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NET.B@NK, INC.
Issuer
AND
SUNTRUST BANK, ATLANTA
Trustee
INDENTURE
Dated as of June 9, 1999
4 3/4% Convertible Subordinated Notes Due 2004
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CROSS-REFERENCE TABLE*
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TRUST INDENTURE ACT SECTION INDENTURE SECTION
--------------------------- -----------------
310(a)(1).................................................................... 7.10
(a)(2)..................................................................... 7.10
(a)(3)..................................................................... N.A.
(a)(4)..................................................................... N.A.
(a)(5)..................................................................... 7.10
(b)........................................................................ 7.9
(c)........................................................................ N.A.
311(a)....................................................................... 7.14
(b)........................................................................ 7.14
(c)........................................................................ N.A.
312(a)....................................................................... 2.5(a); 5.1
(b)........................................................................ 16.4
(c)........................................................................ 16.4
313(a)....................................................................... 7.2
(b)(1)..................................................................... N.A.
(b)(2)..................................................................... 7.2
(c)........................................................................ 7.2
(d)........................................................................ 7.2
314(a)....................................................................... 4.9(a); 4.7
(b)........................................................................ N.A.
(c)(1)..................................................................... 16.6
(c)(2)..................................................................... 16.6
(c)(3)..................................................................... N.A.
(d)........................................................................ N.A.
(e)........................................................................ 16.7
(f)........................................................................ N.A.
315(a)....................................................................... 7.1(b)
(b)........................................................................ 6.8
(c)........................................................................ 7.1(a)
(d)........................................................................ 7.1(c)
(e)........................................................................ 6.9
316(a)(last sentence)........................................................ 8.4
(a)(1)(A).................................................................. 6.7
(a)(1)(B).................................................................. 6.7
(a)(2)..................................................................... N.A.
(b)........................................................................ 6.4
(c)........................................................................ 9.2
317(a)....................................................................... 6.2
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(b)........................................................................ 4.4
318(a)....................................................................... 16.9; 16.10
N.A. means Not applicable.
---------------
* This Cross-Reference Table is not part of the Indenture.
ii
TABLE OF CONTENTS
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PAGE
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions.................................................................................1
Section 1.2 Incorporation by Reference of Trust Indenture Act...........................................6
Section 1.3 Rules of Construction.......................................................................7
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION,
REGISTRATION AND EXCHANGE OF NOTES
Section 2.1 Designation, Amount and Issue of Notes......................................................7
Section 2.2 Form of Notes...............................................................................7
Section 2.3 Date and Denomination of Notes; Payments of Interest........................................9
Section 2.4 Execution of Notes.........................................................................10
Section 2.5 Exchange and Registration of Transfer of Notes; Depositary.................................11
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes.................................................13
Section 2.7 Temporary Notes............................................................................14
Section 2.8 Cancellation of Notes Paid, Etc............................................................14
Section 2.9 CUSIP Numbers..............................................................................14
ARTICLE III
REDEMPTION AND REPURCHASE OF NOTES
Section 3.1 Right of Redemption........................................................................15
Section 3.2 Notice of Redemption; Selection of Notes...................................................15
Section 3.3 Payment of Notes Called for Redemption.....................................................17
Section 3.4 Conversion Arrangement on Call for Redemption..............................................17
Section 3.5 Repurchase of Notes Upon a Change of Control...............................................18
ARTICLE IV
PARTICULAR COVENANTS OF THE COMPANY
Section 4.1 Payment of Principal, Premium and Interest.................................................20
Section 4.2 Maintenance of Office or Agency............................................................20
Section 4.3 Appointments to Fill Vacancies in Trustee's Office.........................................21
Section 4.4 Provisions as to Paying Agent..............................................................21
Section 4.5 Corporate Existence........................................................................22
Section 4.6 Maintenance of Status of Net.B@nk as Insured Depository Institution........................22
Section 4.7 Commission and Other Reports...............................................................22
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Section 4.8 Stay, Extension and Usury Laws.............................................................23
Section 4.9 Compliance Statement; Notice of Defaults...................................................23
Section 4.10 Taxes......................................................................................23
Section 4.11 Insurance..................................................................................24
ARTICLE V
NOTEHOLDERS' LISTS
Section 5.1 Noteholders' Lists.........................................................................24
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default..........................................................................24
Section 6.2 Payments of Notes on Default; Suit Therefor................................................26
Section 6.3 Application of Monies Collected by Trustee.................................................27
Section 6.4 Proceedings by Noteholder..................................................................28
Section 6.5 Proceedings by Trustee.....................................................................29
Section 6.6 Remedies Cumulative and Continuing.........................................................29
Section 6.7 Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders................................................................................29
Section 6.8 Notice of Defaults.........................................................................30
Section 6.9 Undertaking to Pay Costs...................................................................30
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.1 Duties and Responsibilities of Trustee.....................................................30
Section 7.2 Reports by Trustee to Holders..............................................................31
Section 7.3 Reliance on Documents, Opinions, Etc.......................................................32
Section 7.4 No Responsibility for Recitals, Etc........................................................33
Section 7.5 Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes.......................33
Section 7.6 Monies to Be Held in Trust.................................................................33
Section 7.7 Compensation and Expenses of Trustee.......................................................33
Section 7.8 Officers' Certificate as Evidence..........................................................34
Section 7.9 Conflicting Interests of Trustee...........................................................34
Section 7.10 Eligibility of Trustee.....................................................................34
Section 7.11 Resignation or Removal of Trustee..........................................................34
Section 7.12 Acceptance by Successor Trustee............................................................36
Section 7.13 Successor, by Merger, Etc..................................................................36
Section 7.14 Limitation on Rights of Trustee as Creditor................................................36
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ARTICLE VIII
CONCERNING THE NOTEHOLDERS
Section 8.1 Action by Noteholders......................................................................37
Section 8.2 Proof of Execution by Noteholders..........................................................37
Section 8.3 Who Are Deemed Absolute Owners.............................................................37
Section 8.4 Company-Owned Notes Disregarded............................................................38
Section 8.5 Revocation of Consents, Future Holders Bound...............................................38
ARTICLE IX
NOTEHOLDERS' MEETINGS
Section 9.1 Purposes for Which Meetings May be Called..................................................38
Section 9.2 Manner of Calling Meetings; Record Date....................................................39
Section 9.3 Call of Meeting by Company or Noteholders..................................................39
Section 9.4 Who May Attend and Vote at Meetings........................................................39
Section 9.5 Manner of Voting at Meetings and Record To Be Kept.........................................40
Section 9.6 Exercise of Rights of Trustee and Noteholders Not To Be Hindered or
Delayed....................................................................................40
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1 Supplemental Indentures Without Consent of Noteholders.....................................40
Section 10.2 Supplemental Indentures With Consent of Noteholders........................................41
Section 10.3 Effect of Supplemental Indentures..........................................................42
Section 10.4 Notation on Notes..........................................................................42
Section 10.5 Evidence of Compliance of Supplemental Indenture To Be Furnished
Trustee....................................................................................43
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE,
TRANSFER AND LEASE
Section 11.1 Company May Consolidate, Etc. on Certain Terms.............................................43
Section 11.2 Successor Company To Be Substituted........................................................43
Section 11.3 Opinion of Counsel To Be Given to Trustee..................................................43
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ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 12.1 Legal Defeasance and Covenant Defeasance of the Notes......................................43
Section 12.2 Termination of Obligations upon Cancellation of the Notes..................................46
Section 12.3 Survival of Certain Obligations............................................................46
Section 12.4 Acknowledgment of Discharge by Trustee.....................................................46
Section 12.5 Application of Trust Assets................................................................46
Section 12.6 Repayment to the Company; Unclaimed Money..................................................47
Section 12.7 Reinstatement..............................................................................47
ARTICLE XIII
IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS AND DIRECTORS
Section 13.1 Indenture and Notes Solely Corporate Obligations...........................................47
ARTICLE XIV
CONVERSION OF NOTES
Section 14.1 Right to Convert...........................................................................48
Section 14.2 Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No
Adjustment for Interest or Dividends.......................................................48
Section 14.3 Cash Payments in Lieu of Fractional Shares.................................................50
Section 14.4 Conversion Price...........................................................................50
Section 14.5 Adjustment of Conversion Price.............................................................50
Section 14.6 Effect of Reclassification, Consolidation, Merger or Sale..................................58
Section 14.7 Taxes on Shares Issued.....................................................................59
Section 14.8 Reservation of Shares; Shares to Be Fully Paid; Listing of Common
Stock......................................................................................59
Section 14.9 Responsibility of Trustee..................................................................59
Section 14.10 Notice to Holders Prior to Certain Actions.................................................60
ARTICLE XV
SUBORDINATION
Section 15.1 Agreement to Subordinate...................................................................60
Section 15.2 Certain Definitions........................................................................61
Section 15.3 Liquidation; Dissolution; Bankruptcy.......................................................61
Section 15.4 Default on Senior Indebtedness.............................................................62
Section 15.5 When Distribution Must Be Paid Over........................................................62
Section 15.6 Notice by Company..........................................................................63
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Section 15.7 Subrogation................................................................................63
Section 15.8 Relative Rights............................................................................63
Section 15.9 Subordination May Not Be Impaired by Company...............................................64
Section 15.10 Distribution or Notice to Representative...................................................64
Section 15.11 Rights of Trustee and Paying Agent.........................................................64
Section 15.12 Authorization to Effect Subordination......................................................65
Section 15.13 Conversions Not Deemed Payment.............................................................65
Section 15.14 Amendments.................................................................................65
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 Provisions Binding on Company's Successors.................................................65
Section 16.2 Official Acts by Successor Company.........................................................65
Section 16.3 Addresses for Notices, Etc.................................................................66
Section 16.4 Communications by Holders with Other Holders...............................................66
Section 16.5 Governing Law..............................................................................66
Section 16.6 Evidence of Compliance with Conditions Precedent; Certificates to
Trustee....................................................................................66
Section 16.7 Legal Holidays.............................................................................67
Section 16.8 No Security Interest Created...............................................................67
Section 16.9 Trust Indenture Act........................................................................67
Section 16.10 Trust Indenture Act Controls...............................................................67
Section 16.11 Benefits of Indenture......................................................................67
Section 16.12 Table of Contents, Headings, Etc...........................................................67
Section 16.13 Authenticating Agent.......................................................................67
Section 16.14 Execution in Counterparts..................................................................68
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INDENTURE, dated as of June 9, 1999, between NET.B@NK, INC., a Georgia
corporation (the "Company"), and SUNTRUST BANK, ATLANTA, a Georgia banking
corporation with trust powers (the "Trustee").
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issuance of its 4 3/4% Convertible Subordinated Notes Due 2004
(the "Notes"), in an aggregate principal amount of $115,000,000, and, to
provide the terms and conditions upon which the Notes are to be
authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture;
NOW, THEREFORE, in consideration of the terms and conditions hereof and
of the purchase and acceptance of the Notes by the holders thereof, the Company
agrees with the Trustee for the equal and proportionate benefit of the
respective holders from time to time of the Notes (except as otherwise provided
below) as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. The terms defined in this Section 1.1 (except
as otherwise expressly provided herein or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto,
shall have the respective meanings specified in this Section 1.1. The words
"herein," "hereof," "hereunder" and words of similar import refer to this
Indenture as a whole and not to any particular Article or Section.
ACQUISITION PRICE shall mean the weighted average price paid by the
person or group in acquiring the Voting Stock.
AFFILIATE of any specified person shall mean any other person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purpose of this definition,
"control" when used with respect to any specified person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
BOARD OF DIRECTORS shall mean the Board of Directors of the Company or
a committee of such Board of Directors duly authorized to act for it hereunder.
BOARD RESOLUTION shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
BUSINESS DAY shall mean a day, other than a Saturday, a Sunday or a day
on which the banking institutions in the State and City of New York or in the
State of Georgia are authorized
or obligated by law or executive order to close or a day that is declared a
national, New York or Georgia state holiday.
CAPITAL STOCK of any person shall mean any and all shares, interests,
participations or other equivalents (however designated) of such person's
corporate stock or any and all equivalent ownership interests in a person (other
than a corporation) whether now outstanding or issued after the date hereof.
CHANGE OF CONTROL shall have the meaning specified in Section 3.5(d).
CHANGE OF CONTROL NOTICE shall have the meaning specified in Section
3.5(b).
CHANGE OF CONTROL OFFER shall have the meaning specified in Section
3.5(a).
CHANGE OF CONTROL PURCHASE DATE shall have the meaning specified in
Section 3.5(a).
CLOSING PRICE with respect to conversion of the Notes shall have the
meaning specified in Section 14.5(g).
COMMISSION shall mean the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, the body
performing such duties at such time.
COMMON STOCK shall mean any stock of any class of the Company that does
not have a 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 that is not subject to redemption by the Company. Subject to the
provisions of Section 14.6, however, shares issuable on conversion of Notes
shall include only shares of the class designated as common stock of the Company
at the date of this Indenture or shares of any class or classes resulting from
any reclassification or reclassifications thereof and that do not have a
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 that are not subject to redemption by the Company; PROVIDED that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion that the total
number of shares of such class resulting from all such reclassification bears to
the total number of shares of all such classes resulting from all such
reclassifications.
COMPANY shall mean Net.B@nk, Inc., a Georgia corporation and, subject
to the provisions of Article XI, shall include its successors and assigns.
CONVERSION PRICE shall have the meaning specified in Section 14.4.
CORPORATE TRUST OFFICE OF THE TRUSTEE, or other similar term, shall
mean the office of the Trustee at which at any particular time its corporate
trust business shall be principally
2
administered, which office is, at the date as of which this Indenture is dated,
located at ▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Trust Administration.
CURRENT MARKET PRICE with respect to conversion of the Notes shall have
the meaning specified in Section 14.5(g).
CUSTODIAN shall mean the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
DEFAULT shall mean any event that is, or after notice or passage of
time, or both, would be, an Event of Default.
DEFAULTED INTEREST shall have the meaning specified in Section 2.3.
DEFINITIVE NOTES OR IN DEFINITIVE FORM shall have the meanings
specified in Section 2.2, any reference to Notes "in definitive form" shall mean
definitive Notes, and any reference to securities "in definitive form" shall
mean definitive Notes or Common Stock as the context requires.
DEPOSITARY shall mean, with respect to the Notes issuable or issued in
whole or in part in global form, the person specified in Section 2.5(b) as the
Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
EVENT OF DEFAULT shall mean any event specified in Sections 6.1(a)
through (f).
EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
FAIR MARKET VALUE with respect to conversion of the Notes shall have
the meaning specified in Section 14.5(g).
FISCAL YEAR means the annual period adopted by the Company as its
fiscal year for financial reporting and other purposes. The current fiscal year
of the Company is the annual period ending on December 31.
GLOBAL NOTE shall mean any and all Notes in global form.
INDENTURE shall mean this instrument as originally executed or, if
amended or supplemented as herein provided, as so amended or supplemented.
MAKE-WHOLE PAYMENT shall have the meaning specified in Section 3.1(a).
NONPAYMENT DEFAULT shall have the meaning specified in Section 15.4(b).
3
NOTE OR NOTES shall mean any Note or Notes, as the case may be,
authenticated and delivered under this Indenture.
NOTEHOLDER OR HOLDER as applied to any Note, or other similar terms
(but excluding the term "beneficial holder"), shall mean any person in whose
name at the time a particular Note is registered on the Note registrar's books.
NOTE REGISTER shall have the meaning specified in Section 2.5(a).
NOTICE DATE shall have the meaning specified in Section 3.1(a).
OFFICERS' CERTIFICATE when used with respect to the Company, shall mean
a certificate signed by the Chief Executive Officer, the President, the Chief
Operating Officer or the Chief Financial Officer and any Treasurer or Secretary
or any Assistant Treasurer or Assistant Secretary of the Company, that is
delivered to the Trustee. Each such certificate shall include the statements
provided for in Section 16.6 if and to the extent required by the provisions of
such Section.
OPINION OF COUNSEL shall mean an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company or other counsel
acceptable to the Trustee, that is delivered to the Trustee. Each such opinion
shall include the statements provided for in Section 16.6 if and to the extent
required by the provisions of such Section.
OUTSTANDING with reference to Notes as of any particular time shall
mean, subject to the provisions of Section 8.4, all Notes authenticated and
delivered by the Trustee under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Notes, or portions thereof, for which monies in the
necessary amount shall have been deposited in trust with the Trustee for payment
or redemption; PROVIDED that if such Notes are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given pursuant to
Article III or provisions satisfactory to the Trustee shall have been made for
giving such notice;
(c) Notes paid pursuant to Section 2.6 hereof or Notes in lieu
of or in substitution for which other Notes shall have been authenticated and
delivered pursuant to the terms of Section 2.6, unless proof satisfactory to the
Trustee is presented that any such Notes are held by BONA FIDE holders in due
course; and
(d) Notes converted into Common Stock pursuant to Article XIV
and Notes not deemed outstanding pursuant to Section 3.2.
PAYMENT BLOCKAGE NOTICE shall have the meaning specified in
Section 15.4(b).
PAYMENT DEFAULT shall have the meaning specified in Section 15.4(a).
4
PERSON shall mean an individual, a corporation, a limited liability
company, an association, a partnership, a joint venture, a joint stock company,
a trust, an unincorporated organization or a government or an agency or a
political subdivision thereof.
PREDECESSOR NOTE of any particular Note shall mean every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for purposes of this definition, any Note authenticated
and delivered under Section 2.6 in lieu of a lost, destroyed or stolen Note
shall be deemed to evidence the same debt as the lost, destroyed or stolen Note.
PROVISIONAL REDEMPTION shall have the meaning specified in
Section 3.1(a).
PROVISIONAL REDEMPTION DATE shall have the meaning specified in
Section 3.1(a).
RECORD DATE with respect to conversion of the Notes shall have the
meaning specified in Section 14.5(g).
REPRESENTATIVE shall have the meaning specified in Section 15.2.
RESPONSIBLE OFFICER shall mean, with respect to the Trustee, an officer
of the Trustee assigned and duly authorized by the Trustee to administer its
corporate trust matters at the Corporate Trust Office of the Trustee.
SECURITIES ACT shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
SENIOR INDEBTEDNESS shall have the meaning specified in Section 15.2.
SUBSIDIARY of any specified person shall mean (i) a corporation a
majority of whose capital stock with voting power under ordinary circumstances
to elect directors is at the time directly or indirectly owned by such person or
(ii) any other person (other than a corporation) in which such person or such
person and a subsidiary or subsidiaries of such person or a subsidiary or
subsidiaries of such person directly or indirectly, at the date of determination
thereof, has at least majority ownership.
SUCCESSOR COMPANY shall have the meaning specified in Section 11.1.
TRADING DAY shall have the meaning specified in Section 14.5(g).
TRUST INDENTURE ACT shall mean the Trust Indenture Act of 1939, as
amended, as it was in force on the date of execution of this Indenture, except
as provided in Sections 10.3 and 14.6; PROVIDED that if the Trust Indenture Act
of 1939 is amended after the date hereof, the term "Trust Indenture Act" shall
mean, to the extent required by such amendment, the Trust Indenture Act of 1939
as so amended.
5
TRUSTEE shall mean SunTrust Bank, Atlanta, its successors and any
corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee at the time serving
as successor trustee hereunder.
U.S. GOVERNMENT OBLIGATIONS shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a person controlled or
supervised by, and acting as an agency or instrumentality of, the United States
of America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or a specific
payment of principal or interest on any such U.S. Government Obligation held by
such custodian for the account of the holder of such depository receipt;
PROVIDED that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by such custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or interest on the
U.S. Government Obligation evidenced by such depository receipt.
VOTING STOCK of any person shall mean stock of the class or classes
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of such person (irrespective of whether or not at the time
stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).
The definitions of certain other terms are as specified in
Section 12.1.
Section 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in, and made a part of, this
Indenture.
The following Trust Indenture Act terms used in this Indenture have the
following meanings:
INDENTURE SECURITIES means the Notes;
INDENTURE SECURITY HOLDER means a Holder of Notes;
INDENTURE TO BE QUALIFIED means this Indenture;
INDENTURE TRUSTEE or INSTITUTIONAL TRUSTEE means the Trustee; and
OBLIGOR on the Notes means the Company and any successor obligor under
the Trust Indenture Act.
