deemed to constitute a payment or distribution on account of the
principal of (or premium, if any) or interest on Securities or on account of the
purchase or other acquisition of Securities, and (2) the payment, issuance or
delivery of cash (except in satisfaction of fractional shares pursuant to
Section 4.3), property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment on account of the
principal of such Security. For the purposes of this Section 5.8, the term
"junior securities" means (a) shares of any stock of any class of the Company,
or (b) securities of the Company which are subordinated in right of payment to
all Senior Indebtedness which 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.
Nothing contained in this Article 5 or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders, the right, which is
absolute and unconditional, of the Holder of any Security to convert such
Security in accordance with Article 4.
SECTION 5.9. 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 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 in
addition to or in place of the Trustee; provided, however, that the first
paragraph of Section 5.5 shall not apply to the Company or any Affiliate of the
Company if it or such Affiliate acts as Paying Agent.
SECTION 5.10. SENIOR INDEBTEDNESS ENTITLED TO RELY.
The holders of Senior Indebtedness (including, without limitation,
Designated Senior Indebtedness) shall have the right to rely upon this Article
5, 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.
38
ARTICLE 6
COVENANTS
SECTION 6.1. PAYMENT OF SECURITIES.
The Company shall promptly make all payments in respect of the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal or interest or Additional Interest, if
any, shall be considered paid on the date it is due if the Paying Agent (other
than the Company) holds by 11:00 a.m., New York City time, on that date money,
deposited by the Company or an Affiliate thereof, sufficient to pay the
installment. The Company shall, to the fullest extent permitted by law, pay
interest on overdue principal (including premium, if any) and overdue
installments of interest at the rate borne by the Securities per annum.
Payment of the principal of (and premium, if any) and any interest on
the Securities shall be made at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan, The City of New York (which shall
initially be State Street Bank and Trust Company, N.A., an Affiliate of the
Trustee, as agent of the Trustee) or at the Corporate Trust Office of the
Trustee in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address
appears in the Register; provided further that a Holder with an aggregate
principal amount in excess of $2,000,000 will be paid by wire transfer in
immediately available funds at the election of such Holder if such Holder has
provided wire transfer instructions to the Company at least 10 Business Days
prior to the payment date.
SECTION 6.2. SEC REPORTS.
The Company shall file all reports and other information and documents
which it is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act, and within 15 days after it files them with the SEC, the Company
shall file copies of all such reports, information and other documents with the
Trustee.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 6.3. COMPLIANCE CERTIFICATES.
The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year of the Company (beginning with the fiscal year ending
December 31, 2001), an Officers' Certificate as to the signer's knowledge of the
Company's compliance with all conditions and covenants on its part contained in
this Indenture and stating whether or not the signer knows of any default or
Event of Default. If such signer knows of such a default or Event of Default,
the Officers' Certificate shall describe the default or Event of Default and the
efforts to remedy the same. For the purposes of this Section 6.3, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
39
SECTION 6.4. FURTHER INSTRUMENTS AND ACTS.
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.
SECTION 6.5. MAINTENANCE OF CORPORATE EXISTENCE.
Subject to Article 7, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence.
SECTION 6.6. RULE 144A INFORMATION REQUIREMENT.
Within the period prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), the Company covenants and agrees that it shall, during any
period in which it is not subject to Section 13 or 15(d) under the Exchange Act,
make available to any Holder or beneficial holder of Securities or any Common
Stock issued upon conversion thereof which continue to be Restricted Securities
in connection with any sale thereof and any prospective purchaser of Securities
or such Common Stock designated by such Holder or beneficial holder, the
information required pursuant to Rule 144A(d)(4) under the Securities Act upon
the request of any Holder or beneficial holder of the Securities or such Common
Stock and it will take such further action as any Holder or beneficial holder of
such Securities or such Common Stock may reasonably request, all to the extent
required from time to time to enable such Holder or beneficial holder to sell
its Securities or Common Stock without registration under the Securities Act
within the limitation of the exemption provided by Rule 144A, as such Rule may
be amended from time to time. Upon the request of any Holder or any beneficial
holder of the Securities or such Common Stock, the Company will deliver to such
Holder a written statement as to whether it has complied with such requirements.
SECTION 6.7. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
shall 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 or other law
which would prohibit or forgive the Company from paying all or any portion of
the principal of, premium, if any, or interest (including Additional Interest,
if any) on the Securities as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Indenture 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 had been enacted.
SECTION 6.8. PAYMENT OF ADDITIONAL INTEREST.
If Additional Interest is payable by the Company pursuant to the
Registration Rights Agreement, the Company shall deliver to the Trustee a
certificate to that effect stating (i) the amount of such Additional Interest
that is payable and (ii) the date on which such Additional Interest is payable.
Unless and until a Trust Officer of the Trustee receives such a certificate, the
Trustee may assume without inquiry that no such Additional Interest is payable.
If the Company has paid Additional Interest directly to the Persons entitled to
it, the Company shall deliver to the Trustee a certificate setting forth at the
particulars of such payment.
40
ARTICLE 7
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. COMPANY MAY CONSOLIDATE, ETC, ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person
(in a transaction in which the Company is not the surviving corporation) or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, unless:
(1) in case the Company shall consolidate with or merge into
another Person (in a transaction in which the Company is not the surviving
corporation) or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer, or which leases, the properties and assets of the
Company substantially as an entirety shall be a corporation, limited liability
company, partnership or trust, shall be organized and validly existing under the
laws of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, the
due and punctual payment of the principal of and any premium and interest on all
the Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed and the
conversion rights shall be provided for in accordance with Article 4, by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee, by the Person (if other than the Company) formed by
such consolidation or into which the Company shall have been merged or by the
Person which shall have acquired the Company's assets;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.
SECTION 7.2. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 7.1, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
41
ARTICLE 8
DEFAULT AND REMEDIES
SECTION 8.1. EVENTS OF DEFAULT.
An "Event of Default" shall occur if:
(1) the Company defaults in the payment of any interest or
Additional Interest, if any, payable to all holders of Registrable Securities
(as defined in the Registration Rights Agreement) on any Security when the same
becomes due and payable and the default continues for a period of 30 days,
whether or not such payment shall be prohibited by the provisions of Article 5
hereof;
(2) the Company defaults in the payment of any principal of
(including, without limitation, any premium, if any, on) any Security when the
same becomes due and payable (whether at maturity, upon redemption, on a Change
of Control Purchase Date or otherwise), whether or not such payment shall be
prohibited by the provisions of Article 5 hereof;
(3) the Company fails to comply with any of its other
agreements contained in the Securities or this Indenture and the default
continues for the period and after the notice specified below;
(4) the Company defaults in the payment of the purchase price
of any Security when the same becomes due and payable, whether or not such
payment shall be prohibited by the provisions of Article 5 hereof; or
(5) the Company fails to provide a Change in Control Purchase
Notice when required by Section 3.8; or
(6) any indebtedness under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company or any Significant
Subsidiary or under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any indebtedness for
money borrowed by the Company or any Significant Subsidiary (an "Instrument")
with a principal amount then outstanding in excess of U.S. $20,000,000 whether
such indebtedness now exists or shall hereafter be created, is not paid at final
maturity of the Instrument (either at its stated maturity or upon acceleration
thereof), and such indebtedness is not discharged, or such acceleration is not
rescinded or annulled, within a period of 30 days after there shall have been
given, by registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal amount of
the Outstanding Securities a written notice specifying such default and
requiring the Company to cause such indebtedness to be discharged or cause such
default to be cured or waived or such acceleration to be rescinded or annulled
and stating that such notice is a "Notice of Default" hereunder; or
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief
against it in an involuntary case or proceeding;
42
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property; or
(D) makes a general assignment for the benefit of its
creditors; or
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case or proceeding;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for all or substantially all of the property of the
Company or any Significant Subsidiary; or
(C) orders the liquidation of the Company or any
Significant Subsidiary;
and in each case the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11 of the United States Code (or
any successor thereto) or any similar federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
A default under clause (3) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the Securities then outstanding notify the Company and the
Trustee, of the default, and the Company does not cure the default within 60
days after receipt of such notice. The notice given pursuant to this Section 8.1
must specify the default, demand that it be remedied and state that the notice
is a "Notice of Default." When any default under this Section 8.1 is cured, it
ceases.
The Trustee shall not be charged with knowledge of any Event of Default
unless written notice thereof shall have been given to a Trust Officer at the
Corporate Trust Office of the Trustee by the Company, a Paying Agent, any Holder
or any agent of any Holder.
SECTION 8.2. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clause (7) or (8) of Section 8.1) occurs and is continuing, the Trustee may, by
notice to the Company, or the Holders of at least 25% in aggregate principal
amount of the Securities then outstanding may, by notice to the Company and the
Trustee, declare all unpaid principal to the date of acceleration on the
Securities then outstanding (if not then due and payable) to be due and payable
upon any such declaration, and the same shall become and be immediately due and
payable. If an Event of Default specified in clause (7) or (8) of Section 8.1
occurs, all unpaid principal of the Securities then outstanding shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. The Holders of a majority in aggregate
principal amount of the Securities then outstanding by notice to the Trustee may
rescind an acceleration and its consequences if (a) all existing Events of
Default, other than the nonpayment of the principal of the Securities which has
become due solely by such declaration of acceleration, have been cured or
waived; (b) to the extent the payment of such interest is lawful, interest
(calculated at the rate per annum borne by the Securities) on overdue
installments of interest and overdue principal, which has become due otherwise
than
43
by such declaration of acceleration, has been paid; (c) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction; and
(d) all payments due to the Trustee and any predecessor Trustee under Section
9.7 have been made. No such rescission shall affect any subsequent default or
impair any right consequent thereto.
SECTION 8.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may, but
shall not be obligated to, pursue any available remedy by proceeding at law or
in equity to collect the payment of the principal of or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT.
Subject to Sections 8.7 and 11.2, the Holders of a majority in principal
amount of the Securities then outstanding, by notice to the Trustee may waive an
existing default or Event of Default and its consequence, except a default or
Event of Default in the payment of the principal of or interest on any Security,
a failure by the Company to convert any Securities into Common Stock or any
default or Event of Default in respect of any provision of this Indenture or the
Securities which, under Section 11.2, cannot be modified or amended without the
consent of the Holder of each Security affected. When a default or Event of
Default is waived, it is cured and ceases.
SECTION 8.5. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the Securities then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of another Holder or the Trustee, or that may involve
the Trustee in personal liability unless the Trustee is offered indemnity
satisfactory to it; provided, however, that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction.
SECTION 8.6. LIMITATIONS ON SUITS.
A Holder may not pursue any remedy with respect to this Indenture or the
Securities (except actions for payment of overdue principal or interest or for
the conversion of the Securities pursuant to Article 4) unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount
of the then outstanding Securities make a written request to the Trustee to
pursue the remedy;
44
(3) such Holder or Holders offer to the Trustee reasonable
indemnity to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Securities then outstanding.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of the principal of and interest on the
Security, on or after the respective due dates expressed in the Security and
this Indenture, to convert such Security in accordance with Article 4 and to
bring suit for the enforcement of any such payment on or after such respective
dates or the right to convert, is absolute and unconditional and shall not be
impaired or affected without the consent of the Holder.