6
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by a Trust Indenture Act reference to another statute or
defined by Commission rule under the Trust Indenture Act have the meanings so
assigned to them.
Section 1.3 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles;
(c) "or" is not exclusive;
(d) provisions apply to successive events and transactions;
and
(e) words in the singular include the plural, and in the
plural include the singular.
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 DESIGNATION, AMOUNT AND ISSUE OF NOTES. The Notes shall be
designated as "4 3/4% Convertible Subordinated Notes Due 2004." The Notes are
not to exceed the aggregate principal amount of $115,000,000 upon the
execution of this Indenture, or from time to time thereafter, may be executed
by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and make available for delivery said
Notes upon the written order of the Company, signed by its (a) Chief
Executive Officer, President, Chief Operating Officer or Chief Financial
Officer and (b) any Treasurer or Secretary or any Assistant Secretary,
without any further action by the Company hereunder.
Section 2.2 FORM OF NOTES. (a) The Notes, including the form of
Trustee's certificate of authentication, shall be in the form annexed hereto as
Exhibit A, and any Notes represented by a global Note shall be in the form
annexed hereto as Exhibit B.
(b) Any global Note shall represent such of the outstanding
Notes as shall be specified therein and shall provide that it shall represent
the aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be increased or reduced to reflect transfers or exchanges permitted
hereby. Any endorsement of a global Note to reflect the amount of any increase
or decrease in the amount of outstanding Notes represented thereby shall be made
by the Trustee or the Custodian, at the direction of the Trustee, in such manner
and upon written
7
instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal of and interest and premium, if any, on any
global Note shall be made in accordance with the provisions of Section 2.3.
(c) Any of the Notes may have such letters, numbers or other
marks of identification and such notations, legends and endorsements as the
Company officers executing the same may approve (execution thereof to be
conclusive evidence of such approval) and as are not inconsistent with the
provisions of this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Notes may be listed, or to conform to usage.
All Notes shall bear a legend in substantially the following form, in
capital letters and bold-face type:
THIS NOTE AND ANY SHARES OF COMMON STOCK OF NET.B@NK, INC. ISSUABLE
UPON CONVERSION OF THIS NOTE ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
Every global Note authenticated and delivered hereunder shall bear a
legend in substantially the following form, in capital letters and bold-face
type:
THIS NOTE 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 NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
If the Depositary is The Depository Trust Company, the global Note
authenticated and delivered hereunder shall also bear a legend in substantially
the following form, in capital letters and bold-face type:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED SIGNATORY OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. , HAS AN INTEREST HEREIN.
8
The terms and provisions contained in the forms of Notes attached as
Exhibits A and B hereto shall constitute, and are hereby expressly made, a part
of this Indenture and to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Section 2.3 DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication, shall bear interest from the date of
original issue and shall be payable semiannually on each June 1 and December 1,
beginning December 1, 1999, as specified on the faces of the forms of Notes
attached as Exhibits A and B.
The person in whose name any Note (or its Predecessor Note) is
registered at the close of business on any record date with respect to any
interest payment date (including any Note that is converted after the record
date and on or before the interest payment date) shall be entitled to receive
the interest payable on such interest payment date notwithstanding the
cancellation of such Note upon any transfer, exchange or conversion subsequent
to the record date and prior to such interest payment date. Unless other
arrangements are made, interest will be paid by check mailed to the address of
such person as it appears on the Note register; PROVIDED that, with respect to
any global Note or any holder of Notes with an aggregate principal amount equal
to or in excess of $5,000,000, at the request (such request to include
appropriate wire instructions) of such holder in writing to the Trustee on or
before the record date preceding any interest payment date, interest on the
global Note and such holder's Notes, as applicable, shall be paid by wire
transfer in immediately available funds to an account in the continental United
States and any such request shall be deemed a continuing request unless and
until revoked in writing. The term "record date" with respect to any interest
payment date shall mean the May 15 or November 15 preceding the applicable
June 1 or December 1.
None of the Company, the Trustee or any paying agent shall have any
responsibility or liability for any aspect of the records relating to or payment
made on account of beneficial ownership interests in the global Notes or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
Any interest on any Note that is payable but is not punctually paid or
duly provided for on any applicable June 1 or December 1 (herein called
"Defaulted Interest") shall cease to be payable to the Noteholder on the
relevant record date by virtue of his having been such Noteholder; and such
Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a special record
date for the payment of such Defaulted Interest, which shall
9
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest to be paid on each Note and the date
of the payment (which shall be not less than 25 days after the receipt by the
Trustee of such notice, unless the Trustee shall consent to an earlier date)
and, at the same time, the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the persons entitled to such Defaulted Interest as
in this clause provided. Thereupon, the Trustee shall fix a special record date
for the payment of such Defaulted Interest, which shall be not more than 15 days
and not less than 10 days prior to the date of the payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such special record date and, in
the name and at the expense of the Company, shall cause notice of the payment of
such Defaulted Interest and the special record date therefor to be mailed,
first-class postage prepaid, to each Noteholder at his address as it appears in
the Note register, not less than 10 days prior to such special record date.
Notice of the proposed payment of such Defaulted Interest and the special record
date therefor having been so mailed, such Defaulted Interest shall be paid to
the persons in whose names the Notes (or their respective Predecessor Notes)
were registered at the close of business on such special record date and shall
no longer be payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
Section 2.4 EXECUTION OF NOTES. The Notes shall be signed in the name
and on behalf of the Company by its Chief Executive Officer, President, Chief
Operating Officer or Chief Financial Officer and attested by the signature of
its Treasurer, Secretary or any of its Assistant Secretaries or Assistant
Treasurers (any of which signatures may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise). Only such Notes as shall bear
thereon a certificate of authentication substantially in the form set forth on
the forms of Notes attached as Exhibits A and B hereto, manually executed by the
Trustee (or an authenticating agent appointed by the Trustee as provided by
Section 16.13), shall be entitled to the benefits of this Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee (or such an
authenticating agent) upon any Note executed by the Company shall be conclusive
evidence that the Note so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
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Section 2.5 EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES; DEPOSITARY.
(a) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency of the Company designated pursuant to Section 4.2
being herein sometimes collectively referred to as the "Note register") in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Notes and of transfers of Notes. Such Note
register shall be in written form or in any form capable of being converted into
written form within a reasonable period of time. The Trustee is hereby appointed
"Note registrar" for the purpose of registering Notes and transfers of Notes as
herein provided. The Company may appoint one or more co-registrars.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar and satisfaction of the requirements for such
transfer set forth in this Section 2.5, the Company shall execute, and the
Trustee shall authenticate and make available for delivery, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate principal amount.
Notes may be exchanged for other Notes of any authorized denominations
and of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency. Whenever any Notes are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
make available for delivery, the Notes that the Noteholder making the exchange
is entitled to receive bearing certificate numbers not contemporaneously
outstanding.
All Notes presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company, the Trustee, the Note registrar
or any co-registrar) be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Company, executed by the Noteholder
thereof or his attorney duly authorized in writing.
No service charge shall be charged to the Noteholder for any exchange
or registration of transfer of Notes, but the Company may require payment of a
sum sufficient to cover any tax, assessments or other governmental charges that
may be imposed in connection therewith.
None of the Company, the Trustee, the Note registrar or any
co-registrar shall be required to exchange or register a transfer of (i) any
Notes for a period of 15 days next preceding the mailing of a notice of
redemption, (ii) any Notes called for redemption or, if a portion of any Note is
selected or called for redemption, such portion thereof selected or called for
redemption, (iii) any Notes surrendered for conversion or, if a portion of any
Note is surrendered for conversion, such portion thereof surrendered for
conversion or (iv) any Notes surrendered for repurchase pursuant to Section 3.5
or, if a portion of any Note is surrendered for repurchase pursuant to
Section 3.5, such portion thereof surrendered for repurchase pursuant to
Section 3.5.
All Notes issued upon any transfer or exchange of Notes shall be the
valid obligations of the Company, evidencing the same debt and entitled to the
same benefits under this Indenture as the Notes surrendered upon such
registration of transfer or exchange.
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(b) Each global Note authenticated under this Indenture shall
be registered in the name of the Depositary designated for such global Note or a
nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such global Note shall constitute a single Note for
all purposes of this Indenture.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.5(b)), a global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the Exchange
Act.
The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the global Notes. Initially, the global Notes shall
be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Trustee as Custodian for Cede
& Co.
Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under this Indenture) shall have responsibility for the
performance by the Depositary or its participants or indirect participants of
their respective obligations under the rules and procedures governing their
operations.
If at any time the Depositary for the global Notes notifies the Company
that it is unwilling or unable to continue as Depositary for such Notes, the
Company may appoint a successor Depositary with respect to such Notes. If a
successor Depositary for the Notes is not appointed by the Company within 90
days after the Company receives such notice, the Company shall execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of Notes, shall authenticate and make available for delivery, Notes in
definitive form, in an aggregate principal amount equal to the principal amount
of the global Notes in exchange for such global Notes.
Definitive Notes issued in exchange for all or a part of a global Note
pursuant to this Section 2.5(b) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. Upon
execution and authentication, the Trustee shall make available for delivery such
definitive Notes to the persons in whose names such definitive Notes are so
registered.
At such time as all interests in global Notes have been redeemed,
converted, repurchased or canceled, such global Notes shall be, upon receipt
thereof, canceled by the Trustee in accordance with standing procedures and
instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in a global Note is exchanged for
definitive Notes, redeemed, repurchased, converted, canceled or transferred to a
transferee who receives definitive Notes therefor or any definitive Note is
exchanged or transferred for part of a global Note, the principal amount of such
global Note shall, in accordance with the standing procedures and instructions
existing between the Depositary and the Custodian, be reduced or
12
increased, as the case may be, and an endorsement shall be made on such global
Note by the Trustee or the Custodian, at the direction of the Trustee, to
reflect such reduction or increase.
The Company and the Trustee may for all purposes, including the making
of payments due on the Notes, deal with the Depositary as the authorized
representative of the Noteholders for the purposes of exercising the rights of
Noteholders hereunder. The rights of the owner of any beneficial interest in a
global Note shall be limited to those established by law and agreements between
such owner and depository participants; PROVIDED that no such agreement shall
give any rights to any person against the Company or the Trustee without the
written consent of the parties so affected. Multiple requests and directions
from and votes of, the Depositary as holder of notes in book entry form with
respect to any particular matter shall not be deemed inconsistent to the extent
they do not represent an amount of notes in excess of those held in the name of
the Depositary or its nominee.
Section 2.6 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. In case any
Note shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its request, the Trustee or an authenticating
agent appointed by the Trustee shall authenticate and make available for
delivery a new Note bearing a number not contemporaneously outstanding in
exchange and substitution for the mutilated Note or in lieu of and in
substitution for the Note so destroyed, lost or stolen. The Company may charge
such applicant for the expenses of the Company in replacing a Note. In every
case the applicant for a substituted Note shall furnish to the Company, to the
Trustee and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless from any
loss, liability, cost or expense caused by or connected with such substitution,
and in every case of destruction, loss or theft, the applicant shall also
furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent evidence to their satisfaction of the destruction, loss or
theft of such Note and of the ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Note that has matured or is about to mature or has been
called for redemption or is about to be repurchased or converted into Common
Stock shall become mutilated or be destroyed, lost or stolen, the Company may,
instead of issuing a substitute Note, pay or authorize the payment of or convert
or authorize the conversion of the same (without surrender thereof, except in
the case of a mutilated Note), as the case may be, if the applicant for such
payment or conversion shall furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them harmless from any loss, liability, cost or
expense caused by or connected with such substitution, and in case of
destruction, loss or theft, evidence satisfactory to the Company, the Trustee
and, if applicable, any paying agent or conversion agent of the destruction,
loss or theft of such Note and of the ownership thereof.
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Every substitute Note issued pursuant to the provisions of this
Section 2.6 in lieu of any Note that is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Note shall be enforceable by anyone, and
shall be entitled to all the benefits of (but shall be subject to all the
limitations set forth in) this Indenture equally and proportionately with any
and all other Notes duly issued hereunder. To the extent permitted by law,
all Notes shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement or payment
or conversion of mutilated, destroyed, lost or stolen Notes and shall
preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment or conversion of negotiable instruments or other
securities without their surrender.
Section 2.7 TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Company may execute and the Trustee or an authenticating agent
appointed by the Trustee shall, upon written request of the Company,
authenticate and make available for delivery temporary Notes (printed or
lithographed). Temporary Notes shall be issuable in any authorized denomination
and shall be substantially in the form of the definitive Notes but with such
omissions, insertions and variations as may be appropriate for temporary Notes,
all as may be determined by the Company. Every such temporary Note shall be
executed by the Company and authenticated by the Trustee or such authenticating
agent upon the same conditions and in substantially the same manner, and with
the same effect, as the definitive Notes. Without unreasonable delay the Company
shall execute and deliver to the Trustee or such authenticating agent definitive
Notes (other than in the case of Notes in global form) and thereupon any or all
temporary Notes (other than any such global Note) may be surrendered in exchange
therefor, at each office or agency maintained by the Company pursuant to
Section 4.2 and the Trustee or such authenticating agent shall authenticate
and make available for delivery in exchange for such temporary Notes an equal
aggregate principal amount of definitive Notes. Such exchange shall be made
by the Company at its own expense and without any charge therefor. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits and subject to the same limitations under this Indenture as
definitive Notes authenticated and delivered hereunder.
Section 2.8 CANCELLATION OF NOTES PAID, ETC. All Notes surrendered for
the purpose of payment, redemption, repurchase, conversion, exchange or
registration of transfer shall, if surrendered to the Company, any paying agent,
any Note registrar or any conversion agent, be surrendered to the Trustee and
promptly canceled by it or, if surrendered directly to the Trustee, shall be
promptly canceled by it and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. If required by
the Company, the Trustee shall return canceled Notes to the Company. If the
Company shall acquire any of the Notes, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes unless
and until the same are delivered to the Trustee for cancellation.
Section 2.9 CUSIP NUMBERS. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
CUSIP numbers in notices of redemption as a convenience to holders; PROVIDED
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as
14
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such redemption
shall not be affected by any defect in or omission of such numbers. The Company
shall promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE III
REDEMPTION AND REPURCHASE OF NOTES
Section 3.1 RIGHT OF REDEMPTION.
(a) PROVISIONAL REDEMPTION BY THE COMPANY. The Notes may be
redeemed by the Company (a "Provisional Redemption"), in whole or in part, at
any time prior to June 4, 2002, upon notice as set forth in Section 3.2 of this
Indenture, at a redemption price equal to $1,000 per $1,000 principal amount of
Notes to be redeemed plus accrued and unpaid interest, if any, to the date of
redemption (the "Provisional Redemption Date") if the closing price of the
Common Stock shall have exceeded 150% of the Conversion Price then in effect for
at least 20 Trading Days within a period of 30 consecutive Trading Days ending
on the Trading Day prior to the date of mailing of the notice of redemption
pursuant to Section 3.2 (the "Notice Date"). Upon any such Provisional
Redemption, the Company shall make an additional payment in cash (the
"Make-Whole Payment") with respect to the Notes called for Provisional
Redemption to holders on the Notice Date in an amount equal to $187.00 per
$1,000 principal amount of the Notes, less the amount of any interest actually
paid on such Notes prior to the Notice Date. The Company shall make the
Make-Whole Payment on all Notes called for Provisional Redemption, including any
Notes converted into Common Stock pursuant to the terms hereof after the Notice
Date and prior to the Provisional Redemption Date.
(b) OPTIONAL REDEMPTION BY THE COMPANY. At any time on or
after June 4, 2002, the Notes may be redeemed at the Company's option, upon
notice as set forth in Section 3.2, in whole at any time or in part from time to
time, at the following optional redemption prices (expressed as percentages of
the principal amount), together with accrued and unpaid interest to the date
fixed for redemption, if redeemed on or after:
DATE REDEMPTION PRICE
---- ----------------
June 4, 2002 101.00%
June 1, 2003 100.00%
Section 3.2 NOTICE OF REDEMPTION; SELECTION OF NOTES. In case the
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Notes pursuant to Section 3.1, it shall fix a date for
redemption and, in the case of any redemption pursuant to Section 3.1, it or, at
its request accompanied by the proposed form of notice of redemption (which must
be received by the Trustee at least ten days prior to the date the Trustee is
requested to give notice as described below, unless a shorter period is agreed
to by the Trustee), the Trustee in the name of and at the expense of the
Company, shall mail or cause to be mailed a notice of such redemption at least
30 and not more than 60 days prior to the date fixed for redemption to the
holders of Notes so to be redeemed as a whole or in part at their last addresses
as the same
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appear on the Note register; PROVIDED that if the Company shall give such
notice, it shall also give such notice, and notice of the Notes to be redeemed,
to the Trustee. Such mailing shall be by first class mail. The notice, if mailed
in the manner herein provided, shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the holder of any Note
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Note.
Each such notice of redemption shall specify (a) the Notes to be
redeemed (including CUSIP numbers), (b) the aggregate principal amount of Notes
to be redeemed, (c) the date fixed for redemption, (d) the redemption price at
which Notes are to be redeemed, (e) the place or places of payment, (f) that
payment shall be made upon presentation and surrender of such Notes, (g) that
interest accrued to the date fixed for redemption and any Make-Whole Payment
shall be paid as specified in said notice and (h) that on and after said date,
interest thereon or on the portion thereof to be redeemed shall cease to accrue.
Such notice shall also state the current Conversion Price and the date on which
the right to convert such Notes or portions thereof into Common Stock shall
expire. If fewer than all the Notes are to be redeemed, the notice of redemption
shall identify the Notes to be redeemed. In case any Note is to be redeemed in
part only, the notice of redemption shall state the portion of the principal
amount thereof to be redeemed and shall state that on and after the date fixed
for redemption, upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion thereof shall be issued. Any such notice
of redemption must contain a specific statement by the Trustee that no
representation or warranty is being made as to the correctness of the CUSIP
number either as printed on the Notes or as contained in the notice of
redemption and that reliance may be placed only on the other identification
numbers printed on the Notes.
On or prior to the Business Day prior to the redemption date specified
in the notice of redemption given as provided in this Section 3.2, the Company
shall deposit with the Trustee or with one or more paying agents (or, if the
Company is acting as its own paying agent, set aside, segregate and hold in
trust as provided in Section 4.4) an amount of money sufficient to redeem on the
redemption date all the Notes so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued and unpaid interest to the date fixed
for redemption and any Make-Whole Payment. If any Note called for redemption is
converted pursuant hereto, any money deposited with the Trustee or any paying
agent or so segregated and held in trust for the redemption of such Note shall
be paid to the Company upon its request or, if then held by the Company, shall
be discharged from such trust.
If fewer than all the Notes are to be redeemed, the Company shall give
the Trustee written notice in the form of an Officers' Certificate not fewer
than 45 days (or such shorter period of time as may be acceptable to the
Trustee) prior to the redemption date as to the aggregate principal amount of
Notes to be redeemed.
If fewer than all the Notes are to be redeemed, the Trustee shall
select the Notes or portions thereof to be redeemed (in principal amounts of
$1,000 or integral multiples thereof), by lot. If any Note selected for partial
redemption is converted in part after such selection, the
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converted portion of such Note shall be deemed (so far as may be) to be the
portion to be selected for redemption. The Notes (or portions thereof) so
selected shall be deemed duly selected for redemption for all purposes hereof,
notwithstanding that any such Note is converted as a whole or in part before the
mailing of the notice of redemption.
Upon any redemption of less than all the Notes, the Company and the
Trustee may treat as outstanding any Notes surrendered for conversion during the
period of 15 days next preceding the mailing of a notice of redemption and need
not treat as outstanding any Note authenticated and delivered during such period
in exchange for the unconverted portion of any Note converted in part during
such period.