SECTION 8.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in the payment of principal or interest specified
in clause (1) or (2) of Section 8.1 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or another obligor on the Securities for the whole amount of principal
and accrued interest remaining unpaid, together with, to the extent that payment
of such interest is lawful, interest on overdue principal and on overdue
installments of interest, in each case at the rate per annum borne by the
Securities and 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.
SECTION 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders allowed in
any judicial proceedings relative to the Company (or any other obligor on the
Securities), its creditors or its property and shall be entitled and empowered
to collect and receive any money or other property payable or deliverable on any
such claims and to distribute the same, and any Custodian 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 to 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 9.7, and to the extent that such payment of the reasonable compensation,
expenses, disbursements and advances in any such proceedings shall be denied for
any reason, payment of the same shall be secured by a lien on, and shall be paid
out of, any and all distributions, dividends, money, securities and other
property which the Holders may be entitled to receive in such proceedings,
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to, or, on behalf of
45
any Holder, to authorize, accept or adopt 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 8.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 8, it shall
pay out the money in the following order:
First, to the Trustee for amounts due under Section 9.7;
Second, to the holders of Senior Indebtedness to the extent required by
Article 5;
Third, to Holders for amounts due and unpaid on the Securities for
principal and interest (including Additional Interest, if any), ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Securities for principal and interest (including Additional Interest, if
any), respectively; and
Fourth, to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 8.10.
SECTION 8.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 8.11 does not apply to a suit made by the Trustee, a suit
by a Holder pursuant to Section 8.7, or a suit by Holders of more than 10% in
principal amount of the Securities then outstanding.
ARTICLE 9
TRUSTEE
SECTION 9.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties as are
specifically set forth in this Indenture and no others; and
46
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. The Trustee,
however, shall examine any certificates and opinions which by any provision
hereof are specifically required to be delivered to the Trustee 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:
(1) this paragraph does not limit the effect of subsection (b)
of this Section 9.1;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 8.5.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers unless the Trustee shall have received adequate indemnity in
its opinion against potential costs and liabilities incurred by it relating
thereto.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to subsections (a), (b), (c) and (d) of this Section 9.1.
(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.
SECTION 9.2. RIGHTS OF TRUSTEE.
Subject to Section 9.1:
(a) The Trustee may rely conclusively on any document believed by it
to be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 12.4(b). 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.
(c) The Trustee may act through its agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection in respect of any such
47
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.
(h) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office, and such notice
references the Securities and this Indenture.
(i) The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
SECTION 9.3. 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
of the Company with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 9.10 and 9.11.
SECTION 9.4. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement in the Securities other than its certificate of authentication.
SECTION 9.5. NOTICE OF DEFAULT OR EVENTS OF DEFAULT.
If a default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder notice of
the default or Event of Default within 90 days after it occurs. However, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding notice is in the interests of
Securityholders, except in the case of a default or an Event of Default in
payment of the principal of or interest on any Security.
48
SECTION 9.6. REPORTS BY TRUSTEE TO HOLDERS.
If such report is required by TIA Section 313, within 60 days after each
March 15, beginning with the March 15 following the date of this Indenture, the
Trustee shall mail to each Securityholder a brief report dated as of such March
15 that complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b)(2) and (c).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed. The Company shall notify the Trustee
whenever the Securities become listed on any stock exchange or listed or
admitted to trading on any quotation system and any changes in the stock
exchanges or quotation systems on which the Securities are listed or admitted to
trading and of any delisting thereof.
SECTION 9.7. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such compensation
(as agreed to from time to time by the Company and the Trustee in writing) for
its services (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust). The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses may include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee or any predecessor Trustee
(which for purposes of this Section 9.7 shall include its officers, directors,
employees and agents) for, and hold it harmless against, any and all loss,
liability or expense including taxes (other than taxes based upon, measured by
or determined by the income of the Trustee), (including reasonable legal fees
and expenses) incurred by it in connection with the acceptance or administration
of its duties under this Indenture or any action or failure to act as authorized
or within the discretion or rights or powers conferred upon the Trustee
hereunder including the reasonable costs and expenses of the Trustee and its
counsel in defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company need not pay for any
settlement without its written consent, which shall not be unreasonably
withheld.
The Company need not reimburse the Trustee for any expense or indemnify
it against any loss or liability incurred by it resulting from its gross
negligence or bad faith.
To secure the Company's payment obligations in this Section 9.7, the
Trustee shall have a senior claim to which the Securities are hereby made
subordinate on all money or property held or collected by the Trustee, except
such money or property held in trust to pay the principal of and interest on the
Securities. The obligations of the Company under this Section 9.7 shall survive
the satisfaction and discharge of this Indenture or the resignation or removal
of the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (7) or (8) of Section 8.1 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 the termination of this Indenture.
49
SECTION 9.8. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities then outstanding may remove the
Trustee by so notifying the Trustee and may, with the Company's written consent,
appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 9.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. The resignation or removal of a Trustee shall not be effective until a
successor Trustee shall have delivered the written acceptance of its appointment
as described below.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of 10% in principal amount of the Securities then outstanding may
petition any court of competent jurisdiction for the appointment of a successor
Trustee at the expense of the Company.
If the Trustee fails to comply with Section 9.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee and be released from its obligations (exclusive of any
liabilities that the retiring Trustee may have incurred while acting as Trustee)
hereunder, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
A retiring Trustee shall not be liable for the acts or omissions of any
successor Trustee after its succession.
Notwithstanding replacement of the Trustee pursuant to this Section 9.8,
the Company's obligations under Section 9.7 shall continue for the benefit of
the retiring Trustee.
SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust assets (including the
administration of this Indenture) to, another corporation, the resulting,
surviving or transferee corporation, without any further act, shall be the
successor Trustee, provided such transferee corporation shall qualify and be
eligible under Section 9.10. Such successor Trustee shall promptly mail notice
of its succession to the Company and each Holder.
50
SECTION 9.10. ELIGIBILITY; DISQUALIFICATION.
The Trustee shall always satisfy the requirements of paragraphs (1), (2)
and (5) of TIA Section 310(a). The Trustee (or its parent holding company) shall
have a combined capital and surplus of at least $50,000,000. If at any time the
Trustee shall cease to satisfy any such requirements, it shall resign
immediately in the manner and with the effect specified in this Article 9. The
Trustee shall be subject to the provisions of TIA Section 310(b). Nothing herein
shall prevent the Trustee from filing with the SEC the application referred to
in the penultimate paragraph of TIA Section 310(b).
SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 10
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 10.1. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for and except as further provided below),
and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 2.7 and (ii)
Securities for whose payment money has theretofore been deposited in trust and
thereafter repaid to the Company as provided in Section 10.3) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the Final
Maturity Date within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of clause (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Trustee or a Paying
Agent (other than the Company or any of its Affiliates) as trust funds in trust
for the purpose cash in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee for
cancellation, for principal and interest
51
(including Additional Interest, if any) to the date of such deposit (in the case
of Securities which have become due and payable) or to the Final Maturity Date
or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) 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 9.7 shall survive and,
if money shall have been deposited with the Trustee pursuant to subclause (B) of
clause (1) of this Section, the provisions of Sections 2.3, 2.4, 2.5, 2.6, 2.7,
2.12, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13 and 12.5, Article 4, the last paragraph
of Section 6.2 and this Article 10, shall survive until the Securities have been
paid in full.
SECTION 10.2. APPLICATION OF TRUST MONEY.
Subject to the provisions of Section 10.3, the Trustee or a Paying Agent
shall hold in trust, for the benefit of the Holders, all money deposited with it
pursuant to Section 10.1 and shall apply the deposited money in accordance with
this Indenture and the Securities to the payment of the principal of and
interest on the Securities. Money so held in trust shall not be subject to the
subordination provisions of Article 5.
SECTION 10.3. REPAYMENT TO COMPANY.
The Trustee and each Paying Agent shall promptly pay to the Company upon
request any excess money (i) deposited with them pursuant to Section 10.1 and
(ii) held by them at any time.
The Trustee and each Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that remains
unclaimed for two years after a right to such money has matured; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such payment, may at the expense of the Company cause to be mailed to each
Holder entitled to such money notice that such money remains unclaimed and that
after a date specified therein, which shall be at least 30 days from the date of
such mailing, any unclaimed balance of such money then remaining will be repaid
to the Company. After payment to the Company, Holders entitled to money must
look to the Company for payment as general creditors.
SECTION 10.4. REINSTATEMENT.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 10.2 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, then the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 10.1 until such
time as the Trustee or such Paying Agent is permitted to apply all such money in
accordance with Section 10.2; provided, however, that if the Company has made
any payment of the principal of or interest on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive any such payment from the money
held by the Trustee or such Paying Agent.
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ARTICLE 11
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 11.1. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this Indenture or
the Securities without notice to or consent of any Securityholder:
(a) to comply with Sections 4.11 and 7.1;
(b) to cure any ambiguity, defect or inconsistency;
(c) to make any other change that does not adversely effect the
rights of any Securityholder;
(d) to comply with the provisions of the TIA; or
(e) to appoint a successor Trustee.
SECTION 11.2. WITH CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this Indenture or
the Securities with the written consent of the Holders of at least a majority in
aggregate principal amount of the Securities then outstanding. The Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities without notice to any
Securityholder. However, notwithstanding the foregoing but subject to Section
11.4, without the written consent of each Securityholder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 8.4, may not:
(a) change the stated maturity of the principal of, or interest on,
any Security;
(b) reduce the principal amount of, or any premium or interest on,
any Security;
(c) reduce the amount of principal payable upon acceleration of the
maturity of any Security;
(d) change the place or currency of payment of principal of, or any
premium or interest on, any Security;
(e) impair the right to institute suit for the enforcement of any
payment on, or with respect to, any Security;
(f) modify the provisions with respect to the purchase right of
Holders pursuant to Article 3 upon a Change in Control in a manner adverse to
Holders;
(g) modify the subordination provisions of Article 5 in a manner
materially adverse to the Holders of Securities;
(h) adversely affect the right of Holders to convert Securities other
than as provided in or under Article 4 of this Indenture;
53
(i) reduce the percentage of the aggregate principal amount of the
outstanding Securities whose Holders must consent to a modification or
amendment;
(j) reduce the percentage of the aggregate principal amount of the
outstanding Securities necessary for the waiver of compliance with certain
provisions of this Indenture or the waiver of certain defaults under this
Indenture; and
(k) modify any of the provisions of this Section or Section 8.4,
except to increase any such percentage or to provide that certain provisions of
this Indenture cannot be modified or waived without the consent of the Holder of
each outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under this
Section 11.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 11.2 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
An amendment or supplement under this Section 11.2 or under Section 11.1 may not
make any change that adversely affects the rights under Article 5 of any holder
of an issue of Senior Indebtedness unless the holders of that issue, pursuant to
its terms, consent to the change.
SECTION 11.3. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as in effect at the date of such amendment or
supplement.
SECTION 11.4. 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.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(a) through (k) of Section 11.2. In that case the amendment, supplement or
waiver shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.
SECTION 11.5. 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 it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so
54
determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms.
SECTION 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 11 if the amendment or supplemental
indenture does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, in its sole discretion,
but need not sign it. In signing or refusing to sign such amendment or
supplemental indenture, the Trustee shall be entitled to receive and, subject to
Section 9.1, shall be fully protected in relying upon, an Opinion of Counsel
stating that such amendment or supplemental indenture is authorized or permitted
by this Indenture. The Company may not sign an amendment or supplement indenture
until the Board of Directors approves it.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through
operation of Section 318(c) thereof, such imposed duties shall control.