Section 3.3 PAYMENT OF NOTES CALLED FOR REDEMPTION. If notice of
redemption has been given as provided in Section 3.2, the Notes or portion of
Notes with respect to which such notice has been given shall, unless converted
into Common Stock pursuant to the terms hereof, become due and payable on the
date and at the place or places stated in such notice at the applicable
redemption price, together with interest thereon accrued to the date fixed for
redemption and any Make-Whole Payment, and on and after said date (unless the
Company shall default in the payment of such Notes at the redemption price,
together with interest thereon accrued to said date and any Make-Whole Payment),
interest on the Notes or portion of Notes so called for redemption shall cease
to accrue, and such Notes shall cease after the close of business on the
Business Day next preceding the date fixed for redemption to be convertible into
Common Stock and, except as provided in Sections 7.6 and 12.4, to be entitled to
any benefit or security under this Indenture, and the holders thereof shall have
no right in respect of such Notes except the right to receive the redemption
price thereof and unpaid interest thereon to the date fixed for redemption and
any Make-Whole Payment. On presentation and surrender of such Notes at the place
of payment specified in the notice, the said Notes or the specified portions
thereof shall be paid and redeemed by the Company at the applicable redemption
price, together with interest accrued thereon to the date fixed for redemption
and any Make-Whole Payment; PROVIDED that any semi-annual payment of interest
becoming due on the date fixed for redemption shall be payable to the holders of
such Notes registered as such on the relevant record date subject to the terms
and provisions of Section 2.3 hereof.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Notes so presented.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and premium, if any, shall, until paid or
duly provided for, bear interest from the date fixed for redemption at the rate
borne by the Note and such Note shall remain convertible into Common Stock until
the principal and premium, if any, shall have been paid or duly provided for.
Section 3.4 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes by an agreement with one or more investment
bankers or other purchasers to purchase such Notes
17
by paying to the Trustee in trust for the Noteholders, on or prior to the
Business Day prior to the date fixed for redemption, an amount not less than the
applicable redemption price, together with interest accrued to the date fixed
for redemption and any Make-Whole Payment, of such Notes. Notwithstanding
anything to the contrary contained in this Article III, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to the date fixed for redemption and any Make-Whole Payment, shall be
deemed to be satisfied and discharged to the extent such amount is so paid by
such purchasers. If such an agreement is entered into, a copy of which shall be
filed with the Trustee prior to the date fixed for redemption, any Notes not
duly surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and (notwithstanding anything to the contrary
contained in Article XIV) surrendered by such purchasers for conversion, all as
of the time immediately prior to the close of business on the date fixed for
redemption (and the right to convert any such Notes shall be deemed to have been
extended through such time), subject to payment of the above amount as
aforesaid. At the direction of the Company, the Trustee shall hold and dispose
of any such amount paid to it in the same manner as it would monies deposited
with it by the Company for the redemption of Notes. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Notes shall increase or otherwise affect any of
the powers, duties, responsibilities or obligations of the Trustee as set forth
in this Indenture, and the Company agrees to indemnify the Trustee from, and
hold it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Notes between the Company and such purchasers including the costs and expenses
incurred by the Trustee in the defense of any claim or liability arising out of
or in connection with the exercise or performance of any of its powers, duties,
responsibilities or obligations under this Indenture.
Section 3.5 REPURCHASE OF NOTES UPON A CHANGE OF CONTROL.
(a) If a Change of Control shall occur at any time, then each
holder of Notes shall have the right to require that the Company repurchase such
holder's Notes in whole or in part in integral multiples of $1,000 at a purchase
price (the "Change of Control Purchase Price") in cash equal to 100% of the
principal amount of such Notes, plus accrued and unpaid interest thereon, if
any, to the purchase date (the "Change of Control Purchase Date") pursuant to
the offer described in Section 3.5(b) (the "Change of Control Offer") and in
accordance with the other procedures set forth in this Indenture.
(b) Within 30 days following any Change of Control, the
Company shall, unless the Company shall have given each Noteholder notice of its
irrevocable intention to redeem all outstanding Notes as described in
Section 3.1, notify the Trustee thereof and give written notice (the "Change
of Control Notice") of such Change of Control to each holder of Notes, by
first-class mail, postage prepaid, at the Noteholder's address appearing in
the Note register, stating, among other things, (i) that a Change of Control
has occurred, (ii) the Change of Control Purchase Price, (iii) the Change of
Control Purchase Date (which shall be a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed, or such later
date as is necessary to comply with requirements under the Exchange Act),
(iv) that any Note not tendered shall continue to accrue interest and to have
all of the benefits of this Indenture, (v) that, unless the Company defaults
in the payment of the Change of Control Purchase Price, any Notes
18
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Purchase Date, (vi) that Noteholders
electing to have any Notes purchased pursuant to a Change of Control Offer shall
be required to surrender the Notes, with the form entitled "Option of Noteholder
to Elect Purchase" on the reverse of the Notes completed, to the Company at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Purchase Date, (vii) that
Noteholders shall be entitled to withdraw their election if the Company
receives, not later than the close of business on the second Business Day
preceding the Change of Control Purchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Noteholder, the principal
amount of Notes delivered for purchase, and a statement that such Noteholder is
withdrawing his election to have such Notes purchased, and (viii) that
Noteholders whose Notes are being purchased only in part shall be issued new
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof.
The Company shall comply with the requirements of Rule 13e-4 and 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes in connection with a Change of Control.
(c) On or before the next Business Day prior to the Change of
Control Purchase Date, the Company shall deposit with the Trustee an amount
equal to the Change of Control Purchase Price in respect of all Notes or
portions thereof to be tendered on the Change of Control Purchase Date. On the
Change of Control Purchase Date, the Company shall, to the extent lawful, (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, and (ii) deliver or cause to be delivered to the Trustee the
Notes so accepted together with an Officers' Certificate stating the Notes or
portions thereof tendered to the Company. The Trustee shall promptly mail to
each Noteholder of Notes so accepted payment in an amount equal to the Change of
Control Purchase Price of such Notes, and the Trustee shall promptly
authenticate and mail to each Noteholder a new Note equal in principal amount to
any unpurchased portion of the Notes surrendered, if any; PROVIDED that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(d) The term "Change of Control" shall mean an event or series
of events as a result of which (i) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) acquires "beneficial
ownership" (as determined in accordance with Rule 13d-3 under the Exchange Act),
directly or indirectly, of shares representing more than 50% of the combined
voting power of the then outstanding Voting Stock or (ii) the Company
consolidates with or merges into any other person, or conveys, transfers or
leases all or substantially all of its assets to any person, or any other person
merges into the Company, and, in the case of any such transaction, the
outstanding Common Stock of the Company is changed or exchanged as a result,
unless the shareholders of the Company immediately before such transaction own,
directly or indirectly, immediately following such transaction, at least 51% of
the combined voting power of the outstanding voting securities of the person
resulting from such transaction in substantially the same proportion as their
ownership of the Voting Stock
19
immediately before such transaction; PROVIDED that a Change of Control shall not
be deemed to have occurred if either (x) the closing price per share of the
Common Stock for any five Trading Days within the period of 10 consecutive
Trading Days ending immediately after the later of the Change of Control or the
public announcement of the Change of Control (in the case of a Change of Control
under clause (i) above) or ending immediately before the Change of Control (in
the case of a Change of Control under clause (ii) above) shall equal or exceed
105% of the Conversion Price of the Notes in effect on each such Trading Day, or
(y) at least 90% of the consideration (determined as of the date on which the
Change of Control is triggered and excluding cash payments for fractional
shares) in the transaction or transactions constituting the Change of Control
consists of shares of common stock traded on a national securities exchange or
quoted on the Nasdaq National Market and as a result of such transaction or
transactions the Notes become convertible solely into such common stock.
ARTICLE IV
PARTICULAR COVENANTS OF THE COMPANY
Section 4.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
shall duly and punctually pay or cause to be paid the principal of and premium,
if any, and interest on each of the Notes at the places, at the respective times
and in the manner provided herein and in the Notes. Each installment of interest
on the Notes due on any semi-annual interest payment date shall be payable (a)
in respect to Notes held of record by the Depositary or its nominee in same day
funds and (b) in respect of holders other than the Depositary or its nominee by
mailing checks for the interest payable to or upon the written order of the
holders of Notes entitled thereto as they shall appear on the Note register;
PROVIDED that, with respect to any holder of Notes with an aggregate principal
amount equal to or in excess of $5,000,000, at the request (such request to
include appropriate wire instructions) of such holder in writing to the Trustee,
interest on such holder's Notes shall be paid by wire transfer in immediately
available funds to an account in the continental United States of America and
any such request shall be deemed a continuing request unless and until revoked
in writing. An installment of principal or interest shall be considered paid on
the date due if the Trustee or paying agent (other than the Company, a
subsidiary of the Company or any Affiliate of any of them) holds on that date
money designated for and sufficient to pay the installment of principal or
interest and is not prohibited from paying such money to the holders of the
Notes pursuant to the terms of this Indenture.
Section 4.2 MAINTENANCE OF OFFICE OR AGENCY. The Company may from time
to time designate one or more offices or agencies where the Notes may be
surrendered for registration of transfer or exchange or for presentation for
payment or for conversion or redemption and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of any such office or agency. If at any time the Company
shall fail to maintain any such office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
20
The Company hereby initially designates the Trustee as paying agent,
Note registrar and conversion agent and the Corporate Trust Office of the
Trustee as the office or agency of the Company for the purposes set forth in the
first paragraph of this Section 4.2.
So long as the Trustee is the Note registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 7.11(a) and the
third paragraph of Section 7.12.
Section 4.3 APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
shall appoint, in the manner provided in Section 7.11, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 4.4 PROVISIONS AS TO PAYING AGENT.
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, the Company or the
Trustee, as the case may be, shall cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section 4.4:
(i) that it shall hold all sums held by it as such
agent for the payment of the principal of, premium, if any, or
interest on the Notes (whether such sums have been paid to it
by the Company or by any other obligor on the Notes) in trust
for the benefit of the holders of the Notes;
(ii) that it shall give the Trustee notice of any
failure by the Company (or by any other obligor on the Notes)
to make any payment of the principal of, premium, if any, or
interest on the Notes when the same shall be due and payable;
and
(iii) that at any time during the continuance of an
Event of Default, upon request of the Trustee, it shall
forthwith pay to the Trustee all sums so held in trust.
The Company shall, before each due date of the principal of, premium,
if any, or interest on the Notes, deposit with the paying agent a sum sufficient
to pay such principal, premium, if any, or interest, and (unless such paying
agent is the Trustee) the Company shall promptly notify the Trustee of any
failure to take such action.
(b) If the Company shall act as its own paying agent, it
shall, on or before each due date of the principal of, premium, if any, or
interest or any Make-Whole Payment on the Notes, set aside, segregate and hold
in trust for the benefit of the holders of the Notes a sum sufficient to pay
such principal, premium, if any, or interest so becoming due and shall notify
the Trustee of any failure to take such action and of any failure by the Company
(or any other obligor under the Notes) to make any payment of the principal of,
premium, if any, or interest or any Make-Whole Payment on the Notes when the
same shall become due and payable.
21
(c) Anything in this Section 4.4 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge of this Indenture, or for any other reason, pay or
cause to be paid to the Trustee all sums held in trust by the Company or any
paying agent hereunder as required by this Section 4.4, such sums to be held by
the Trustee upon the trusts herein contained and upon such payment by the
Company or any paying agent to the Trustee, the Company or such paying agent
shall be released from all further liability with respect to such sums.
(d) Anything in this Section 4.4 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this Section
4.4 is subject to Sections 12.3 and 12.4.
Section 4.5 CORPORATE EXISTENCE. Subject to Article XI, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (a) its corporate existence, and the corporate or other
existence of any subsidiary of the Company, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such subsidiary and (b) the rights (charter and statutory),
licenses and franchises of the Company and its subsidiaries; PROVIDED that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate or other existence of any of its subsidiaries if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its subsidiaries, taken as a
whole, and that the loss thereof is not materially adverse to the Holders of the
Notes.
Section 4.6 MAINTENANCE OF STATUS OF NET.B@NK AS INSURED DEPOSITORY
INSTITUTION. The Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect the status of Net.B@nk, its banking
subsidiary, as an insured depository institution and do or cause to be done all
things necessary to ensure that depository accounts of Net.B@nk are insured by
the Federal Deposit Insurance Corporation or any successor organization up to
the maximum amount permitted by 12 U.S.C. Section 1811 ET SEQ. and the
regulations thereunder or any succeeding federal law, except as to individual
accounts or interests in employee benefit plans that are not entitled to
pass-through insurance under 12 U.S.C. Section 1821 (a)(1)(D).
Section 4.7 COMMISSION AND OTHER REPORTS. The Company shall deliver to
the Trustee and each Holder, within 10 days after it files the same with the
Commission, copies of all reports and information (or copies of such portions of
any of the foregoing as the Commission may by rules and regulations prescribe),
if any, that the Company is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act; PROVIDED that in the case of annual
reports, information may be incorporated by reference and furnished to Holders
at the time and in the manner in which such information is required to be
furnished to the Company's common shareholders. The Company agrees to continue
to comply with the filing and reporting requirements of the Commission as long
as any of the Notes are outstanding; PROVIDED, that if the Company is not
subject to the filing and reporting requirements of the Commission at any time,
(a) the Company shall provide the Trustee and each Holder with the reports and
information (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that are specified in Section
13 or 15(d) of the Exchange Act as if the Company were subject to such filing
and reporting requirements, and (b) the Company shall provide copies of such
reports and information to any prospective holder of the Notes promptly upon
written request and payment of reasonable costs of duplication and delivery. The
record date to identify
22
the Holders to whom such reports shall be furnished shall be no longer than 60
days prior to the date on which such reports are first mailed to the Holders on
the Notes. The Company shall also comply with the other provisions of the Trust
Indenture Act Section 314(a).
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.8 STAY, EXTENSION AND USURY LAWS. The Company (to the extent
that it may lawfully do so) 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 that would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that 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 shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
Section 4.9 COMPLIANCE STATEMENT; NOTICE OF DEFAULTS.
(a) In accordance with the provisions of Trust Indenture Act,
the Company shall deliver to the Trustee within 120 days after the end of each
Fiscal Year of the Company an Officers' Certificate stating whether or not to
the best knowledge of the signers thereof the Company is in compliance (without
regard to periods of grace or notice requirements) with all conditions and
covenants under this Indenture, and if the Company shall not be in compliance,
specifying such non-compliance and the nature and status thereof of which such
signer may have knowledge. The Company agrees to promptly notify the Trustee of
any change in the Fiscal Year.
(b) The Company shall file with the Trustee written notice of
the occurrence of any default or Event of Default within ten days of its
becoming aware of any such default or Event of Default.
Section 4.10 TAXES. The Company shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (a) all taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Company
or its subsidiaries or upon the income, profits or property of the Company or
any such subsidiary and (b) all lawful claims for labor, materials and supplies
that, if unpaid, might by law become a lien upon the property of the Company or
any such subsidiary; PROVIDED that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which disputed amounts adequate reserves have
been made.
23
Section 4.11 INSURANCE. The Company shall provide, or cause to be
provided, for itself and its subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties, including, but
not limited to, products liability insurance and public liability insurance,
with reputable insurers or with the government of the United States of America
or an agency or instrumentality thereof, in such amounts with such deductibles
and by such methods as shall be determined in good faith by the Board of
Directors to be appropriate.
ARTICLE V
NOTEHOLDERS' LISTS
Section 5.1 NOTEHOLDERS' LISTS. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of holders of Notes and shall otherwise comply with
Trust Indenture Act Section 312(a). If the Trustee is not the Notes registrar,
the Company shall furnish or cause to be furnished to the Trustee on or before
at least seven Business Days preceding each interest payment date, redemption
date, purchase 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 reasonably may
require of the names and addresses of holders of Notes; and the Company shall
otherwise comply with Trust Indenture Act Section 312(a); PROVIDED however to
the extent there has been established a record date or special record date with
respect to such payment, any such list of holders shall be as of such record
date or special record date.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 EVENTS OF DEFAULT. In case one or more of the following
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:
(a) default in the payment of the principal of or premium, if
any, on the Notes when due at maturity, upon redemption or otherwise, including
failure by the Company to purchase the Notes when required under Section 3.5
(whether or not such payment shall be prohibited by Article XV of this
Indenture); or
(b) default in the payment of any installment of interest on
the Notes as and when the same shall become due and payable (whether or not such
payment shall be prohibited by Article XV of this Indenture), and continuance of
such default for a period of 30 days; or
(c) failure to provide a Change of Control Notice (whether or
not such Notice or payment pursuant to Section 3.5 shall be prohibited by
Article XV of this Indenture); or
24
(d) failure on the part of the Company to duly observe or
perform any other covenant on the part of the Company in this Indenture (other
than a default in the performance or breach of a covenant that is specifically
dealt with elsewhere in this Section 6.1) that continues for a period of 90 days
after the date on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the Trustee, or to the
Company and a Responsible Officer of the Trustee by the holders of at least 25%
in aggregate principal amount of the Notes at the time outstanding (determined
in accordance with Section 8.4); or
(e) the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it or shall make a general assignment for the
benefit of creditors or shall fail generally to pay its debts as they become
due; or
(f) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 6.1(e) or (f)), unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the holders of not less
than 25% in aggregate principal amount of the Notes then outstanding (determined
in accordance with Section 8.4), by notice in writing to the Company (and to the
Trustee if given by Noteholders), may declare the principal of and premium, if
any, on the Notes and the interest accrued thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the Notes
contained to the contrary notwithstanding. If an Event of Default specified in
Section 6.1(e) or (f) occurs and is continuing, the principal of all the Notes
and the interest accrued thereon shall be immediately due and payable. The
foregoing provision is subject to the conditions that if, at any time after the
principal of the Notes shall have been so declared due and payable, and before
any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all Notes and the principal of and premium, if any, on any and all
Notes that shall have become due otherwise than by acceleration (with interest
on overdue installments of interest (to the extent that payment of such interest
is enforceable under applicable law) and on such principal and premium, if any,
at the rate borne by the Notes, to the date of such payment or deposit) and
amounts due to the Trustee pursuant to Section 7.7, and if any and all defaults
under this Indenture, other than the nonpayment of principal of, premium, if
any, and accrued interest on Notes that shall have become due by acceleration,
shall have been cured or waived pursuant to Section 6.7, then and in every such
case the holders of a majority in aggregate principal amount
25
of the Notes then outstanding, by written notice to the Company and to the
Trustee, may waive all defaults or Events of Default and rescind and annul such
declaration and its consequences; but no such waiver or rescission and annulment
shall extend to or shall affect any subsequent default or Event of Default, or
shall impair any right consequent thereto. The Company shall notify a
Responsible Officer of the Trustee, promptly upon becoming aware thereof, of any
Event of Default.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission and annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the holders of Notes and the Trustee shall be restored respectively
to their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes and the Trustee shall continue as
though no such proceeding had been taken.
Section 6.2 PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR. The Company
covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Notes as and when the same shall become
due and payable, and such default shall have continued for a period of 30 days,
or (b) in case default shall be made in the payment of the principal of or
premium, if any, on any of the Notes as and when the same shall have become due
and payable, whether at maturity of the Notes or in connection with any
redemption, by declaration or otherwise, then, upon demand of the Trustee, the
Company shall pay to the Trustee, for the benefit of the holders of the Notes,
the whole amount that then shall have become due and payable on all such Notes
for principal of, premium, if any, or interest, or both, as the case may be,
with interest upon the overdue principal of, premium, if any, and (to the extent
that payment of such interest is enforceable under applicable law) upon the
overdue installments of interest at the rate borne by the Notes; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including reasonable compensation to the Trustee,
its agents, attorneys and counsel, and any expenses or liabilities incurred by
the Trustee hereunder other than through its negligence or bad faith. Until such
demand by the Trustee, the Company may pay the principal of and premium, if any,
and interest on the Notes to the registered holders, whether or not the Notes
are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In the case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Notes under
Title 11 of the United States Code or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such
26
other obligor upon the Notes, or to the creditors or property of the Company or
such other obligor, the Trustee, irrespective of whether the principal of the
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 6.2, shall be entitled and empowered,
by intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal, premium, if any, and interest owing
and unpaid in respect of the Notes and, in case of any judicial proceedings, to
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 and of the Noteholders
allowed in such judicial proceedings relative to the Company or any other
obligor on the Notes, its or their creditors, or its or their property and to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same after the deduction of any amounts due
the Trustee under Section 7.7; and any receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, custodian or similar official is
hereby authorized by each of the Noteholders 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 Noteholders, to pay to the Trustee any amount due it
for reasonable compensation, expenses, advances and disbursements, including
counsel fees incurred by it up to the date of such distribution. To the extent
that such payment of reasonable compensation, expenses, advances and
disbursements out of the estate 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, monies, securities and other property
that the holders of the Notes 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 adopt on behalf of any Noteholder any plan of
reorganization or arrangement affecting the Notes or the rights of any
Noteholder, or to authorize the Trustee to vote in respect of the claim of any
Noteholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes or the production thereof on any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
holders of the Notes, and it shall not be necessary to make any holders of the
Notes parties to any such proceedings.