SECTION 12.2. NOTICES.
Any notice, request or communication shall be given in writing and
delivered in person or mailed by first-class mail, postage prepaid, addressed as
follows: If to the Company:
HNC Software Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Trustee:
State Street Bank and Trust Company of California, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department (HNC Software Inc.-- 5.25%
Convertible Subordinated Notes Due September 1, 2008)
Such notices or communications shall be effective when received.
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 mailed to a Securityholder shall be mailed
by first-class mail or delivered by an overnight delivery service to it at its
address shown on the register kept by the Primary Registrar.
55
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 to a Securityholder is mailed in
the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 12.3. COMMUNICATIONS 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 any other person shall
have the protection of TIA Section 312(c).
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
(a) 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
at the request of the Trustee:
(1) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent (including any covenants, compliance with
which constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent (including any covenants, compliance with
which constitutes a condition precedent) have been complied with.
(b) Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with;
provided however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 12.5. RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS.
The Company (or, in the event deposits have been made pursuant to
Section 10.1, the Trustee) may set a record date for purposes of determining the
identity of Holders entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture, which record date shall not be
more than thirty (30) days prior to the date of the commencement of solicitation
of such action. Notwithstanding the provisions of Section 11.4, if a record date
is fixed, those persons who were Holders of Securities at the close
56
of business on such record date (or their duly designated proxies), and only
those persons, shall be entitled to take such action by vote or consent or to
revoke any vote or consent previously given, whether or not such persons
continue to be Holders after such record date.
SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION
AGENT.
The Trustee may make reasonable rules (not inconsistent with the terms
of this Indenture) for action by or at a meeting of Holders. Any Registrar,
Paying Agent or Conversion Agent may make reasonable rules for its functions.
SECTION 12.7. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, Sunday or a day on which state or
federally chartered banking institutions in New York, New York and the state in
which the Corporate Trust Office is located are not required to be open. If a
payment date is a Legal Holiday, payment shall be made on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If a regular record date is a Legal Holiday, the record date
shall not be affected.
SECTION 12.8. GOVERNING LAW.
This Indenture and the Securities shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary of the Company. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. NO RECOURSE AGAINST OTHERS.
All liability described in paragraph 18 of the Securities of any
director, officer, employee or shareholder, as such, of the Company is waived
and released.
SECTION 12.11. 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 12.12. MULTIPLE COUNTERPARTS.
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
57
SECTION 12.13. SEPARABILITY.
In case any provisions 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 12.14. TABLE OF CONTENTS, HEADINGS, ETC.
The table of contents, cross-reference sheet 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.
[SIGNATURE PAGE FOLLOWS]
58
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as
of the date and year first above written.
HNC SOFTWARE INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer and
Secretary
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., AS TRUSTEE
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
EXHIBIT A
[FORM OF FACE OF SECURITY]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY 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 THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 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 THEREOF. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT 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 OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.](1)
[THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.](2)
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN
THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) PURSUANT TO AN EXEMPTION
----------------
(1) These paragraphs should be included only if the Security is a global
Security.
(2) These paragraphs to be included only if the Security is a Restricted
Security.
A-1
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.](2)
[THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A
REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED
TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY
AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.]2
----------------
(2) These paragraphs to be included only if the Security is a Transfer
Restricted Security.
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HNC SOFTWARE INC.
CUSIP: __________ R-______
5.25% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 1, 2008
HNC Software Inc., a Delaware corporation (the "Company", which term
shall include any successor corporation under the Indenture referred to on the
reverse hereof), promises to pay to___________ _________________, or registered
assigns, the principal sum of _____________________________ Dollars
($__________) on September 1, 2008 [or such greater or lesser amount as is
indicated on the Schedule of Exchanges of Notes on the other side of this
Note].(3)
Interest Payment Dates: March 1 and September 1
Record Dates: February 15 and August 15
This Note is convertible as specified on the other side of this Note.
Additional provisions of this Note are set forth on the other side of this Note.
SIGNATURE PAGE FOLLOWS
----------------
(3) This phrase should be included only if the Security is a global
Security.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
HNC SOFTWARE INC.
By:
-------------------------------------
Name:
Title:
Attest:
---------------------------------
Name:
Title:
Dated:
Trustee's Certificate of Authentication: This is one of the
Securities referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
---------------------------------
Authorized Signatory
By:
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[FORM OF REVERSE SIDE OF SECURITY]
HNC SOFTWARE INC.
5.25% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 1, 2008
1. INTEREST
HNC Software Inc., a Delaware corporation (the "Company", which term
shall include any successor corporation under the Indenture hereinafter referred
to), promises to pay interest on the principal amount of this Note at the rate
of 5.25% per annum. The Company shall pay interest semiannually on March 1 and
September 1 of each year, commencing March 1, 2002. Interest on the Notes shall
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from August 24, 2001; provided, however, that if there
is not an existing default in the payment of interest and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding interest payment date, interest shall accrue from such interest
payment date. Interest will be computed on the basis of a 360-day year of twelve
30-day months. Any reference herein to interest accrued or payable as of any
date shall include any Additional Interest accrued or payable on such date as
provided in the Registration Rights Agreement.