Section 6.3 APPLICATION OF MONIES COLLECTED BY TRUSTEE. Any monies
collected by the Trustee pursuant to this Article VI shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes
27
and stamping thereon the payment, if only partially paid, and upon surrender
thereof, if fully paid:
First: To the payment of all amounts due the Trustee under
this Indenture, including, without limitation Section 7.7;
Second: Subject to the provisions of Article XV, in case the
principal of the outstanding Notes shall not have become due and be
unpaid, to the payment of interest on the Notes in default in the order
of the maturity of the installments of such interest, with interest (to
the extent that such interest has been collected by the Trustee) upon
the overdue installments of interest at the rate borne by the Notes,
such payments to be made ratably to the persons entitled thereto; and
Third: Subject to the provisions of Article XV, in case the
principal of the outstanding Notes shall have become due, by
declaration or otherwise, and be unpaid, to the payment of the whole
amount then due and unpaid upon the Notes for principal, premium, if
any, and interest, with interest on the overdue principal and premium,
if any, and (to the extent that such interest has been collected by the
Trustee) upon overdue installments of interest at the rate borne by the
Notes; and in case such monies shall be insufficient to pay in full the
whole amounts so due and unpaid upon the Notes, then to the payment of
such principal of, premium, if any, and interest without preference or
priority of principal and premium, if any, over interest, or of
interest over principal and premium, if any, or of any installment of
interest over any other installment of interest, or of any Note over
any other Note, ratably to the aggregate of such principal and premium,
if any, and accrued and unpaid interest.
Section 6.4 PROCEEDINGS BY NOTEHOLDER. No holder of any Note shall have
any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding, and no direction inconsistent
with such written request shall have been given to the Trustee pursuant to
Section 6.7; it being understood and intended, and being expressly covenanted by
the taker and holder of every Note with every other taker and holder and the
Trustee, that not one or more holders of Notes shall have any right in any
manner whatever by virtue of or by availing of any provision of this Indenture
to affect, disturb or prejudice the rights of any other holder of Notes, to
obtain or seek to obtain priority over or preference to any other such holder or
to enforce any right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all holders of Notes (except as
otherwise provided herein). For the protection and
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enforcement of this Section 6.4, each and every Noteholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision
of any Note, the right of any holder of any Note to receive payment of the
principal of, premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder
except as otherwise set forth herein.
Anything in this Indenture or the Notes to the contrary
notwithstanding, the holder of any Note, without the consent of either the
Trustee or the holder of any other Note, in his own behalf and for his own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, his rights of conversion as provided herein.
Section 6.5 PROCEEDINGS BY TRUSTEE. In case of an Event of Default, the
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
Section 6.6 REMEDIES CUMULATIVE AND CONTINUING. Except as provided in
Section 2.6, all powers and remedies given by this Article VI to the Trustee or
to the Noteholders shall, to the extent permitted by law, be deemed cumulative
and not exclusive of such powers and remedies or of any other powers and
remedies available to the Trustee or the holders of the Notes, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any holder of any of the Notes to exercise any right or
power accruing upon any default or Event of Default occurring and continuing as
aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such default or any acquiescence therein; and, subject to the
provisions of Section 6.4, every power and remedy given by this Article VI or by
law to the Trustee or to the Noteholders may be exercised from time to time, and
as often as shall be deemed expedient, by the Trustee or by the Noteholders.
Section 6.7 DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY
OF NOTEHOLDERS. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding (determined in accordance with Section 8.4) shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee; PROVIDED that (a) such direction shall not be in
conflict with any rule of law or with this Indenture, (b) the Trustee may take
any other action deemed proper by the Trustee that is not inconsistent with such
direction and (c) such direction shall not in the estimation of the Trustee
involve it in personal liability. The holders of a majority in aggregate
principal amount of the Notes at the time outstanding (determined in accordance
with Section 8.4) may on behalf of the holders of all of the Notes waive any
past default or Event of Default hereunder and its consequences except (i) a
default in the payment of
29
interest or premium, if any, on, or the principal of, the Notes, (ii) a failure
by the Company to convert any Notes into Common Stock or (iii) a default in
respect of a covenant or provisions hereof that under Article X cannot be
modified or amended without the consent of the holders of all Notes then
outstanding. Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section 6.7, said default or Event of Default shall
for all purposes of the Notes and this Indenture be deemed to have been cured
and to be not continuing and the Company, the Trustee and the holders of the
Notes shall be restored to their former positions and rights hereunder; but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon.
Section 6.8 NOTICE OF DEFAULTS. The Trustee shall, within 90 days after
the occurrence of a default, mail to all Noteholders, as the names and addresses
of such holders appear upon the Note register, notice of all defaults known to a
Responsible Officer, unless such defaults shall have been cured or waived before
the giving of such notice; PROVIDED that, except in the case of default in the
payment of the principal of, premium, if any, or interest on any of the Notes,
the Trustee shall be protected in withholding such notice if and so long as a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the
Noteholders.
Section 6.9 UNDERTAKING TO PAY COSTS. All parties to this Indenture
agree, and each holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; PROVIDED that the provisions of this Section 6.9
shall not apply to any suit instituted by the Trustee, to any suit instituted by
any Noteholder or group of Noteholders holding in the aggregate more than 10% in
principal amount of the Notes at the time outstanding (determined in accordance
with Section 8.4) or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of, premium, if any, or interest on
any Note on or after the due date expressed in such Note or to any suit for the
enforcement of the right to convert any Note in accordance with the provisions
of Article XIV.
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.1 DUTIES AND RESPONSIBILITIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
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(i) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; PROVIDED that in the case of any such certificates or
opinions that by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph (c) does not limit the effect of paragraph
(b) of this Section 7.1;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by an officer or officers of the Trustee unless it
is proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.7.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this
Section 7.1.
(e) The Trustee may refuse to perform any duty or exercise any
right or power or expend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.
Section 7.2 REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each
May 15 commencing with the May 15 following the date of this Indenture, the
Trustee shall, but only if required by the Trust Indenture Act, mail to each
Noteholder a brief report dated as of such May 15 that complies with Trust
Indenture Act Section 313(a). The Trustee also shall comply with Trust Indenture
Act Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the Notes
become listed or delisted on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Noteholders shall
be mailed to the Company and, to the extent required by Section 4.7 hereof and
of the Trust Indenture Act Section 313(d), filed with the Commission and each
stock exchange, if any, on which the Notes are listed.
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Section 7.3 RELIANCE ON DOCUMENTS, OPINIONS, ETC. Except as otherwise
provided in Section 7.1:
(a) The Trustee may rely and shall be protected in acting upon
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, coupon or other paper or document
believed by it in good faith to be genuine and to have been signed or presented
by the proper party or parties;
(b) Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed or
required by the Trust Indenture Act); and any resolution of the Board of
Directors may be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Company;
(c) The Trustee may consult with counsel of its selection and
any advice or opinion of counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in accordance with such advice or opinion of counsel;
(d) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys, and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed by it with due care
hereunder; no Depositary, Custodian or paying agent who is not the Trustee shall
be deemed an agent of the Trustee, and the Trustee (in its capacity as Trustee)
shall not be responsible for any act or omission by any such Depositary,
Custodian or paying agent;
(e) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by the Indenture at the request or
direction of any of the holders pursuant to this Indenture unless such holders
have offered the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that would be incurred by it in compliance with such
request or direction.
(f) Subject to the provisions of Section 7.1(c), the Trustee
shall not be liable for any action it takes or omits to take in good faith that
it believes to be authorized or within its rights or powers;
(g) In connection with any request to transfer or exchange any
Note, the Trustee may request a direction (in the form of an Officers'
Certificate) from the Company and an Opinion of Counsel with respect to
compliance with any restrictions on transfer or exchange imposed by this
Indenture, the Securities Act, other applicable law or the rules and regulations
of any exchange on which the Notes or the capital stock may be traded, and the
Trustee may rely and shall be protected in acting upon such direction and in
accordance with such Officers' Certificate and Opinion of Counsel;
(h) The Trustee may rely and shall be fully protected in
acting upon the determination and notice by the Company of the Conversion Price;
and
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(i) The Trustee shall not be deemed to have knowledge of any
Event of Default or other fact or event upon the occurrence of which it may be
required to take action hereunder unless one of its Responsible Officers has
actual knowledge thereof.
(j) The Trustee's privileges, protections and immunities from
liability and its rights to compensation and indemnification in connection with
the performance of its duties under this Indenture shall extend to the Trustee
when serving in the roles of paying agent, authenticating agent, conversion
agent and Note registrar, as well as to the Trustee's officers, directors,
employees and agents. Such privileges, protections, immunities and rights to
indemnification, together with the Trustee's right to compensation, shall
survive the Trustee's resignation or removal in any or all of the capacities it
may be serving hereunder and final payment of the Notes.
(k) No recourse under or upon any obligation, covenant or
agreement of the Trustee in this Indenture or in any supplemental indenture
shall be had against any officer, director, employee or agent, as such, past,
present or future, of the Trustee or of any successor entity, either directly or
through the Trustee or any successor entity, whether by virtue of any
constitution, statute or rule of law, by the enforcement of any assessment or
penalty or otherwise, it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as consideration
for, the execution of this Indenture.
Section 7.4 NO RESPONSIBILITY FOR RECITALS, ETC. The recitals contained
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
Section 7.5 TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY
OWN NOTES. The Trustee, any paying agent, any conversion agent or any Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.
Section 7.6 MONIES TO BE HELD IN TRUST. Subject to the provisions of
Section 12.4, all monies received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.
Money held by the Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as may be
agreed to in writing from time to time by the Company and the Trustee.
Section 7.7 COMPENSATION AND EXPENSES OF TRUSTEE. The Company shall pay
to the Trustee from time to time, and the Trustee shall be entitled to, such
compensation as the Company and the Trustee shall from time to time agree in
writing, for all services rendered by it hereunder in any capacity (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), and the Company shall pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or
33
made by the Trustee in accordance with any of the provisions of this Indenture
(including the reasonable fees and expenses of its counsel and of all persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Company also shall indemnify
each of the Trustee or any predecessor Trustee in any capacity under this
Indenture and its respective agents and any authenticating agent and their
respective officers, directors, employees and agents for, and to hold them
harmless against, any and all loss, liability, damage, claim or expense,
including taxes (other than taxes based on the income of the Trustee) and
reasonable counsel fees and expenses incurred without negligence or bad faith on
the part of the Trustee or any such other indemnified parties, as the case may
be, and arising out of or in connection with the acceptance or administration of
this trust or in any other capacity hereunder, including the costs and expenses
of defending themselves against any claim of liability in the premises. The
obligations of the Company under this Section 7.7 to compensate or indemnify the
Trustee and to pay or reimburse the Trustee for expenses, disbursements and
advances shall be secured by a lien prior to that of the Notes upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the holders of particular Notes. The obligation of the
Company under this Section shall survive the satisfaction and discharge of this
Indenture.
Section 7.8 OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise
provided in Section 7.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee, and such Officers' Certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.
Section 7.9 CONFLICTING INTERESTS OF TRUSTEE. In the event that the
Trust Indenture Act is applicable hereto, and if the Trustee has or shall
acquire a conflicting interest within the meaning of Trust Indenture Act Section
310(b) and there exists an Event of Default hereunder (exclusive of any period
of grace or requirement of notice), the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
Section 7.10 ELIGIBILITY OF TRUSTEE. There shall at all times be a
Trustee hereunder that shall be a person that satisfied the requirements of
Trust Indenture Act Section 310(a)(1) and Section 310(a)(5) and that has a
combined capital and surplus of at least $50,000,000. If such person makes
available to the public reports of condition or audited financial statements at
least annually, then for the purposes of this Section, the combined capital and
surplus of such person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition or audited financial
statements. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article VII.
Section 7.11 RESIGNATION OR REMOVAL OF TRUSTEE.
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(a) The Trustee may at any time resign by giving written
notice of such resignation to the Company; and the Company shall mail, or cause
to be mailed, notice thereof to the holders of Notes at their addresses as they
shall appear on the Note register. Upon receiving such notice of resignation,
the Company shall promptly appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with Section 7.9
after written request therefor by the Company or by any Noteholder
who has been a BONA FIDE holder of a Note or Notes for at least six
months; or
(ii) the Trustee shall cease to be eligible in
accordance with the provisions of Section 7.10 and shall fail to
resign after written request therefor by the Company or by any such
Noteholder; or
(iii) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee or any Noteholder who
has been a BONA FIDE holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The holders of a majority in aggregate principal amount
of the Notes at the time outstanding may at any time remove the Trustee and
nominate a successor trustee, which shall be deemed appointed as successor
trustee unless within ten days after notice to the Company of such nomination
the Company objects thereto, in which case the Trustee so removed or any
Noteholder, upon the terms and conditions and otherwise as provided in the
next paragraph, may petition any court of competent jurisdiction for an
appointment of a successor trustee.
If no successor trustee shall have been so appointed and have accepted
appointment within 60 days after removal or the mailing of such notice of
resignation to the Noteholders, the Trustee resigning or being removed may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or, in the case of either resignation or removal, any Noteholder who
has been a BONA FIDE holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of
35
a successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a successor trustee.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 7.11
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 7.12.
Section 7.12 ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor trustee
appointed as provided in Section 7.11 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon, the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but on the written request of the Company
or of the successor trustee, the Trustee ceasing to act shall, upon payment of
any amounts then due it pursuant to the provisions of Section 7.7, execute and
deliver an instrument transferring to such successor trustee all the rights and
powers of the Trustee so ceasing to act. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a lien
upon all property and funds held or collected by such trustee as such, except
for funds held in trust for the benefit of holders of particular Notes, to
secure any amounts then due it pursuant to the provisions of Section 7.7.
No successor trustee shall accept appointment as provided in this
Section 7.12 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 7.9 and eligible under the
provisions of Section 7.10.
Upon acceptance of appointment by a successor trustee as provided in
this Section 7.12, the Company shall mail or cause to be mailed notice of the
succession of such Trustee hereunder to the holders of Notes at their addresses
as they shall appear on the Note register. If the Company fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Company.
Section 7.13 SUCCESSOR, BY MERGER, ETC. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor to
the Trustee hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto; PROVIDED such corporation
shall be qualified under the provisions of Section 7.9 and eligible under the
provisions of Section 7.10.
Section 7.14 LIMITATION ON RIGHTS OF TRUSTEE AS CREDITOR. If and when
the Trustee shall be or become a creditor of the Company (or any other obligor
upon the Notes) and the Trust Indenture Act is applicable hereto, the Trustee
shall be subject to the provisions of Trust Indenture Act Section 311(a) or, if
applicable, Trust Indenture Act Section 311(b) regarding the collection of the
claims against the Company (or any such other obligor).
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ARTICLE VIII
CONCERNING THE NOTEHOLDERS
Section 8.1 ACTION BY NOTEHOLDERS. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article IX or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than 15 days
prior to the date of commencement of solicitation of such action.
Section 8.2 PROOF OF EXECUTION BY NOTEHOLDERS. Subject to the
provisions of Sections 7.1, 7.2 and 9.5, proof of the execution of any
instrument by a Noteholder or by agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the Note register or by a certificate of the
Note registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 9.5.
Section 8.3 WHO ARE DEEMED ABSOLUTE OWNERS. The Company, the Trustee,
any paying agent, any conversion agent and any Note registrar may deem the
person in whose name such Note shall be registered upon the books of the Company
to be, and may treat such person as, the absolute owner of such Note (whether or
not such Note shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment of or on account of
the principal of, premium, if any, and interest on such Note, for conversion of
such Note and for all other purposes; and neither the Company nor the Trustee
nor any paying agent nor any conversion agent nor any Note registrar shall be
affected by any notice to the contrary. All such payments so made to any holder
for the time being, or upon order of such holder, shall be valid and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for monies payable upon any such Note.
The Depositary shall be deemed to be the owner of any global Note
for all purposes, including receipt of notices to Noteholders and payment of
principal of, premium, if any, and interest on the Notes. None of the
Company, the Trustee (in its capacity as Trustee), any paying agent or the
Note registrar (or co-registrar) shall have any responsibility for any aspect
of the records relating to or payments made on account of beneficial
interests of a global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests; PROVIDED that the
foregoing shall not apply to the Trustee or any other person acting in its
capacity as Custodian.
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Section 8.4 COMPANY-OWNED NOTES DISREGARDED. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes that
are owned by the Company or any other obligor on the Notes or by any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any other obligor on the Notes shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; PROVIDED that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, consent, waiver or other
action, only Notes that a Responsible Officer actually knows are so owned shall
be so disregarded. Notes so owned that have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 8.4 if the pledgee
shall establish to the satisfaction of the Trustee the ▇▇▇▇▇▇▇'▇ right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or a person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any such other obligor. In
the case of a dispute as to such right, any decision by the Trustee taken upon
the advice of counsel shall be full protection to the Trustee. Upon request of
the Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Notes, if any, known by the Company to
be owned or held by or for the account of any of the above described persons;
and subject to Section 7.1, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth and
of the fact that all Notes not listed therein are outstanding for the purpose of
any such determination.
Section 8.5 REVOCATION OF CONSENTS, FUTURE HOLDERS BOUND. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
8.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note that is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 8.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.
ARTICLE IX
NOTEHOLDERS' MEETINGS
Section 9.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of
Noteholders may be called at any time and from time to time pursuant to the
provisions of this Article IX for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to be
taken by Noteholders pursuant to any of the provisions of Article VI;
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(b) to remove the Trustee and appoint a successor trustee
pursuant to the provisions of Article VII;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 10.2; or
(d) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of the Notes
under any other provisions of this Indenture or under applicable law.
Section 9.2 MANNER OF CALLING MEETINGS; RECORD DATE. The Trustee may at
any time call a meeting of Noteholders to take any action specified in Section
9.1, to be held at such time and at such place in the City of New York, State of
New York, as the Trustee shall determine. Notice of every meeting of the
Noteholders, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be mailed not less
than 30 nor more than 60 days prior to the date fixed for the meeting to such
Noteholders at their addresses as such addresses appear in the Note register.
For the purpose of determining Noteholders entitled to notice of any meeting of
Noteholders, the Trustee shall fix in advance a date as the record date for such
determination, such date to be a Business Day not more than ten days prior to
the date of the mailing of such notice as hereinabove provided. Only persons in
whose name any Note shall be registered in the Note register at the close of
business on a record date fixed by the Trustee as aforesaid, or by the Company
or the Noteholders as provided in Section 9.3, shall be entitled to notice of
the meeting of Noteholders with respect to which such record date was so fixed.
Section 9.3 CALL OF MEETING BY COMPANY OR NOTEHOLDERS. In case at any
time the Company, pursuant to a resolution of its Board of Directors or the
holders of at least 10% in aggregate principal amount of the Notes then
outstanding shall have requested the Trustee to call a meeting of Noteholders to
take any action authorized in Section 9.1 by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed notice of such meeting within 20 days after
receipt of such request, then the Company or the holders of Notes in the amount
above specified, as the case may be, may fix the record date with respect to,
and determine the time and the place for, such meeting and may call such meeting
to take any action authorized in Section 9.1, by mailing notice thereof as
provided in Section 9.2. The record date fixed as provided in the preceding
sentence shall be set forth in a written notice to the Trustee and shall be a
Business Day not less than 15 nor more than 20 days after the date on which the
original request is sent to the Trustee.
Section 9.4 WHO MAY ATTEND AND VOTE AT MEETINGS. Only persons entitled
to receive notice of a meeting of Noteholders and their respective proxies duly
appointed by an instrument in writing shall be entitled to vote at such meeting.
The only persons who shall be entitled to be present or to speak at any meeting
of Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel. When a determination of
Noteholders entitled to vote at any meeting of Noteholders has been made as
provided in this Section, such determination shall apply to any adjournments
thereof.
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Section 9.5 MANNER OF VOTING AT MEETINGS AND RECORD TO BE KEPT. The
vote upon any resolution submitted to any meeting of Noteholders shall be by
written ballots on each of which shall be subscribed the signature of the
Noteholder or proxy casting such ballot and the identifying number or numbers of
the Notes held or represented in respect of which such ballot is cast. The
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 9.2. The record shall show the identifying numbers of the Notes voting
in favor of or against any resolution. Each counterpart of such record shall be
signed and verified by the affidavits of the chairman and secretary of the
meeting and one of the counterparts shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee.
Any counterpart record so signed and verified shall be conclusive
evidence of the matters therein stated and shall be the record referred to in
clause (b) of Section 8.1.
Section 9.6 EXERCISE OF RIGHTS OF TRUSTEE AND NOTEHOLDERS NOT TO BE
HINDERED OR DELAYED. Nothing in this Article IX contained shall be deemed or
construed to authorize or permit, by reason of any call of a meeting of
Noteholders or any rights expressly or impliedly conferred hereunder to make
such call, any hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the Noteholders under any of the
provisions of this Indenture or of the Notes.
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
The Company, when authorized by a Board Resolution, and the Trustee may from
time to time and at any time enter into an indenture or indentures supplemental
hereto for one or more of the following purposes:
(a) to make provision with respect to the conversion rights of
the holders of Notes pursuant to the requirements of Section 14.6;
(b) subject to Article XV, to convey, transfer, assign,
mortgage or pledge to the Trustee, as security for the Notes, any property or
assets;
(c) to evidence the succession of another person to the
Company, or successive successions, and the assumption by the Successor Company
of the covenants, agreements and obligations of the Company pursuant to Article
XI;
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(d) to add to the covenants of the Company such further
covenants, restrictions or conditions as the Board of Directors and the Trustee
shall consider to be for the benefit of the holders of Notes and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture; PROVIDED that in respect of any such additional
covenant, restriction or condition, such supplemental indenture may provide for
a particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such default or may limit the remedies available to
the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Notes
in coupon form (including Notes registrable as to principal only) and to provide
for exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;
(f) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture that may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under this Indenture that shall not adversely affect the
interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this
Indenture to such extent necessary to effect the qualification of this Indenture
under the Trust Indenture Act (if applicable), or under any similar federal
statute hereafter enacted (if applicable).
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations that may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any
supplemental indenture that affects the Trustee's own rights, duties,
protections, privileges, liabilities or immunities under this Indenture or
otherwise.
Any supplemental indenture authorized by the provisions of this Section
10.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 10.2.
Section 10.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. With
the consent (evidenced as provided in Article VIII) of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by a Board Resolution and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or any
supplemental indenture or of modifying in any manner the rights of the holders
of the Notes; PROVIDED that, without the
41
consent of the holders of all Notes then outstanding, no such supplemental
indenture shall (a) extend the fixed maturity of any Note, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or premium, if any, thereon or reduce any amount payable on redemption
thereof, alter the obligation of the Company to redeem the Notes at the option
of the holder upon the occurrence of a Change of Control or impair or affect the
right of any Noteholder to institute suit for the payment thereof or make the
principal thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes, modify the subordination
provisions in a manner adverse to the holders of the Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth herein
without the consent of the holder of each Note so affected or (b) reduce the
aforesaid percentage of Notes, the holders of which are required to consent to
any such supplemental indenture.
Upon the request of the Company, accompanied by a copy of a Board
Resolution certified by its Secretary or Assistant Secretary authorizing the
execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of Noteholders as aforesaid, the Trustee
shall join with the Company in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties,
protections, privileges, liability or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Noteholders under this
Section 10.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 10.3 EFFECT OF SUPPLEMENTAL INDENTURES. Any supplemental
indenture executed pursuant to the provisions of this Article X shall comply
with the Trust Indenture Act, as then in effect, if such supplemental indenture
is then required to so comply. Upon the execution of any supplemental indenture
pursuant to the provisions of this Article X, this Indenture shall be and be
deemed to be modified and amended in accordance therewith and the respective
rights, limitation of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the holders of Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 10.4 NOTATION ON NOTES. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article X may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture, but they need not do so. If the
Company or the Trustee shall determine to add such a notation, new Notes so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may, at the Company's expense, be prepared and executed
by the Company, authenticated by the Trustee (or an authenticating agent duly
appointed by the Trustee pursuant to Section 16.13) and delivered in exchange
for the Notes then outstanding, upon surrender of such Notes then outstanding.
42
Section 10.5 EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE
FURNISHED TRUSTEE. The Trustee shall be furnished with and, subject to the
provisions of Sections 7.1 and 7.2, may rely upon an Officers' Certificate and
an Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant hereto complies with the requirements of this Article X.
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE,
TRANSFER AND LEASE
Section 11.1 COMPANY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all of its assets (determined on a consolidated
basis), whether in a single transaction or a series of related transactions, to
any person unless: (a) either the Company is the resulting, surviving or
transferee person (the "Successor Company") or the Successor Company is a person
organized and existing under the laws of the United States or any State thereof
or the District of Columbia, and the Successor Company (if not the Company)
expressly assumes by a supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the Company
under this Indenture and the Notes, including the rights pursuant to Article XIV
hereof, (b) immediately after giving effect to such transaction, no Event of
Default has happened and is continuing and (c) the Company delivers to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
Section 11.2 SUCCESSOR COMPANY TO BE SUBSTITUTED. In case of any such
consolidation, merger, sale, conveyance, transfer or lease and upon the
assumption by the Successor Company, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of, premium, if any, and interest on all of
the Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such Successor
Company shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party hereto. When a Surviving
Person duly assumes all the obligations of the Company pursuant to their
Indenture and the Notes, the predecessor shall be released from all such
obligations.
Section 11.3 OPINION OF COUNSEL TO BE GIVEN TO TRUSTEE. The Trustee,
subject to Sections 7.1 and 7.2, shall receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance, transfer or lease and any such assumption complies with the
provisions of this Article XI.
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONIES
Section 12.1 LEGAL DEFEASANCE AND COVENANT DEFEASANCE OF THE NOTES.
43
(a) The Company may, at its option by Board Resolution, at any
time, with respect to the Notes, elect to have either paragraph (b) or paragraph
(c) below be applied to the outstanding Notes upon compliance with the
conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (b), the Company shall be deemed to have
been released and discharged from its obligations with respect to the
outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, "legal defeasance"). For this purpose, such legal defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of the Sections of and matters
under this Indenture referred to in clauses (i) and (ii) below and to have
satisfied all its other obligations under such Notes and this Indenture insofar
as such Notes are concerned, except for the following, which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of holders of
outstanding Notes to receive solely from the trust fund described in paragraph
(d) below and as more fully set forth in such paragraph, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due and (ii) obligations listed in Section 12.3.
(c) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (c), the Company shall be released and
discharged from its obligations under any covenant contained in Sections 3.5 and
4.6 and Article XI with respect to the outstanding Notes on and after the date
the conditions set forth in paragraph (d) are satisfied (hereinafter, "covenant
defeasance"), and the Notes shall thereafter be deemed to be not "outstanding"
for the purpose of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes hereunder.
For this purpose, such covenant defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document, and such omission to
comply shall not constitute a default or an Event of Default under Section 6.1,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby.
(d) The following shall be the conditions to application of
either paragraph (b) or paragraph (c) above to the outstanding Notes:
(i) The Company shall have irrevocably deposited in
trust with the Trustee, pursuant to an irrevocable trust and
security agreement in form and substance satisfactory to the
Trustee, cash or U.S. Government Obligations maturing as to
principal and interest at such times, or a combination thereof, in
such amounts as are sufficient, without consideration of the
reinvestment of such interest and after payment of all federal,
state and local taxes or other charges or assessments in respect
thereof payable by the Trustee, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof (in form and substance reasonably
satisfactory to the Trustee) delivered to the Trustee, to pay the
principal of, premium, if any, and
44
interest on the outstanding Notes on the dates on which any such
payments are due and payable in accordance with the terms of this
Indenture and of the Notes;
(ii) (A) No Event of Default shall have occurred or be
continuing on the date of such deposit, and (B) no default or Event
of Default under Section 6.1(e) or 6.1(f) shall occur on or before
the 123rd day after the date of such deposit;
(iii) Such deposit shall not result in a default under
this Indenture or a breach or violation of, or constitute a default
under, any other instrument or agreement to which the Company is a
party or by which it or its property is bound;
(iv) In the case of a legal defeasance under paragraph
(b) above, the Company has delivered to the Trustee an Opinion of
Counsel stating that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B)
since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the holders
of the Notes shall not recognize income, gain or loss for federal
income tax purposes as a result of such deposit, defeasance and
discharge and shall be subject to federal income tax on the same
amounts and in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge had not
occurred; and, in the case of a covenant defeasance under paragraph
(c) above, the Company shall deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, in form and substance
reasonably satisfactory to the Trustee, to the effect that holders
of the Notes shall not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and defeasance and
shall be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if
such deposit and defeasance had not occurred;
(v) The holders shall have a perfected security
interest under applicable law in the cash or U.S. Government
Obligations deposited pursuant to Section 12.1(d)(i) above;
(vi) The Company shall have delivered to the Trustee an
Opinion of Counsel, in form and substance reasonably satisfactory to
the Trustee, to the effect that, after the passage of 123 days
following the deposit, the trust funds shall not be subject to any
applicable bankruptcy, insolvency, reorganization or similar law
affecting creditors' rights generally;
(vii) Such defeasance shall not cause the Trustee to have
a conflicting interest with respect to any securities of the
Company; and
(viii) The Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent
45
specified herein relating to the defeasance contemplated by this
Section 12.1 have been complied with;
PROVIDED that no deposit under clause (i) shall be effective to terminate the
obligations of the Company under the Notes or this Indenture prior to the
passage of 123 days following such deposit.
Section 12.2 TERMINATION OF OBLIGATIONS UPON CANCELLATION OF THE
NOTES. In addition to the Company's rights under Section 12.1, the Company
may terminate all of its obligations under this Indenture (subject to Section
12.3) when:
(a) (i) all Notes theretofore authenticated and delivered
(other than Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.6) have been delivered to the
Trustee for cancellation, and (ii) the Company has paid or caused to be paid
all other sums payable hereunder and under the Notes by the Company; or
(b) (i) the Notes not previously delivered to the Trustee
for cancellation shall have become due and payable or are by their terms to
become due and payable within one year or are to be called for redemption
under arrangements satisfactory to the Trustee upon delivery of notice, (ii)
the Company shall have irrevocably deposited with the Trustee, as trust
funds, cash, in an amount sufficient to pay principal of and interest on the
outstanding Notes, to maturity or redemption, as the case may be, (iii) such
deposit shall not result in a breach or violation of, or constitute a default
under, any agreement or instrument pursuant to which the Company is a party
or by which it or its property is bound and (iv) the Company has delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions related to such defeasance have been complied with.
Section 12.3 SURVIVAL OF CERTAIN OBLIGATIONS. Notwithstanding the
satisfaction and discharge of this Indenture and of the Notes referred to in
Section 12.1 or 12.2, the respective obligations of the Company and the
Trustee under Sections 2.3, 2.4, 2.5, 2.6, 3.1, 4.2, 5.1, 6.4, 6.9, 7.6, 7.7,
7.11, 12.5, 12.6, 12.7 and Article XIV shall survive until the Notes are no
longer Outstanding, and thereafter, the obligations of the Company and the
Trustee under Sections 6.9, 7.6, 7.7, 12.5, 12.6 and 12.7 shall survive.
Nothing contained in this Article XII shall abrogate any of the rights,
obligations or duties of the Trustee under this Indenture.
Section 12.4 ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE. Subject to
Section 12.7, after (i) the conditions of Section 12.1 or 12.2 have been
satisfied, (ii) the Company has paid or caused to be paid all other sums
payable hereunder by the Company and (iii) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of
the Company's obligations under this Indenture except for those surviving
obligations specified in Section 12.3.
Section 12.5 APPLICATION OF TRUST ASSETS. The Trustee shall hold any
cash or U.S. Government Obligations deposited with it in the irrevocable
trust established pursuant to Section 12.1 or 12.2, as the case may be. The
Trustee shall apply the deposited cash or the U.S.
46
Government Obligations, together with earnings thereon in accordance with
this Indenture and the terms of the irrevocable trust agreement established
pursuant to Section 12.1 or 12.2, as the case may be, to the payment of
principal of, premium, if any, and interest on the Notes. The cash or U.S.
Government Obligations so held in trust and deposited with the Trustee in
compliance with Section 12.1 or 12.2, as the case may be, shall not be part
of the trust estate under this Indenture, but shall constitute a separate
trust fund for the benefit of all holders entitled thereto. Except as
specifically provided herein, the Trustee shall not be requested to invest
any amounts held by it for the benefit of the holders or pay interest on
uninvested amounts to any holder.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 12.1 hereof or Section 12.2 hereof
or the principal and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the holders of
outstanding Notes.
Section 12.6 REPAYMENT TO THE COMPANY; UNCLAIMED MONEY. Subject to
applicable laws governing escheat of such property, and upon termination of
the trust established pursuant to Section 12.1 hereof or 12.2 hereof, as the
case may be, the Trustee shall promptly pay to the Company upon written
request any excess cash or U.S. Government Obligations held by it.
Additionally, if amounts for the payment of principal, premium, if any, or
interest remains unclaimed for two years, the Trustee shall pay such amounts
back to the Company forthwith. Thereafter, all liability of the Trustee with
respect to such amounts shall cease. After payment to the Company, holders
entitled to such payment must look to the Company for such payment as general
creditors unless an applicable abandoned property law designates another
person.
Section 12.7 REINSTATEMENT. If the Trustee is unable to apply any
cash or U.S. Government Obligations in accordance with Section 12.1 or 12.2
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, the Company's obligations under this Indenture
and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 12.1 or 12.2 until such time as the Trustee is
permitted to apply all such cash or U.S. Government Obligations in accordance
with Section 12.1 or 12.2, as the case may be; PROVIDED that if the Company
makes any payment of principal of, premium, if any, or interest on any Notes
following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the holders of such Notes to receive such payment
from the amounts held by the Trustee.
ARTICLE XIII
IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS AND DIRECTORS
Section 13.1 INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No
recourse for the payment of the principal of, or premium, if any, or interest
on any Note, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in this Indenture or in any supplemental indenture or in any Note, or
because of the creation of any indebtedness represented thereby, shall be had
against any
47
incorporator, shareholder, officer or director, as such, past, present or
future, of the Company or of any successor entity, either directly or through
the Company or any successor entity, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for,
the execution of this Indenture and the issuance of the Notes.
ARTICLE XIV
CONVERSION OF NOTES
Section 14.1 RIGHT TO CONVERT. Subject to and upon compliance with
the provisions of this Indenture, the holder of any Note shall have the
right, at the option of such holder, at any time through the close of
business on the Business Day immediately preceding the maturity date (except
that, with respect to any Note or portion of a Note that shall be called for
redemption or delivered for repurchase, such right shall terminate
immediately prior to the close of business on the last Business Day before
the date fixed for redemption of such Note or portion of a Note unless the
Company shall default in payment due upon redemption thereof) to convert the
principal amount of any such Note, or any portion of such principal amount
that is $1,000 or an integral multiple thereof, into that number of fully
paid and nonassessable shares of Common Stock (as such shares shall then be
constituted) obtained by dividing the aggregate principal amount of the Notes
or portion thereof surrendered for conversion by the Conversion Price in
effect at such time rounded to the nearest 1/100,000th of a share (with
.0000005 being rolled upward), by surrender of the Note so to be converted in
whole or in part in the manner provided in Section 14.2. A holder of Notes is
not entitled to any rights of a holder of Common Stock until such holder has
converted such holder's Notes to Common Stock and only to the extent such
Notes are deemed to have been converted to Common Stock under this Article
XIV.
Section 14.2 EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON
STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order to
exercise the conversion privilege with respect to any Note in definitive
form, the holder of any such Note to be converted in whole or in part shall
surrender such Note, duly endorsed, at an office or agency maintained by the
Company pursuant to Section 4.2, accompanied by the funds, if any, required
by the penultimate paragraph of this Section 14.2, and shall give written
notice of conversion in the form provided on the form of Note (or such other
notice that is acceptable to the Company) to the office or agency that the
holder elects to convert such Note or the portion thereof specified in said
notice. Such notice shall also state the name or names (with address) in
which the certificate or certificates for shares of Common Stock that shall
be issuable on such conversion shall be issued and shall be accompanied by
transfer taxes, if required pursuant to Section 14.7. Each such Note
surrendered for conversion shall, unless the shares issuable on conversion
are to be issued in the name of the holder of such Note as it appears on the
Note register, be duly endorsed by, or be accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the holder or
his duly authorized attorney.
In order to exercise the conversion privilege with respect to any
interest in a global Note, the beneficial holder must complete the
appropriate instruction form for conversion pursuant to
48
the Depositary's book-entry conversion program and follow the other
procedures set forth in such program.
As promptly as practicable after satisfaction of the requirements
for conversion set forth above, subject to compliance with any restrictions
on transfer if shares issuable on conversion are to be issued in a name other
than that of the Noteholder (as if such transfer were a transfer of the Note
or Notes (or portion thereof) so converted), the Company shall issue and
shall deliver to such holder at the office or agency maintained by the
Company for such purpose pursuant to Section 4.2, a certificate or
certificates for the number of full shares issuable upon the conversion of
such Note (or portion thereof) in accordance with the provisions of this
Article XIV and a check or cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion, as provided
in Section 14.3. In case any Note of a denomination greater than $1,000 shall
be surrendered for partial conversion, and subject to Section 2.3, the
Company shall execute and the Trustee shall authenticate and make available
for delivery to the holder of the Note so surrendered, without charge to him,
a new Note or Notes in authorized denominations in an aggregate principal
amount equal to the unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth
above in this Section 14.2 have been satisfied as to such Note (or portion
thereof), and the person in whose name any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed
to have become on said date the holder of record of the shares represented
thereby; PROVIDED that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the person in whose
name the certificates are to be issued as the record holder thereof for all
purposes on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the
date upon which such Note shall have been surrendered.
Any Note or portion thereof surrendered for conversion during the
period from the close of business on the record date for any interest payment
date through the opening of business on the next succeeding interest payment
date shall (unless such Note or portion thereof being converted shall have
been called for redemption on a date during the period from the close of
business on or after any record date to the close of business on the Business
Day following the corresponding payment date) be accompanied by payment, in
funds acceptable to the Company, of an amount equal to the interest otherwise
payable on such interest payment date on the principal amount being
converted; PROVIDED that no such payment need be made if there shall exist at
the time of conversion an Event of Default under subsection (a) or (b) of
Section 6.1 hereof. An amount equal to such payment shall be paid by the
Company on such interest payment date to the holder of such Note at the close
of business on such record date; PROVIDED that if the Company shall default
in the payment of interest on such interest payment date, such amount shall
be paid to the person who made such required payment. The interest payment
with respect to a Note called for redemption on a date during the period from
the close of business on or after any record date to the close of business on
the Business Day following the corresponding payment date shall be payable on
the corresponding interest payment date to the registered Holder at the close
of business on that record date (notwithstanding the conversion of such Note
49
before the corresponding interest payment date) and a Holder who elects to
convert need not include funds equal to the interest paid. Except as provided
above in this Section 14.2, no adjustment shall be made for interest accrued
on any Note converted or for dividends on any shares issued upon the
conversion of such Note as provided in this Article XIV.
Upon the conversion of an interest in a global Note, the Trustee, or
the Custodian at the direction of the Trustee, shall make a notation on such
global Note as to the reduction in the principal amount represented thereby.
Section 14.3 CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No
fractional shares of Common Stock or scrip representing fractional shares
shall be issued upon conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same holder, the number of
fully paid and non-assessable shares of Common Stock issuable upon conversion
of a Note shall be determined by dividing the aggregate principal amount of
the Note or portion thereof surrendered for conversion by the Conversion
Price in effect at such time. The aggregate number of shares of Common Stock
issuable upon conversion shall be rounded to the nearest 1/100,000th of a
share (with .0000005 being rolled upward). If any fractional share of stock
would be issuable upon the conversion of any Note or Notes, the Company shall
make an adjustment therefor in cash at the current market value thereof. The
current market value of a share of Common Stock shall be determined by
multiplying the fractional share by the Closing Price on the Trading Day
immediately preceding the date on which the Notes (or specified portions
thereof) are deemed to have been converted.