2. METHOD OF PAYMENT
The Company shall pay interest on this Note (except defaulted interest)
to the person who is the Holder of this Note at the close of business on
February 15 or August 15, as the case may be, next preceding the related
interest payment date. The Holder must surrender this Note to a Paying Agent to
collect payment of principal. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal and
interest in respect of any Certificated Security by check or wire payable in
such money; provided, however, that a Holder with an aggregate principal amount
in excess of $2,000,000 will be paid by wire transfer in immediately available
funds at the election of such Holder. If such Holder has provided wire transfer
instructions to the Company. The Company may mail an interest check to the
Holder's registered address. Notwithstanding the foregoing, so long as this Note
is registered in the name of a Depositary or its nominee, all payments hereon
shall be made by wire transfer of immediately available funds to the account of
the Depositary or its nominee.
3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT
Initially, State Street Bank and Trust Company of California, N.A. (the
"Trustee", which term shall include any successor trustee under the Indenture
hereinafter referred to) will act as Paying Agent, Registrar and Conversion
Agent. The Company may change any Paying Agent, Registrar or Conversion Agent
without notice to the Holder. The Company or any of its Subsidiaries may,
subject to certain limitations set forth in the Indenture, act as Paying Agent
or Registrar.
4. INDENTURE, LIMITATIONS
This Note is one of a duly authorized issue of Securities of the Company
designated as its 5.25% Convertible Subordinated Notes Due September 1, 2008
(the "Notes"), issued under an Indenture dated as of August 24, 2001 (together
with any supplemental indentures thereto, the "Indenture"), between the Company
and the Trustee. The terms of this Note include those stated in the Indenture
and those required by or made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended, as in effect on the date of
A-5
the Indenture. This Note is subject to all such terms, and the Holder of this
Note is referred to the Indenture and said Act for a statement of them.
The Notes are subordinated unsecured obligations of the Company limited
to $150,000,000 aggregate principal amount, subject to Section 2.2 of the
Indenture. The Indenture does not limit other debt of the Company, secured or
unsecured, including Senior Indebtedness.
5. OPTIONAL AND PROVISIONAL REDEMPTION
The Notes are subject to redemption, at any time on or after July 5,
2004, as a whole or from time to time in part, at the election of the Company.
The Redemption Prices (expressed as percentages of the principal amount) are as
follows for Notes redeemed during the periods set forth below:
PERIOD REDEMPTION PRICE
------ ----------------
September 5, 2004 through August 31, 2005............ 102.625%
September 1, 2005 through August 31, 2006............ 101.750%
September 1, 2006 through August 31, 2007............ 100.875%
September 1, 2007 and thereafter..................... 100.000%
in each case together with accrued interest up to but not including the
Redemption Date; provided that if the Redemption Date is an interest payment
date, interest will be payable to the Holders in whose names the Notes are
registered at the close of business on the relevant Redemption Dates.
The Securities may be redeemed at the election of the Company, as a
whole or in parts from time to time, at any time prior to September 5, 2004 (a
"Provisional Redemption"), at a Redemption Price equal to $1,000 per $1,000
principal amount of the Notes redeemed (such amount, together with the
Make-Whole Payment described below, the "Provisional Redemption Price"), on the
date of redemption (the "Provisional Redemption Date") if (i) the Closing Price
of the Common Stock has exceeded 150% of the Conversion Price for at least 20
Trading Days within a period of any 30 consecutive Trading Days ending on the
Trading Day prior to the date of mailing of the provisional notice of redemption
(the "Notice Date"), and (ii) a shelf registration statement covering resales of
the Notes and the Common Stock issuable upon conversion thereof is effective and
available for use and is expected to remain effective for the 30 days following
the Provisional Redemption Date unless registration is no longer required.
Upon any such Provisional Redemption, the Company shall make an
additional payment, at its option, in either cash or Common Stock (the
"Make-Whole Payment") to holders of the Notes called for redemption, including
those Notes converted into Common Stock between the Notice Date and the
Provisional Redemption Date, in an amount equal to the total value of the
aggregate amount of interest that would have been payable on the Securities from
the last day through which interest was paid on the Notes (or August 24, 2001 if
no interest has been paid) through September 1, 2004. Payments made in Common
Stock will be valued at 95% of the average Closing Prices of Common Stock for
the five trading days ending on the day prior to the Provisional Redemption
Date.
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail at least 20 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at its registered address. Notes in denominations larger than $1,000
may be redeemed in part, but only in whole multiples of $1,000. On and
A-6
after the Redemption Date, subject to the deposit with the Paying Agent of funds
sufficient to pay the Redemption Price plus accrued interest, if any, accrued
to, but excluding, the Redemption Date, interest shall cease to accrue on Notes
or portions of them called for redemption.
7. PURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral multiple of $1,000 in excess thereof) of the Notes held by such
Holder on the date that is 30 Business Days after the occurrence of a Change in
Control, at a purchase price equal to 100% of the principal amount thereof
together with accrued interest up to, but excluding, the Change in Control
Purchase Date. The Holder shall have the right to withdraw any Change in Control
Purchase Notice (in whole or in a portion thereof that is $1,000 or an integral
multiple of $1,000 in excess thereof) at any time prior to the close of business
on the Business Day next preceding the Change in Control Purchase Date by
delivering a written notice of withdrawal to the Paying Agent in accordance with
the terms of the Indenture.
8. CONVERSION
A Holder of a Note may convert the principal amount of such Note (or any
portion thereof equal to $1,000 or any integral multiple of $1,000 in excess
thereof) into shares of Common Stock at any time prior to the close of business
on September 1, 2008; provided, however, that if the Note is called for
redemption or subject to purchase upon a Change in Control, the conversion right
will terminate at the close of business on the Business Day immediately
preceding the Redemption Date or the Change in Control Purchase Date, as the
case may be, for such Note or such earlier date as the Holder presents such Note
for redemption or purchase (unless the Company shall default in making the
redemption payment or Change in Control Purchase Price, as the case may be, when
due, in which case the conversion right shall terminate at the close of business
on the date such default is cured and such Note is redeemed or purchased).