Section 14.4 CONVERSION PRICE. The Conversion Price shall be as
specified in the forms of Notes (herein called the "Conversion Price")
attached as Exhibits A and B hereto, subject to adjustment as provided in
this Article XIV.
Section 14.5 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price
shall be adjusted from time to time by the Company as follows:
(a) In case the Company shall (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii)
subdivide or split its outstanding Common Stock into a greater number of
shares, (iii) combine its outstanding Common Stock into a smaller number of
shares or (iv) issue any shares of capital stock by reclassification of its
Common Stock, the Conversion Price in effect immediately prior thereto shall
be adjusted so that the Holder of any Notes thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock
or other shares of capital stock of the Company that such Holder would have
owned or have been entitled to receive after the occurrence of any of the
events described above had such Notes been surrendered for conversion
immediately prior to the occurrence of such event or the Record Date
therefor, whichever is earlier. An adjustment made pursuant to this
subsection (a) shall become effective immediately after the close of business
on the Record Date for determination of shareholders entitled to receive such
dividend or distribution in the case of a dividend or distribution (except as
provided in Section 14.5(k)) and shall become effective immediately after the
close of business on the effective date in the case of a subdivision, split,
combination or reclassification. Any shares of Common Stock issuable in
payment of a dividend shall be deemed to have been issued immediately prior
to the close of
50
business on the Record Date for such dividend for purposes of calculating the
number of outstanding shares of Common Stock under Sections 14.5(b) and (c).
(b) In case the Company shall issue rights, options or
warrants to all holders of its outstanding shares of Common Stock entitling
them (for a period expiring within 45 days after the date fixed for
determination of shareholders entitled to receive such rights, options or
warrants) to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Price on the Record Date fixed for
determination of shareholders entitled to receive such rights, options or
warrants, the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect at the
opening of business on the day after the Record Date by a fraction the
numerator of which shall be the number of shares of Common Stock outstanding
at the close of business on the Record Date plus the number of shares that
the aggregate offering price of the total number of shares so offered would
purchase at such Current Market Price, and the denominator of which shall be
the number of shares of Common Stock outstanding on the close of business on
the Record Date plus the total number of additional shares of Common Stock so
offered for subscription or purchase. Such adjustment shall become effective
immediately after the opening of business on the day following the Record
Date fixed for determination of shareholders entitled to receive such rights,
options or warrants. To the extent that shares of Common Stock are not
delivered after the expiration or termination of such rights, options or
warrants, the Conversion Price shall be readjusted to the Conversion Price
that would then be in effect had the adjustments made upon the issuance of
such rights, options or warrants been made on the basis of delivery of only
the number of shares of Common Stock actually delivered. In the event that
such rights, options or warrants are not so issued, the Conversion Price
shall again be adjusted to be the Conversion Price that would then be in
effect if such date fixed for the determination of shareholders entitled to
receive such rights, options or warrants had not been fixed. In determining
whether any rights, options or warrants entitle the holders to subscribe for
or purchase shares of Common Stock at less than such Current Market Price,
and in determining the aggregate offering price of such shares of Common
Stock, there shall be taken into account all consideration received for such
rights, options or warrants, the value of such consideration, if other than
cash, to be determined by the Board of Directors.
(c) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately reduced,
and conversely, in case outstanding shares of Common Stock shall be combined
into a smaller number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of capital
stock of the Company (other than any dividends or distributions to which
Section 14.5(a) applies) or evidences of its indebtedness or assets
(including securities, but excluding any rights, options or warrants referred
to in Section 14.5(b), and excluding any dividend or distribution (i) in
connection with the liquidation,
51
dissolution or winding-up of the Company, whether voluntary or involuntary,
(ii) exclusively in cash or (iii) referred to in Section 14.5(a) (any of the
foregoing hereinafter in this Section 14.5(d) called the "Securities")),
then, in each such case, the Conversion Price shall be reduced so that the
same shall be equal to the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on the Record Date
with respect to such distribution by a fraction of which the numerator shall
be the Current Market Price on such date less the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) on such date of the portion of the
Securities so distributed applicable to one share of Common Stock and the
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following
the Record Date; PROVIDED that in the event the then fair market value (as so
determined) of the portion of the Securities so distributed applicable to one
share of Common Stock is equal to or greater than the Current Market Price on
the Record Date, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Noteholder shall have the right to receive upon
conversion the amount of Securities such holder would have received had such
holder converted each Note on such 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 that 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 14.5(d) by reference to the actual or when issued trading market for
any securities comprising all or part of such distribution, it must in doing
so consider the prices in such market over the same period used in computing
the Current Market Price pursuant to Section 14.5(g) to the extent possible.
Notwithstanding the foregoing provisions of this Section 14.5(d), no
adjustment shall be made hereunder for any distribution of Securities if the
Company makes proper provision so that each Noteholder who converts a Note
(or any portion thereof) after the Record Date for determination of
shareholders entitled to receive such distribution shall be entitled to
receive upon such conversion, in addition to the shares of Common Stock
issuable upon such conversion, the amount and kind of Securities that such
holder would have been entitled to receive if such holder had, immediately
prior to such Record Date, converted such Note into Common Stock; PROVIDED
that, with respect to any Securities that are convertible, exchangeable or
exercisable, the foregoing provision shall only apply to the extent (and so
long as) the Securities receivable upon conversion of such Note would be
convertible, exchangeable or exercisable, as applicable, without any loss of
rights or privileges for a period of at least 60 days following conversion of
such Note.
Rights, options 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
specified circumstances), which rights, options or warrants, until the
occurrence of a specified event or events (the "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 not be deemed distributed for purposes of this Section
14.5(d) (and no adjustment to the Conversion Price under Section 14.5(d)
shall be required) until the occurrence of the earliest Trigger Event. In
addition, in the event of any distribution of rights, options or warrants, or
any Trigger Event with respect thereto, that shall have resulted in an
adjustment to the Conversion Price under this Section 14.5(d), (1) in the
case of any such rights, options or warrants that shall all have been
redeemed or repurchased without exercise by
52
any holders thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution, equal to
the per share redemption or repurchase price received by a holder of Common
Stock with respect to such rights, options or warrants (assuming such holder
had retained such rights, options 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, options or warrants all of which shall have expired or been
terminated without exercise by any holder thereof, the Conversion Price shall
be readjusted as if such issuance had not occurred.
For purposes of this Section 14.5(d) and Sections 14.5(a) and (b),
any dividend or distribution to which this Section 14.5(d) is applicable that
also includes shares of Common Stock, or rights, options or warrants to
subscribe for or purchase shares of Common Stock (or both), shall be deemed
instead to be (i) a dividend or distribution of the evidences of
indebtedness, assets or shares of capital stock other than such shares of
Common Stock or rights, options or warrants (and any Conversion Price
reduction required by this Section 14.5(d) with respect to such dividend or
distribution shall then be made) immediately followed by (ii) a dividend or
distribution of such shares of Common Stock or such rights, options or
warrants (and any further Conversion Price reduction required by Sections
14.5(a) and (b) with respect to such dividend or distribution shall then be
made) except (1) the Record Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of shareholders entitled
to receive such dividend or distribution" and "the date fixed for such
determination" within the meaning of Sections 14.5(a) and (b) and (2) any
shares of Common Stock included in such dividend or distribution shall not be
deemed "outstanding at the close of business on the date fixed for such
determination" within the meaning of Section 14.5(a).
(e) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash that
is distributed upon a merger or consolidation to which Section 14.6 applies
or as part of a distribution referred to in Section 14.5(d) for which an
adjustment to the Conversion Price is provided therein) in an aggregate
amount that, together with (i) the aggregate amount of any other such
distributions to all holders of its Common Stock made exclusively in cash
within the 12 months preceding the date of payment of such distribution, and
in respect of which no adjustment pursuant to this Section 14.5(e) has been
made, and (ii) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) of consideration payable in respect of
any tender offer, by the Company or any of its subsidiaries for all or any
portion of the Common Stock concluded within the 12 months preceding the date
of payment of such distribution, and in respect of which no adjustment
pursuant to Section 14.5(f) has been made, exceeds 20.0% of the product of
the Current Market Price (determined as provided in Section 14.5(g)) on the
Record Date with respect to such distribution times the number of shares of
Common Stock outstanding on such date, then, and in each such case,
immediately after the close of business on such date, unless the Company
elects to reserve such cash for distribution to the holders of the Notes upon
the conversion of the Notes so that any such holder converting Notes shall
receive upon such conversion, in addition to the shares of Common Stock to
which such holder is entitled, the amount of cash that such holder would have
received if such holder had, immediately prior to the Record Date for such
distribution of cash, converted its Notes into Common Stock, the Conversion
Price shall be reduced so that the same
53
shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on such date by a fraction
(1) the numerator of which shall be equal to the Current Market Price on the
Record Date less an amount equal to the quotient of (x) the excess of such
combined amount over such 20.0% and (y) the number of shares of Common Stock
outstanding on the Record Date and (2) the denominator of which shall be
equal to the Current Market Price on such date; PROVIDED that in the event
the portion of the cash so distributed applicable to one share of Common
Stock is equal to or greater than the Current Market Price of the Common
Stock on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Noteholder shall have the right to
receive upon conversion the amount of cash such holder would have received
had such holder converted each Note on the 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 that would then be in
effect if such dividend or distribution had not been declared.
(f) In case a tender offer made by the Company or any of
its subsidiaries for all or any portion of the Common Stock shall expire and
such tender offer (as amended upon the expiration thereof) shall require the
payment to shareholders (based on the acceptance (up to any maximum specified
in the terms of the tender offer) of Purchased Shares (as defined below)) of
an aggregate consideration having a fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described in
a Board Resolution) that combined together with (1) the aggregate of the cash
plus the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution), as of
the expiration of such tender offer, of consideration payable in respect of
any other tender offer, by the Company or any of its subsidiaries for all or
any portion of the Common Stock expiring within the 12 months preceding the
expiration of such tender offer, and in respect of which no adjustment
pursuant to this Section 14.5(f) has been made, and (ii) the aggregate amount
of any distributions to all holders of the Company's Common Stock made
exclusively in cash within 12 months preceding the expiration of such tender
offer, and in respect of which no adjustment pursuant to Section 14.5(e) has
been made, exceeds 20.0% of the product of the Current Market Price as of the
last time (the "Expiration Time") tenders could have been made pursuant to
such tender offer (as it may be amended) times the number of shares of Common
Stock outstanding (including any tendered shares) on the Expiration Time,
then, and in each such case, immediately prior to the opening of business on
the day after the date of the Expiration Time, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on the
date of the Expiration Time by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding (including any tendered shares)
on the Expiration Time multiplied by the Current Market Price of the Common
Stock on the Trading Day next succeeding the Expiration Time and the
denominator shall be the sum of (1) the fair market value (determined as
aforesaid) of the aggregate consideration payable to shareholders 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 (2) the product of the number of shares of Common
Stock outstanding (less any Purchased Shares) on the Expiration Time and the
Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, such reduction to become effective immediately prior to
the opening of business on the day following the Expiration Time. In the
event that the Company is obligated to purchase shares
54
pursuant to any such tender offer, but the Company is permanently prevented
by applicable law from effecting any such purchases or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price that would then be in effect if such tender offer had not been made.
(g) For purposes of this Section 14.5, the following terms
shall have the meaning indicated:
(i) "Closing Price" with respect to any securities on
any day shall mean the closing sale price regular way on such day
or, in case no such sale takes place on such day, the average of the
reported closing bid and asked prices, regular way, in each case on
the New York Stock Exchange, or, if such security is not listed or
admitted to trading on such Exchange, on the principal national
security exchange or quotation system on which such security is
quoted or listed or admitted to trading, or, if not quoted or listed
or admitted to trading on any national securities exchange or
quotation system, the average of the closing bid and asked prices of
such security on the over-the-counter market on the day in question
as reported by the National Quotation Bureau Incorporated, or a
similar generally accepted reporting service, or if not so
available, in such manner as furnished by any New York Stock
Exchange member firm selected from time to time by the Board of
Directors for that purpose, or a price determined in good faith by
the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution.
(ii) "Current Market Price" shall mean the average of
the daily Closing Prices per share of Common Stock for the ten
consecutive Trading Days immediately prior to the date in question;
PROVIDED that (1) if the "ex" date (as hereinafter defined) for any
event (other than the issuance or distribution or other event
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 14.5(a), (b), (c), (d), (e) or
(f) occurs during such ten consecutive Trading Days, the Closing
Price for each Trading Day prior to the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the
same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (2) if the "ex" date for
any event (other than the issuance, distribution or other event
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 14.5(a), (b), (c), (d), (e) or
(f) occurs on or after the "ex" date for the issuance or
distribution requiring such computation and prior to the day in
question, the Closing Price for each Trading Day on and after the
"ex" date for such other event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the
Conversion Price is so required to be adjusted as a result of such
other event and (3) if the "ex" date for the issuance, distribution
or other event requiring such computation is prior to the day in
question, after taking into account any adjustment required pursuant
to clause (1) or (2) of this proviso, the Closing Price for each
Trading Day on or after such "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value (as
determined by the Board of Directors in a manner consistent with any
determination of such value
55
for purposes of Section 14.5(d) or (f), whose determination shall be
conclusive and described in a Board Resolution) of the evidences of
indebtedness, shares of capital stock or assets being distributed
applicable to one share of Common Stock as of the close of business
on the day before such "ex" date. For purposes of any computation
under Section 14.5(f), the Current Market Price of the Common Stock
on any date shall be deemed to be the average of the daily Closing
Prices per share of Common Stock for such day and the next two
succeeding Trading Days; PROVIDED that if the "ex" date for any
event (other than the tender or exchange offer requiring --------
such computation) that requires an adjustment to the Conversion
Price pursuant to Section 14.5(a), (b), (c), (d), (e) or (f) occurs
on or after the Expiration Time for the tender or exchange offer
requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the "ex" date for
such other event shall be adjusted by multiplying such Closing Price
by the reciprocal of the fraction by which the Conversion Price is
so required to be adjusted as a result of such other event. For
purposes of this paragraph, the term "ex" date, (x) when used with
respect to any issuance or distribution, means the first date on
which the Common Stock trades regular way on the relevant exchange
or in the relevant market from which the Closing Price was obtained
without the right to receive such issuance or distribution, (y) when
used with respect to any subdivision or combination of shares of
Common Stock, means the first date on which the Common Stock trades
regular way on such exchange or in such market after the time at
which such subdivision or combination becomes effective and (z) when
used with respect to any tender or exchange offer means the first
date on which the Common Stock trades regular way on such exchange
or in such market after the expiration of such offer.
Notwithstanding the foregoing, whenever successive adjustments to
the Conversion Price are called for pursuant to this Section 14.5,
such adjustments shall be made to the Current Market Price as may be
necessary or appropriate to effectuate the intent of this Section
14.5 and to avoid unjust or inequitable results as determined in
good faith by the Board of Directors.
(iii) "Fair market value" shall mean the amount that a
willing buyer would pay a willing seller in an arm's-length
transaction.
(iv) "Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the
holders of Common Stock have the right to receive any cash,
securities or other property or in which the Common Stock (or other
applicable security) is exchanged for or converted into any
combination of cash, securities or other property, the date fixed
for determination of shareholders entitled to receive such cash,
securities or other property (whether such date is fixed by the
Board of Directors or by statute, contract or otherwise).
(v) "Trading Day" shall mean (1) if the applicable
security is listed or admitted for trading on the New York Stock
Exchange or another national security exchange, a day on which the
New York Stock Exchange or such other national security exchange is
open for business or (2) if the applicable
56
security is quoted on the Nasdaq National Market, a day on which
trades may be made thereon or (3) if the applicable security is not
so listed, admitted for trading or quoted, any day other than a
Saturday or Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
(h) The Company may make such reductions in the Conversion
Price, in addition to those required by Sections 14.5(a), (b), (c), (d), (e)
and (f), as the Board of Directors considers to be advisable to avoid or
diminish any income tax to holders of Common Stock or rights to purchase
Common Stock resulting from any dividend or distribution of stock (or rights
to acquire stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to time may
reduce the Conversion Price by any amount for any period of time if the
period is at least 20 Business Days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive and described in a Board Resolution. Whenever the
Conversion Price is reduced pursuant to the preceding sentence, the Company
shall mail to the Trustee and all holders of record of the Notes a notice of
the reduction at least 15 days prior to the date the reduced Conversion Price
takes effect, and such notice shall state the reduced Conversion Price and
the period it shall be in effect.
(i) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1%
in such price; PROVIDED that any adjustments that by reason of this Section
14.5(i) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article XIV
shall be made by the Company and shall be made to the nearest 1/100,000 (with
0.0000005 being rolled upward).
No adjustment need be made for a change in the par value, or to or
from no par value, of the Common Stock.
To the extent the Notes become convertible into cash, assets,
property or securities (other than Common Stock of the Company), no
adjustment need be made thereafter as to the cash, assets, property or such
securities (except as such securities may otherwise by their terms provide),
and interest shall not accrue on such cash.
(j) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Trustee and any conversion
agent other than the Trustee an Officers' Certificate setting forth the
Conversion Price both before and after such adjustment and setting forth in
reasonable detail the facts upon which such adjustment is based. Promptly
after delivery of such certificate, the Company shall prepare a notice of
such adjustment of the Conversion Price setting forth the adjusted Conversion
Price and the date on which each adjustment becomes effective and shall mail
such notice of such adjustment of the Conversion Price to the holder of each
Note at his last address appearing on the Note register provided for in
Section 2.5, within 20 days after execution thereof. Failure to deliver such
notice shall not affect the legality or validity of any such adjustment.
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(k) In any case in which this Section 14.5 provides that an
adjustment shall become effective immediately after a Record Date for an
event, the Company may defer until the occurrence of such event (i) issuing
to the holder of any Note converted after such Record Date and before the
occurrence of such event the additional shares of Common Stock issuable upon
such conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such holder any amount in cash in lieu of
any fraction pursuant to Section 14.3.
Section 14.6 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any of the following events occur, namely (a) any reclassification
or change of outstanding shares of Common Stock (other than a change in par
value, or to or from no par value, as a result of a subdivision or
combination), (b) any consolidation, merger or combination of the Company
with another person as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets (including
cash) with respect to or in exchange for such Common Stock or (c) any sale or
conveyance of the properties and assets of the Company as, or substantially
as, an entirety (determined on a consolidated basis) to any other person as a
result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock, then the Company or the successor or
purchasing person, as the case may be, shall execute with the Trustee a
supplemental indenture (which shall comply with the Trust Indenture Act as in
force at the date of execution of such supplemental indenture if such
supplemental indenture is then required to so comply) providing that the
Notes shall be convertible into the kind and amount of shares of stock and
other securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or
conveyance by a holder of a number of shares of Common Stock issuable upon
conversion of such Notes (assuming, for such purposes, a sufficient number of
authorized shares of Common Stock available to convert all such Notes)
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance, assuming such holder of Common Stock did not
exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance (PROVIDED
that, if the kind or amount of securities, cash or other property receivable
upon such reclassification, change, consolidation, merger, combination, sale
or conveyance is not the same for each share of Common Stock in respect of
which such rights of election shall not have been exercised ("non-electing
share"), then for the purposes of this Section 14.6 the kind and amount of
securities, cash or other property receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance for each
non-electing share shall be deemed to be the kind and amount so receivable
per share by a plurality of the non-electing shares). Such supplemental
indenture shall provide for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article XIV.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on
the Note register provided for in Section 2.5, within 20 days after execution
thereof. Failure to deliver such notice shall not affect the legality or
validity of such supplemental indenture.