The initial Conversion Price is $28.80 per share, subject to adjustment
under certain circumstances. The number of shares of Common Stock issuable upon
conversion of a Note is determined by dividing the principal amount of the Note
or portion thereof converted by the Conversion Price in effect on the Conversion
Date. No fractional shares will be issued upon conversion; in lieu thereof, an
amount will be paid in cash based upon the Closing Price (as defined in the
Indenture) of the Common Stock on the Trading Day immediately prior to the
Conversion Date.
To convert a Note, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to a Conversion Agent,
(b) surrender the Note to a Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by a Registrar or a Conversion
Agent, and (d) pay any transfer or similar tax, if required. Notes so
surrendered for conversion (in whole or in part) during the period from the
close of business on any regular record date to the opening of business on the
next succeeding interest payment date (excluding Notes or portions thereof
called for redemption or subject to purchase upon a Change in Control on a
Redemption Date or Change in Control Purchase Date, as the case may be, during
the period beginning at the close of business on a regular record date and
ending at the opening of business on the first Business Day after the next
succeeding interest payment date, or if such interest payment date is not a
Business Day, the second such Business Day) shall also be accompanied by payment
in funds acceptable to the Company of an amount equal to the interest payable on
such interest payment date on the principal amount of such Note then being
converted, and such interest shall be payable to such registered Holder
notwithstanding the conversion of such Note, subject to the provisions of this
A-7
Indenture relating to the payment of defaulted interest by the Company. If the
Company defaults in the payment of interest payable on such interest payment
date, the Company shall promptly repay such funds to such Holder. A Holder may
convert a portion of a Note equal to $1,000 or any integral multiple thereof.
A Note in respect of which a Holder had delivered a Change in Control
Purchase Notice exercising the option of such Holder to require the Company to
purchase such Note may be converted only if the Change in Control Purchase
Notice is withdrawn in accordance with the terms of the Indenture.
9. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION
Any Notes called for redemption, unless surrendered for conversion
before the close of business on the Business Day immediately preceding the
Redemption Date, may be deemed to be purchased from the Holders of such Notes at
an amount not less than the Redemption Price, together with accrued interest, if
any, to, but not including, the Redemption Date, by one or more investment
bankers or other purchasers who may agree with the Company to purchase such
Notes from the Holders, to convert them into Common Stock of the Company and to
make payment for such Notes to the Paying Agent in trust for such Holders.
10. SUBORDINATION
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Indebtedness of the Company. Any Holder
by accepting this Note agrees to and shall be bound by such subordination
provisions and authorizes the Trustee to give them effect. In addition to all
other rights of Senior Indebtedness described in the Indenture, the Senior
Indebtedness shall continue to be Senior Indebtedness and entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any terms of any instrument relating to the Senior
Indebtedness or any extension or renewal of the Senior Indebtedness.
11. DENOMINATIONS, TRANSFER, EXCHANGE
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of
or exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes or other governmental charges that may be imposed
in relation thereto by law or permitted by the Indenture.
12. PERSONS DEEMED OWNERS
The Holder of a Note may be treated as the owner of it for all purposes.
13. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent will pay the money back to the Company at
its written request. After that, Holders entitled to money must look to the
Company for payment.
A-8
14. AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding, and an existing default or Event
of Default and its consequence or compliance with any provision of the Indenture
or the Notes may be waived in a particular instance with the consent of the
Holders of a majority in principal amount of the Notes then outstanding. Without
the consent of or notice to any Holder, the Company and the Trustee may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency or make any other change that does not
adversely affect the rights of any Holder.
15. SUCCESSOR ENTITY
When a successor corporation, limited liability company, partnership or
trust assumes all the obligations of its predecessor under the Notes and the
Indenture in accordance with the terms and conditions of the Indenture, the
predecessor corporation, limited liability company, partnership or trust will
(except in certain circumstances specified in the Indenture) be released from
those obligations.
16. DEFAULTS AND REMEDIES
Under the Indenture, an Event of Default includes: (i) default for 30
days in payment of any interest on any Notes; (ii) default in payment of any
principal (including, without limitation, any premium, if any) on the Notes when
due; (iii) failure by the Company for 60 days after notice to it to comply with
any of its other agreements contained in the Indenture or the Notes; (iv)
default in the payment of certain indebtedness of the Company or a Significant
Subsidiary and (v) certain events of bankruptcy, insolvency or reorganization of
the Company or any Significant Subsidiary. If an Event of Default (other than as
a result of certain events of bankruptcy, insolvency or reorganization of the
Company) occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding may declare all unpaid
principal to the date of acceleration on the Notes then outstanding to be due
and payable immediately, all as and to the extent provided in the Indenture. If
an Event of Default occurs as a result of certain events of bankruptcy,
insolvency or reorganization of the Company, unpaid principal of the Notes then
outstanding shall become due and payable immediately without any declaration or
other act on the part of the Trustee or any Holder, all as and to the extent
provided in the Indenture. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in principal amount of the Notes then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders notice of any continuing default (except a
default in payment of principal or interest) if it determines that withholding
notice is in their interests. The Company is required to file periodic reports
with the Trustee as to the absence of default.
17. TRUSTEE DEALINGS WITH THE COMPANY
State Street Bank and Trust Company of California, N.A., the Trustee
under the Indenture, in its individual or any other capacity, may make loans to,
accept deposits from and perform services for the Company or an Affiliate of the
Company, and may otherwise deal with the Company or an Affiliate of the Company,
as if it were not the Trustee.
A-9
18. NO RECOURSE AGAINST OTHERS
A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the Notes
or the Indenture nor for any claim based on, in respect of or by reason of such
obligations or their creation. The Holder of this Note by accepting this Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Note.