The above provisions of this Section 14.6 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
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Section 14.7 TAXES ON SHARES ISSUED. The issuance of stock
certificates on conversions of Notes shall be made without charge to the
converting Noteholder for any transfer or similar tax in respect of the issue
thereof. The Company shall not, however, be required to pay any tax that may
be payable in respect of any transfer involved in the issue and delivery of
stock in any name other than that of the holder of any Note converted, and
the Company shall not be required to issue or deliver any such stock
certificate unless and until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
Section 14.8 RESERVATION OF SHARES; SHARES TO BE FULLY PAID; LISTING
OF COMMON STOCK. The Company shall provide, free from preemptive rights, out
of its authorized but unissued shares or shares held in treasury, sufficient
shares to provide for the conversion of the Notes from time to time as such
Notes are presented for conversion.
Before taking any action that would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common
Stock issuable upon conversion of the Notes, the Company shall take all
corporate action that may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue shares of such Common
Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock that may be
issued upon conversion of Notes shall, upon issuance, be fully paid and
nonassessable by the Company and free from all taxes, liens and charges with
respect to the issuance thereof.
The Company further covenants that it shall, if permitted by the
rules of the Nasdaq National Market and each securities exchange upon which
the Common Stock is listed or quoted, list and keep listed or have and keep
quoted, so long as the Common Stock shall be so listed or quoted on such
market and exchange or exchanges, all Common Stock issuable upon conversion
of the Notes.
Section 14.9 RESPONSIBILITY OF TRUSTEE. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist that may require any
adjustment of the Conversion Price, or with respect to the nature or extent
or calculation of any such adjustment when made, or with respect to the
method employed, or herein or in any supplemental indenture provided to be
employed, in making the same. The Trustee and any other conversion agent
shall not be accountable with respect to the validity or value (or the kind
or amount) of any shares of Common Stock, or of any securities or property,
that may at any time be issued or delivered upon the conversion of any Note;
and the Trustee and any other conversion agent make no representations with
respect thereto. Subject to the provisions of Section 7.1, neither the
Trustee nor any conversion agent shall be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property or cash upon the surrender of
any Note for the purpose of conversion or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article XIV.
Without limiting the generality of the foregoing, neither the Trustee nor any
conversion agent shall be under any responsibility to
59
determine whether a supplemental indenture under Section 14.6 needs to be
entered into or the correctness of any provisions contained in any
supplemental indenture entered into pursuant to Section 14.6 relating either
to the kind or amount of shares of stock or securities or property (including
cash) receivable by Noteholders upon the conversion of their Notes after any
event referred to in such Section 14.6 or to any adjustment to be made with
respect thereto, but, subject to the provisions of Section 7.1, may accept as
conclusive evidence of the correctness of any such provisions, and shall be
protected in relying upon, the Officers' Certificate (which the Company shall
be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.
Section 14.10 NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. If:
(a) the Company makes any distribution or dividend that
would require an adjustment in the Conversion Price pursuant to Section 14.5;
or
(b) the Company takes any action that would require a
supplemental indenture pursuant to Section 14.6; or
(c) there shall occur the voluntary or involuntary
dissolution, liquidation or winding-up of the Company,
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register, as promptly as
possible but in any event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (i) the date on which a record is to
be taken for the purpose of such dividend, distribution, rights, options or
warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution, rights, options or warrants are to be determined or (ii) the
date on which such reclassification, change, consolidation, merger, sale,
conveyance, transfer, dissolution, liquidation or winding-up is expected to
become effective or occur and the date as of which it is expected that
holders of record of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such
reclassification, change, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding-up. Neither the failure to give such
notice nor any defect therein shall affect the legality or validity of the
proceedings referenced in clauses (a) through (c) of this Section 14.10.
ARTICLE XV
SUBORDINATION
Section 15.1 AGREEMENT TO SUBORDINATE. The Company agrees, and each
Noteholder by accepting a Note agrees, that the indebtedness evidenced by the
Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article XV, to the prior payment in full of all Senior
Indebtedness and that the subordination is for the benefit of the holders of
Senior Indebtedness.
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Section 15.2 CERTAIN DEFINITIONS. For purposes of this Article XV,
the following terms shall have the meaning indicated:
(a) "Representative" shall mean the indenture trustee or
other trustee, agent or representative for any Senior Indebtedness.
(b) "Senior Indebtedness" with respect to the Notes means
the principal of, premium, if any, and interest on, and any fees, costs,
expenses and any other amounts (including indemnity payments) related to the
following, whether outstanding on the date hereof or hereafter incurred or
created: (i) indebtedness, matured or unmatured, whether or not contingent,
of the Company for money borrowed evidenced by notes or other written
obligations, (ii) any interest rate contract, interest rate swap agreement or
other similar agreement or arrangement designed to protect the Company or any
of its subsidiaries against fluctuations in interest rates, (iii)
indebtedness, matured or unmatured, whether or not contingent, of the Company
evidenced by notes, debentures, bonds or similar instruments or letters of
credit (or reimbursement agreements in respect thereof), (iv) obligations of
the Company as lessee under capitalized leases and under leases of property
made as part of any sale and leaseback transactions, (v) indebtedness of
others of any of the kinds described in the preceding clauses (i) through
(iv) assumed or guaranteed by the Company and (vi) renewals, extensions,
modifications, amendments, and refundings of, and indebtedness and
obligations of a successor person issued in exchange for or in replacement
of, indebtedness or obligations of the kinds described in the preceding
clauses (i) through (v), unless the agreement pursuant to which any such
indebtedness described in clauses (i) through (v) is created, issued, assumed
or guaranteed expressly provides that such indebtedness is not senior or
superior in right of payment to the Notes; PROVIDED that the following shall
not constitute Senior Indebtedness: (1) any indebtedness or obligation of the
Company in respect of the Notes, (2) any indebtedness of the Company to any
of its subsidiaries or other Affiliates; (3) any indebtedness that is
subordinated or junior in any respect to any other indebtedness of the
Company; and (4) any indebtedness incurred for the purchase of goods or
materials in the ordinary course of business.
For the purposes of this Indenture, Senior Indebtedness shall not be
deemed to have been paid in full until the holders of the Senior Indebtedness
shall have indefeasibly received payment in full in cash of all Senior
Indebtedness; PROVIDED that if any holder of Senior Indebtedness agrees to
accept payment in full of such Senior Indebtedness for consideration other
than cash, such holder shall be deemed to have indefeasibly received payment
in full of such Senior Indebtedness. The provisions of this Article XV shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Senior Indebtedness is rescinded or must otherwise
be returned by any holder of Senior Indebtedness upon the insolvency,
bankruptcy or organization of the Company or otherwise, all as though such
payment had not been made.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
Section 15.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any
distribution to creditors of the Company in a liquidation or dissolution of
the Company or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or its property, in an assignment
for the benefit of creditors or any marshalling of the Company's
61
assets and liabilities, (a) holders of Senior Indebtedness shall be entitled
to receive payment in full of all amounts due or to become due thereon before
Noteholders shall be entitled to receive any payment with respect to the
principal of, premium, if any, or interest on the Notes (except that
Noteholders may receive securities that are subordinated to at least the same
extent as the Notes to Senior Indebtedness and any securities issued in
exchange for Senior Indebtedness) and (b) until all Senior Indebtedness (as
provided in clause (a) above) is paid in full, any distribution to which
Noteholders would be entitled but for this Article shall be made to holders
of Senior Indebtedness (except that Noteholders may receive securities that
are subordinated to at least the same extent as the Notes to Senior
Indebtedness and any securities issued in exchange for Senior Indebtedness),
as their interests may appear.
Section 15.4 DEFAULT ON SENIOR INDEBTEDNESS. The Company may not
make any payment upon or in respect of the Notes (except in such subordinated
securities) and may not acquire from the Trustee or any Noteholder any Note
for cash or property (other than securities that are subordinated to at least
the same extent as the Note to Senior Indebtedness and any securities issued
in exchange for Senior Indebtedness) until all Senior Indebtedness has been
paid in full if:
(a) a default in the payment of the principal of, premium,
if any, or interest on Senior Indebtedness occurs and is continuing beyond
any applicable period of grace (a "Payment Default"); or
(b) a default, other than a Payment Default, on Senior
Indebtedness occurs and is continuing that permits holders of the Senior
Indebtedness as to which such default relates to accelerate its maturity (a
"Nonpayment Default") and the Trustee receives a notice of the default (a
"Payment Blockage Notice") from the Representative or Representatives of
holders of at least a majority in principal amount of Senior Indebtedness
then outstanding. No Nonpayment Default that existed or was continuing on the
date of delivery of any such Payment Blockage Notice to the Trustee shall be,
or be made, the basis for a subsequent Payment Blockage Notice. No new period
of payment blockage may be commenced within 360 days after the receipt by the
Trustee of any prior Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(i) in the case of a Payment Default, upon the date on
which the default is cured or waived, or
(ii) in the case of a Nonpayment Default, 179 days after
the date on which the applicable Payment Blockage Notice is
received, unless the maturity of such Senior Indebtedness has been
accelerated,
if this Article XV otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
Section 15.5 WHEN DISTRIBUTION MUST BE PAID OVER. Subject to the
provisions of Section 15.11, if the Trustee (or paying agent if other than
the Trustee) or any Noteholder
62
receives any payment of principal of, premium, if any, or interest with
respect to the Notes at a time when such payment is prohibited by Section
15.3 or 15.4 hereof, such payment shall be held by the Trustee (or paying
agent if other than the Trustee) or such Noteholder, in trust for the benefit
of, and immediately shall be paid over and delivered, upon written request,
to the holders of Senior Indebtedness as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to
which Senior Indebtedness may have been issued, as their respective interests
may appear, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all Senior Indebtedness in
full in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article XV, 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. The Trustee
shall not be liable to any such holders of Senior Indebtedness if the Trustee
shall pay over or distribute to or on behalf of Noteholders or the Company or
any other person money or assets to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article XV.
Section 15.6 NOTICE BY COMPANY. The Company shall promptly notify
the Trustee and the paying agent of any facts known to the Company that would
cause a payment of any principal or interest with respect to the Notes to
violate this Article XV, but failure to give such notice shall not affect the
subordination of the Notes to the Senior Indebtedness as provided in this
Article XV.
Section 15.7 SUBROGATION. After all Senior Indebtedness is paid in
full and until the Notes are paid in full, Noteholders shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Notes)
to the rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness to the extent that distributions otherwise
payable to the Noteholders have been applied to the payment of Senior
Indebtedness. A distribution made under this Article XV to holders of Senior
Indebtedness that otherwise would have been made to Noteholders is not, as
between the Company and Noteholders, a payment by the Company on the Notes.
Section 15.8 RELATIVE RIGHTS. This Article XV defines the relative
rights of Noteholders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(a) impair, as between the Company and the Noteholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of, premium, if any, and interest on the Notes in accordance with
their terms;
(b) affect the relative rights of Noteholders and creditors
of the Company other than their rights in relation to holders of Senior
Indebtedness; or
63
(c) prevent the Trustee or any Noteholder from exercising
its available remedies upon a default or Event of Default, subject to the
rights of holders and owners of Senior Indebtedness to receive distributions
and payments otherwise payable to Noteholders.
If the Company fails because of this Article XV to pay principal of,
premium, if any, or interest on a Note on the due date, the failure is still
a default or Event of Default.
Section 15.9 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right
of any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any holder of Notes or by the failure of the Company
or any holder of Notes to comply with this Indenture.
Section 15.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred
to in this Article XV, the Trustee and the Noteholders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other person making any distribution to the Trustee or to the
Noteholders 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, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XV.
Section 15.11 RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
the provisions of this Article XV or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
that would prohibit the making of any payment or distribution by the Trustee,
and the Trustee and the paying agent may continue to make payments on the
Notes, unless a Responsible Officer shall have received at the Corporate
Trust Office at least three Business Days prior to the date of such payment
written notice of facts that would cause the payment of any principal,
premium, if any, and interest with respect to the Notes to violate this
Article XV. Only the Company or a Representative may give the notice. Nothing
in this Article XV shall impair the claims of, or payments to, the Trustee
under or pursuant to this Indenture, including, without limitation, Section
7.7 hereof.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing such person to be a holder of Senior
Indebtedness (or a trustee or agent on behalf of such holder) to establish
that such notice has been given by a holder of Senior Indebtedness (or a
trustee or agent on behalf of any such holder). 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 XV, 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 XV, and if such evidence is not furnished, the Trustee may defer
any payment which it may be required to make for the benefit of such person
pursuant to the
64
terms of this Indenture pending judicial determination as to the rights of
such person to receive such payment.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
paying agent, any authenticating agent, any conversion agent, any Note
registrar and their successors may do the same with like rights.
Section 15.12 AUTHORIZATION TO EFFECT SUBORDINATION. Each holder of
a Note 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 effect subordination as provided in this Article XV and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such
purposes. Without limiting the foregoing, each Representative is hereby
irrevocably authorized and empowered (in its own name or in the name of the
Noteholders or the Trustee or otherwise), but shall have no obligation, to
demand, ▇▇▇ for, collect and receive every payment or distribution referred
to in Section 15.3 above and give acquittance therefor and to file claims and
proofs of claim and take such other action as it may deem necessary or
advisable for the exercise or enforcement of any of the rights or interests
of the holders or owners of the Senior Indebtedness hereunder; PROVIDED that
for purposes of this Section 15.12 holders or owners of Senior Indebtedness
may act only through such Representative.
Section 15.13 CONVERSIONS NOT DEEMED PAYMENT. For the purposes of
this Article XV only, the issuance and delivery of Common Stock upon
conversion of the Notes in accordance with Article XIV shall not be deemed to
constitute a payment or distribution on account of the principal of or
interest on the Notes or on account of the purchase or other acquisition of
Notes. Nothing contained in this Article or elsewhere in this Indenture or in
the Notes 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 Note to convert such Note
in accordance with Article XIV.
Section 15.14 AMENDMENTS. The provisions of this Article XV shall
not be amended or modified without the written consent of the holders of
Senior Indebtedness.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 PROVISIONS BINDING ON COMPANY'S SUCCESSORS. All the
covenants, stipulations, promises and agreements in this Indenture made by
the Company shall bind its successors and assigns whether so expressed or not.
Section 16.2 OFFICIAL ACTS BY SUCCESSOR COMPANY. Any act or
proceeding by any provision of this Indenture authorized or required to be
done or performed by any board (including the Board of Directors), committee
or officer of the Company shall and may be done and performed with like force
and effect by the like board, committee or officer of any corporation that
shall at the time be the lawful sole successor of the Company.
65
Section 16.3 ADDRESSES FOR NOTICES, ETC. Any notice or demand that
by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Notes on the Company shall be
deemed to have been sufficiently given or made, for all purposes if given or
served by being sent by prepaid overnight delivery or being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until another address is filed by the Company with the Trustee) to Net.B@nk,
Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief
Executive Officer with a copy to Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇, Esq. Any notice, direction, request or demand hereunder to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or served by being sent by prepaid overnight delivery or
being deposited postage prepaid by registered or certified mail in a post
office letter box addressed to the Corporate Trust Office of the Trustee,
which office is, at the date as of which this Indenture is dated, located at
▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed
to him by first class mail, postage prepaid, at the address of such
Noteholder as it appears on the Note register and shall be sufficiently given
to such Noteholder if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other
Noteholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 16.4 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Noteholders may communicate pursuant to Trust Indenture Act Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
the Notes. The Company, the Trustee, the Note registrar and any other person
shall have the protection of Trust Indenture Act Section 312(c).
Section 16.5 GOVERNING LAW. This Indenture and each Note shall be
deemed to be a contract made under the substantive laws of New York and for
all purposes shall be construed in accordance with the substantive laws of
New York without regard to conflicts of laws principles thereof.
Section 16.6 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT;
CERTIFICATES TO TRUSTEE. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture,
including those actions set forth in Trust Indenture Act Section 314(c), the
Company shall furnish to the Trustee an Officers' Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with, and an Opinion of Counsel
stating that, in the Opinion of such Counsel, all such conditions precedent
have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture shall
66
include: (a) a statement that the person making such certificate or opinion
has read such covenant or condition, (b) a brief statement as to the nature
and scope of the examination or investigation upon which the statement or
opinion contained in such certificate or opinion is based, (c) a statement
that, in the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been complied with and (d) a
statement as to whether or not, in the opinion of such person, such condition
or covenant has been complied with.
Section 16.7 LEGAL HOLIDAYS. In any case where any interest payment
date, date fixed for redemption, stated maturity or Change of Control
Purchase Date of any Note or the last date on which a Holder has the right to
convert his Notes shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Notes) payment of interest or
principal (and premium, if any) or conversion of the Notes need not be made
on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the interest payment date, date fixed for
redemption, Change of Control Purchase Date, or at the stated maturity, or on
such last day for conversion; PROVIDED that no interest shall accrue for the
period from and after such interest payment date, date fixed for redemption,
Change of Control Purchase Date or stated maturity, as the case may be.
Section 16.8 NO SECURITY INTEREST CREATED. Nothing in this Indenture
or in the Notes, expressed or implied (other than the lien granted to the
Trustee pursuant to Section 7.7), shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction where property of the
Company or its subsidiaries is located.
Section 16.9 TRUST INDENTURE ACT. This Indenture is hereby made
subject to, and shall be governed by, the provisions of the Trust Indenture
Act required to be part of and to govern indentures qualified under the Trust
Indenture Act.
Section 16.10 TRUST INDENTURE ACT CONTROLS. If any provision of this
Indenture limits, qualifies, or conflicts with the duties imposed by
operation of the Trust Indenture Act, the imposed duties, upon qualification
of this Indenture under the Trust Indenture Act, shall control.
Section 16.11 BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, expressed or implied, shall give to any person, other than the
parties hereto, any paying agent, any authenticating agent, any conversion
agent, any Note registrar and their successors hereunder and the holders of
Notes, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 16.12 TABLE OF CONTENTS, HEADINGS, ETC. The table of
contents and the titles 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.
Section 16.13 AUTHENTICATING AGENT. The Trustee may appoint an
authenticating agent that shall be authorized to act on its behalf and
subject to its direction in the authentication and
67
delivery of Notes in connection with the original issuance thereof and
transfers and exchanges of Notes hereunder, including under Sections 2.4,
2.5, 2.6, 2.7 and 3.3, as fully to all intents and purposes as though the
authenticating agent had been expressly authorized by this Indenture and
those Sections to authenticate and deliver Notes. For all purposes of this
Indenture, the authentication and delivery of Notes by the authenticating
agent shall be deemed to be authentication and delivery of such Notes "by the
Trustee" and a certificate of authentication executed on behalf of the
Trustee by an authenticating agent shall be deemed to satisfy any requirement
hereunder or in the Notes for the Trustee's certificate of authentication.
Such authenticating agent shall at all times be a person eligible to serve as
Trustee hereunder pursuant to Section 7.10.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating
agent shall be a party, or any corporation succeeding to the corporate trust
business of any authenticating agent, shall be the successor of the
authenticating agent hereunder, if such successor company is otherwise
eligible under this Section, without the execution or filing of any paper or
any further act on the part of the parties hereto or the authenticating agent
or such successor company.
Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at
any time terminate the agency of any authenticating agent by giving written
notice of termination to such authenticating agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time any authenticating agent shall cease to be eligible under this
Section, the Trustee shall promptly appoint a successor authenticating agent
(which may be the Trustee), shall give written notice of such appointment to
the Company and shall mail notice of such appointment to all holders of Notes
as the names and addresses of such holders appear on the Note register.
The Company agrees to pay to the authenticating agent from time to
time reasonable compensation for its services.
The provisions of Sections 7.3, 7.4, 7.5, 8.3 and this Section 16.13
shall be applicable to any authenticating agent.
Section 16.14 EXECUTION IN COUNTERPARTS. This Indenture may be
executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same
instrument.
SunTrust Bank, Atlanta hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly signed and attested, all as of the date first written above.
68
NET.B@NK, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇
------------------------------
Name: ▇.▇. ▇▇▇▇▇▇
Title: Vice Chairman and Chief
Executive Officer
Attest:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Secretary
69
SUNTRUST BANK,
ATLANTA, as Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
By:
------------------------------
Name:
Title:
70
EXHIBIT A - FORM OF DEFINITIVE NOTE
[FORM OF FACE OF NOTE]
No. A-1 $
-------------------
CUSIP No. 64107J AA4
NET.B@NK, INC.