19. AUTHENTICATION
This Note shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of this
Note.
20. ABBREVIATIONS AND DEFINITIONS
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).
All terms defined in the Indenture and used in this Note but not
specifically defined herein are defined in the Indenture and are used herein as
so defined.
21. INDENTURE TO CONTROL; GOVERNING LAW
In the case of any conflict between the provisions of this Note and the
Indenture, the provisions of the Indenture shall control. This Note shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principals of conflicts of law.
The Company will furnish to any Holder, upon written request and without
charge, a copy of the Indenture. Requests may be made to: HNC Software Inc.,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief
Financial Officer.
A-10
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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(Print or type assignee's name, address and zip code)
and irrevocably appoint
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agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him or her.
Your Signature:
Date:
---------------------------- ----------------------------------------
(Sign exactly as your name appears on
the other side of this Note)
*Signature guaranteed by:
By:
------------------------------
* The signature must be guaranteed by an institution which is a member
of one of the following recognized signature guaranty programs: (i)
the Securities Transfer Agent Medallion Program (STAMP); (ii) the New
York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange
Medallion Program (SEMP); or (iv) such other guaranty program
acceptable to the Trustee.
A-11
CONVERSION NOTICE
To convert this Note into Common Stock of the Company, check the box: [ ]
To convert only part of this Note, state the principal amount to be
converted (must be $1,000 or a multiple of $1,000): $____________.
If you want the stock certificate made out in another person's name,
fill in the form below:
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(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
Your Signature:
Date:
---------------------------- ----------------------------------------
(Sign exactly as your name appears on
the other side of this Note)
*Signature guaranteed by:
By:
------------------------------
* The signature must be guaranteed by an institution which is a member
of one of the following recognized signature guaranty programs: (i)
the Securities Transfer Agent Medallion Program (STAMP); (ii) the New
York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange
Medallion Program (SEMP); or (iv) such other guaranty program
acceptable to the Trustee.
A-12
OPTION TO ELECT REPURCHASE
UPON A CHANGE OF CONTROL
To: HNC Software Inc.
The undersigned registered owner of this Security hereby irrevocably
acknowledges receipt of a notice from HNC Software Inc. (the "Company") as to
the occurrence of a Change in Control with respect to the Company and requests
and instructs the Company to redeem the entire principal amount of this
Security, or the portion thereof (which is $1,000 or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Security at the Change in Control Purchase Price, together
with accrued interest to, but excluding, such date, to the registered Holder
hereof.
Dated:
------------- ----------------------------------------
----------------------------------------
Signature(s)
Signature(s) must be guaranteed by a
qualified guarantor institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange
Act of 1934.
----------------------------------------
Signature Guaranty
Principal amount to be redeemed
(in an integral multiple of $1,000, if less than all):
--------------------
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
A-13
SCHEDULE OF EXCHANGES OF NOTES(4)
The following exchanges, redemptions, repurchases or conversions of a
part of this global Note have been made:
PRINCIPAL AMOUNT
OF THIS GLOBAL NOTE AUTHORIZED AMOUNT OF
FOLLOWING SUCH SIGNATORY OF AMOUNT OF DECREASE IN INCREASE IN
DECREASE DATE SECURITIES PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF EXCHANGE (OR INCREASE) CUSTODIAN OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE
------------------------- ------------ --------------------- -------------------
----------------
(4) This schedule should be included only if the Security is a global
Security.
A-14
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF TRANSFER RESTRICTED SECURITIES(5)
Re: 5.25% Convertible Subordinated Notes Due September 1, 2008 (the "Notes")
of HNC Software Inc.
This certificate relates to $_______ principal amount of Notes owned in
(check applicable box)
[ ] book-entry or [ ]definitive form by ___________ (the "Transferor").
The Transferor has requested a Registrar or the Trustee to exchange or
register the transfer of such Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Notes as provided in Section 2.12 of the Indenture
dated as of August 24, 2001 between HNC Software Inc. and State Street Bank and
Trust Company of California, N.A., as trustee (the "Indenture"), and the
transfer of such Note is being made pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
(check applicable box) or the transfer or exchange, as the case may be, of such
Note does not require registration under the Securities Act because (check
applicable box):
[ ] Such Note is being transferred pursuant to an effective
registration statement under the Securities Act.
[ ] Such Note is being acquired for the Transferor's own account,
without transfer.
[ ] Such Note is being transferred to the Company or a Subsidiary (as
defined in the Indenture) of the Company.
[ ] Such Note is being transferred to a person the Transferor
reasonably believes is a "qualified institutional buyer" (as
defined in Rule 144A or any successor provision thereto ("Rule
144A") under the Securities Act) that is purchasing for its own
account or for the account of a "qualified institutional buyer", in
each case to whom notice has been given that the transfer is being
made in reliance on such Rule 144A, and in each case in reliance on
Rule 144A.
[ ] Such Note is being transferred pursuant to and in compliance with
an exemption from the registration requirements under the
Securities Act in accordance with Rule 144 (or any successor
thereto) ("Rule 144") under the Securities Act.
Such Note is being transferred pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act (other than
an exemption referred to above) and as a result of which such
----------------
(5) This certificate should only be included if this Security is a Transfer
Restricted Security.
A-15
Note will, upon such transfer, cease to be a "restricted security" within the
meaning of Rule 144 under the Securities Act.
The Transferor acknowledges and agrees that, if the transferee will hold
any such Notes in the form of beneficial interests in a global Note which is a
"restricted security" within the meaning of Rule 144 under the Securities Act,
then such transfer can only be made pursuant to Rule 144A under the Securities
Act and such transferee must be a "qualified institutional buyer" (as defined in
Rule 144A).
Date:
---------------------------- -----------------------------------
(Insert Name of Transferor)
A-16