4 3/4% Convertible Subordinated Notes Due 2004
THIS NOTE AND ANY SHARES OF COMMON STOCK OF NET.B@NK, INC. ISSUABLE
UPON CONVERSION OF THIS NOTE ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR
OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
NET.B@NK, INC., a corporation duly organized and validly existing under
the laws of the State of Georgia (the "Company"), which term includes any
Successor Company under the Indenture referred to on the reverse hereof, for
value received hereby promises to pay to ___________ ________________, or
registered assigns, the principal sum of ______________________________________
Dollars on June 1, 2004, at the Corporate Trust Office of the Trustee or at the
option of the holder of this Note, at any other office or agency of the Company
maintained for that purpose pursuant to the Indenture, in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts, and to pay interest, semi-annually
on June 1 and December 1 of each year, commencing December 1, 1999, on said
principal sum at said office or agency, in like coin or currency, at the rate
per annum specified in the title of this Note, from the June 1 or December 1 as
the case may be, next preceding the date of this Note to which interest has been
paid or duly provided for, unless the date hereof is a date to which interest
has been paid or duly provided for, in which case from the date of this Note, or
unless no interest has been paid or duly provided for on the Notes, in which
case from June 9, 1999, until payment of said principal sum has been made or
duly provided for; PROVIDED that if the Company shall default in the payment of
interest due on such June 1 or December 1, then this Note shall bear interest
from the next preceding June 1 or December 1 to which interest has been paid or
duly provided for or, if no interest has been paid or duly provided for on such
Note, from June 9, 1999. The interest so payable on any June 1 or December 1
will be paid to the person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the record date, which shall be
the May 15 or November 15 (whether or not a Business Day) next preceding such
June 1 or December 1, respectively; PROVIDED that any such interest not
punctually paid or duly provided for shall be payable as provided in the
Indenture. Interest shall be paid by check mailed to the registered holder at
the registered address of such person unless other arrangements are made in
accordance with the provisions of the Indenture.
A-1
Reference is made to the further provisions of this Note set forth on
the reverse hereof, including, without limitation, provisions giving the holder
of this Note the right to convert this Note into Common Stock of the Company on
the terms and subject to the limitations referred to on the reverse hereof and
as more fully specified in the Indenture. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of said State, without regard to conflicts of laws
principles thereof.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee, or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
NET.B@NK, INC.
By:
------------------------------------
Name:
Title:
Attest:
---------------------------
Secretary
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Notes described in the within-named Indenture.
SUNTRUST BANK, ATLANTA, as Trustee
By:
------------------------------------
Authorized Signatory
A-2
[FORM OF REVERSE OF NOTE]
NET.B@NK, INC.
4 3/4% Convertible Subordinated Notes Due 2004
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 4 3/4% Convertible Subordinated Notes Due 2004 (herein called
the "Notes"), limited to the aggregate principal amount of $100,000,000 (which
may be increased to $115,000,000 if the underwriters' overallotment option
issued in connection with the public offering of the Notes is exercised in full)
all issued or to be issued under and pursuant to an Indenture dated as of June
9, 1999 (the "Indenture"), between the Company and SunTrust Bank, Atlanta, as
trustee (the "Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a complete description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Notes. Each Note is subject to, and
qualified by, all such terms as set forth in the Indenture certain of which are
summarized hereon and each holder of a Note is referred to the corresponding
provisions of the Indenture for a complete statement of such terms. To the
extent that there is any inconsistency between the summary provisions set forth
in the Notes and the Indenture, the provisions of the Indenture shall govern.
Capitalized terms used but not defined in this Note shall have the meanings
ascribed to them in the Indenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The payment of principal of, premium, if any, and interest on the Notes
will, to the extent set forth in the Indenture, be subordinated in right of
payment to the prior payment in full of all Senior Indebtedness (as defined in
the Indenture). Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding related to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities, the holders of all Senior Indebtedness
will first be entitled to receive payments in full of all amounts due or to
become due thereon before the holders of the Notes will be entitled to receive
any payment in respect of the principal of, premium, if any, or interest on the
Notes (except that holders of Notes may receive securities that are subordinated
at least to the same extent as the Notes to Senior Indebtedness and any
securities issued in exchange for Senior Indebtedness).
The Company also may not make any payment upon or in respect of the
Notes (except in such subordinated securities) if (a) a default in the payment
of the principal of, premium, if any, or interest on Senior Indebtedness occurs
and is continuing beyond any applicable period of grace or (b) any other default
occurs and is continuing with respect to Senior Indebtedness that permits
holders of the Senior Indebtedness as to which such default relates to
accelerate its maturity and
A-3
the Trustee receives a notice of such default (a "Payment Blockage Notice") from
the representative or representatives of holders of at least a majority in
principal amount of Senior Indebtedness then outstanding. Payments on the Notes
may and shall be resumed (i) in the case of a Payment Default, upon the date on
which such default is cured or waived, or (ii) in the case of a Nonpayment
Default, 179 days after the date on which the applicable Payment Blockage Notice
is received, unless the maturity of any Senior Indebtedness has been
accelerated. No new period of payment blockage may be commenced within 360 days
after the receipt by the Trustee of any 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 shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have been cured or
waived.
In the event that the Trustee (or paying agent if other than the
Trustee) or any holder of the Notes receives any payment of principal or
interest with respect to the Notes at a time when such payment is prohibited
under the Indenture, such payment shall be held in trust for the benefit of, and
shall be paid over and delivered to, the holders of Senior Indebtedness or their
representative as their respective interests may appear. After all Senior
Indebtedness is paid in full and until the Notes are paid in full, the holders
of the Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the holders of the Notes have
been applied to the payment of Senior Indebtedness.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the rights
of the holders of the Notes; provided that no such supplemental indenture shall
(i) extend the fixed maturity of any Note, or reduce the rate or extend the time
of payment of interest thereon, or reduce the principal amount thereof or
premium, if any, thereon, or reduce any amount payable on redemption thereof,
alter the obligation of the Company to repurchase the Notes at the option of the
holders upon the occurrence of a Change of Control or impair or affect the right
of any Noteholder to institute suit for the payment thereof, or make the
principal thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes, modify the subordination
provisions in a manner adverse to the holders of the Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth in the
Indenture without the consent of the holder of each Note so affected or (ii)
reduce the aforesaid percentage of Notes, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of all Notes then outstanding. It is also provided in the Indenture that, prior
to any declaration accelerating the maturity of the Notes, the holders of a
majority in aggregate principal amount of the Notes at the time outstanding may
on behalf of the holders of all of the Notes waive any past default or Event of
Default under the Indenture and its consequences except a default in the payment
of interest or any premium on or the principal of any of the Notes, a failure by
the Company to convert any Notes into Common Stock of the Company or a default
in respect of a covenant or provision of the Indenture that under Article X
A-4
thereof cannot be modified or amended without the consent of the holders of all
Notes then outstanding. Any such consent or waiver by the holder of this Note
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Note and any
Notes that may be issued in exchange or substitution hereof, irrespective of
whether or not any notation thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
The Notes are issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. At the
Corporate Trust Office of the Trustee, and in the manner and subject to the
limitations provided in the Indenture, without payment of any service charge but
with payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration or exchange of Notes,
Notes may be exchanged for a like aggregate principal amount of Notes of other
authorized denominations.
No sinking fund is provided for the Notes.
The Notes are subject to Provisional Redemption by the Company, in
whole or in part, at any time prior to June 4, 2002, upon notice as set forth in
Section 3.2 of the Indenture, at a redemption price equal to $1,000 per $1,000
principal amount of Notes to be redeemed plus accrued and unpaid interest, if
any, to the Provisional Redemption Date if the closing price of the Common Stock
shall have exceeded 150% of the Conversion Price then in effect for at least 20
Trading Days within a period of 30 consecutive Trading Days ending on the
Trading Day prior to the Notice Date. Upon any such Provisional Redemption, the
Company shall make a Make-Whole Payment with respect to the Notes called for
Provisional Redemption to holders on the Notice Date in an amount equal to
$187.00 per $1,000 principal amount of Notes, less the amount of any interest
actually paid on such Notes prior to the Notice Date. The Company shall make the
Make-Whole Payment on all Notes called for Provisional Redemption, including any
Notes converted into Common Stock pursuant to the terms of the Indenture after
the Notice Date and prior to the Provisional Redemption Date.
The Notes are also subject to redemption at the option of the Company
at any time on or after June 4, 2002, in whole or in part, upon not less than 30
or more than 60 days' notice to the holders of the Notes prior to the redemption
date at the following optional redemption prices (expressed as percentages of
the principal amount), together with accrued and unpaid interest to the date
fixed for redemption, if redeemed on or after:
A-5
DATE REDEMPTION PRICE
---- ----------------
June 4, 2002 101.00%
June 1, 2003 100.00%
If a Change of Control (as defined in the Indenture) shall occur at any
time, then each holder of Notes shall have the right to require that the Company
repurchase such holder's Notes in whole or in part in integral multiples of
$1,000, at a purchase price in cash in an amount equal to 100% of the principal
amount of such Notes, plus accrued and unpaid interest, if any, to the
repurchase date pursuant to an offer to be made by the Company and in accordance
with the procedures set forth in the Indenture.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time prior to the close of business on the Business
Day immediately preceding June 1, 2004, or, as to all or any portion hereof
called for redemption, immediately prior to the close of business on the
Business Day immediately preceding the date fixed for redemption (unless the
Company shall default in payment due upon redemption thereof), to convert the
principal hereof or any portion of such principal that is $1,000 or an integral
multiple thereof, into that number of fully paid and non-assessable shares of
Company's Common Stock, as said shares shall be constituted at the date of
conversion, obtained by dividing the principal amount of this Note or portion
thereof to be converted by the Conversion Price of $35.67 or such Conversion
Price as adjusted from time to time as provided in the Indenture, which
conversion shall be effected by surrender of this Note, together with a
conversion notice as provided in the Indenture, to the Corporate Trust Office of
the Trustee or at the option of the holder of this Note, at any other office or
agency of the Company maintained for that purpose pursuant to the Indenture,
and, unless the shares issuable on conversion are to be issued in the same name
as this Note, duly endorsed by, or accompanied by instruments of transfer in
form satisfactory to the Company duly executed by, the holder or by his duly
authorized attorney. No adjustment in respect of interest or dividends will be
made upon any conversion; PROVIDED that if this Note shall be surrendered for
conversion during the period from the close of business on any record date for
the payment of interest through the opening of business on the next succeeding
interest payment date, this Note (unless it or the portion being converted shall
have been called for redemption on a date during the period from the close of
business on or after any record date to the close of business on the business
day following the corresponding payment date) on a date during the period from
the close of business on or after any record date to the close of business on
the business day following the corresponding payment date must be accompanied by
an amount, in funds acceptable to the Company, equal to the interest payable on
such interest payment date on the principal amount being converted. The interest
payment with respect to a Note called for redemption will be payable on the
corresponding interest payment date to the registered Holder at the close of
business on that record date (notwithstanding the conversion of such Note before
the corresponding interest payment date) and a Holder who elects to convert need
not include funds equal to the interest paid. No fractional shares will be
issued upon any conversion, but an
A-6
adjustment in cash will be made, as provided in the Indenture, in respect of any
fraction of a share that would otherwise be issuable upon the surrender of any
Note or Notes for conversion.
Upon due presentment for registration of transfer of this Note at the
Corporate Trust Office of the Trustee or at the option of the holder of this
Note, at any other office or agency of the Company maintained for that purpose
pursuant to the Indenture, a new Note or Notes of authorized denominations for
an equal aggregate principal amount will be issued to the transferee in exchange
thereof, subject to the conditions and limitations provided in the Indenture,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Note registrar), for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor any other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or of any Successor Company, either
directly or through the Company or any Successor Company, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
A-7
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties Custodian
--------------------
(Cust)
JT TEN - as joint tenants with under
right of survivorship and --------------------
not as tenants in (Minor)
common
Uniform Gifts to
Minors Act
-------------------
(State)
Additional abbreviations may also be used
though not in the above list.
A-8
[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
To: NET.B@NK, INC.
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 principal amount or an integral multiple thereof) below designated, into
shares of Common Stock of the Company in accordance with the terms of the
Indenture referred to in this Note, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Notes representing any unconverted principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this Note
not converted are to be issued in the name of a person other than the
undersigned, the undersigned will check the appropriate box below and pay all
transfer taxes payable with respect thereto. Any amount required to be paid to
the undersigned on account of interest accompanies this Note.
Dated:
------------------------------
----------------------------------------
----------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor
Institution (banks, stock brokers, savings and loan associations
and credit unions) with membership in an approved signature
guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15 if shares of Common Stock are to be
issued, or Notes are to be delivered, other than to and in the name
of the registered holder.
----------------------------------------------------
Signature Guarantee
Fill in for registration of shares if to be issued, and Notes if to be
delivered, other than to and in the name of the registered holder:
----------------------------------------------------
(Name)
----------------------------------------------------
(Street Address)
----------------------------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less than all) $
--------------
-------------------------------------------------------------------
Social Security or other Taxpayer
Identification Number
A-9
[FORM OF OPTION TO ELECT REPAYMENT
UPON A CHANGE OF CONTROL]
To: NET.B@NK, INC.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Net.B@nk, Inc. (the "Company") as to the
occurrence of a Change of Control with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Note, or the
portion thereof (which is $1,000 principal amount or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Note, together with accrued interest to such date, to the
registered holder hereof.
Dated:
------------------------------
----------------------------------------
----------------------------------------
Signature(s)
----------------------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less than all): $
------
A-10
[FORM OF ASSIGNMENT]
For value received _____________________________ hereby sell(s),
assign(s) and transfer(s) unto _________________________ (Please insert social
security or other identifying number of assignee) the within Note, and hereby
irrevocably constitutes and appoints ________________________________ attorney
to transfer the said Note on the books of the Company, with full power of
substitution in the premises.
Dated:
------------------------------------
------------------------------------
------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15.
------------------------------------
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect
payment upon a Change of Control or the assignment must correspond with
the name as written upon the face of the Note in every particular
without alteration or enlargement or any change whatever.
A-11
EXHIBIT B - FORM OF GLOBAL NOTE
[FORM OF FACE OF NOTE]
No. B-1 $
---------------------
CUSIP No. 64107J AA4
NET.B@NK, INC.
4 3/4% Convertible Subordinated Notes Due 2004
THIS NOTE AND ANY SHARES OF COMMON STOCK OF NET.B@NK, INC. ISSUABLE
UPON CONVERSION OF THIS NOTE ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS DEBENTURE 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 DEBENTURE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS DEBENTURE IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED SIGNATORY OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NET.B@NK, INC., a corporation duly organized and validly existing under
the laws of the State of Georgia (the "Company"), which term includes any
Successor Company under the
B-1
Indenture referred to on the reverse hereof, for value received hereby promises
to pay to _______________________________________________, or registered
assigns, the principal sum of ____________________________Dollars (subject to
adjustment as set forth in the next paragraph hereof) on June 1, 2004, at the
Corporate Trust Office of the Trustee or at the option of the holder of this
Global Note, at any other office or agency or the Company maintained for that
purpose pursuant to the Indenture, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, semi-annually on June 1 and
December 1 of each year, commencing December 1, 1999, on said principal sum at
said office or agency, in like coin or currency, at the rate per annum specified
in the title of this Global Note, from the June 1 or December 1, as the case may
be, next preceding the date of this Global Note to which interest has been paid
or duly provided for, unless the date hereof is a date to which interest has
been paid or duly provided for, in which case from the date of this Global Note,
or unless no interest has been paid or duly provided for on the Notes, in which
case from June 9, 1999, until payment of said principal sum has been made or
duly provided for; PROVIDED that if the Company shall default in the payment of
interest due on such June 1 or December 1, then this Global Note shall bear
interest from the next preceding June 1 or December 1, to which interest has
been paid or duly provided for or, if no interest has been paid or duly
provided for on such Note, from June 9, 1999. The interest so payable on any
June 1 or December 1 will be paid to the person in whose name this Global
Note (or one or more Predecessor Notes) is registered at the close of
business on the record date, which shall be the May 15 or November 15
(whether or not a Business Day) next preceding such June 1 or December 1,
respectively; PROVIDED that any such interest not punctually paid or duly
provided for shall be payable as provided in the Indenture. Interest shall be
paid by wire transfer in immediately available funds to the account in the
continental United States designated by the holder of this Global Note in
accordance with the provisions of the Indenture.
The aggregate principal amount of this Global Note represented hereby
may from time to time be reduced or increased to reflect exchanges of a part of
this Global Note for definitive Notes or conversions, redemptions or repurchases
of a part of this Global Note or cancellations of a part of this Global Note or
transfers of interests in the definitive Notes in return for a part of this
Global Note or transfers of a part of this Global Note effected by delivery of
interests in definitive Notes, in each case, and in any such case, by means of
notations on the Schedule of Exchanges, Conversions, Redemptions, Repurchases,
Cancellations and Transfers on the last page hereof. Notwithstanding any
provision of this Global Note to the contrary, (i) exchanges or transfers of a
part of this Global Note for interests in the definitive Notes, (ii) exchanges
or transfers of interests in the definitive Notes in return for a part of this
Global Note, (iii) conversions, redemptions or repurchases of a part of this
Global Note, or (iv) cancellations of a part of this Global Note may be effected
without the surrendering of this Global Note; PROVIDED that appropriate
notations on the Schedule of Exchanges, Conversions, Redemptions, Repurchases,
Cancellations and Transfers are made by the Trustee, or the Custodian at the
direction of the Trustee, to reflect the appropriate reduction or increase, as
the case may be, in the aggregate principal amount of this Global Note resulting
therefrom or as a consequence thereof.
Reference is made to the further provisions of this Global Note set
forth on the reverse hereof, including, without limitation, provisions giving
the holder of this Global Note the right to
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convert this Global Note into Common Stock of the Company on the terms and
subject to the limitations referred to on the reverse hereof and as more fully
specified in the Indenture. Such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
This Global Note shall be deemed to be a contract made under the laws
of the State of New York, and for all purposes shall be construed in accordance
with and governed by the laws of said State, without regard to conflicts of laws
principles thereof.
This Global Note shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been manually
signed by the Trustee or a duly authorized authenticating agent under the
Indenture.
IN WITNESS WHEREOF, the Company has caused this Global Note to be duly
executed under its corporate seal.
NET.B@NK, INC.
By:
------------------------------------
Name:
Title:
Attest:
------------------------------------
Secretary
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Notes described in the within-named Indenture.
SUNTRUST BANK, ATLANTA, as Trustee
By:
------------------------------------
Authorized Signatory
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[FORM OF REVERSE OF GLOBAL NOTE]
4 3/4% Convertible Subordinated Notes Due 2004
This Global Note is one of a duly authorized issue of Notes of the
Company, designated as its 4 3/4% Convertible Subordinated Notes Due 2004
(herein called the "Notes"), limited to the aggregate principal amount of
$100,000,000 (which may be increased to $115,000,000 if the underwriters'
overallotment option issued in connection in the public offering of the Notes is
exercised in full) all issued or to be issued under and pursuant to an Indenture
dated as of June 9, 1999 (the "Indenture"), between the Company and SunTrust
Bank, Atlanta, as trustee (the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a complete description of the
rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee, the Company and the holders of the Notes. Each Note is subject to,
and qualified by, all such terms as set forth in the Indenture certain of which
are summarized hereon and each holder of a Note is referred to the corresponding
provisions of the Indenture for a complete statement of such terms. To the
extent that there is any inconsistency between the summary provisions set forth
in the Notes and the Indenture, the provisions of the Indenture shall govern.
Capitalized terms used but not defined in this Note shall have the meanings
ascribed to them in the Indenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The payment of principal of, premium, if any, and interest on the Notes
will, to the extent set forth in the Indenture, be subordinated in right of
payment to the prior payment in full of all Senior Indebtedness (as defined in
the Indenture). Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding related to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities, the holders of all Senior Indebtedness
will first be entitled to receive payment in full of all amounts due or to
become due thereon before the holders of the Notes will be entitled to receive
any payment in respect of the principal of, premium, if any, or interest on the
Notes (except that holders of Notes may receive securities that are subordinated
at least to the same extent as the Notes to Senior Indebtedness and any
securities issued in exchange for Senior Indebtedness).
The Company also may not make any payment upon or in respect of the
Notes (except in such subordinated securities) if (a) a default in the payment
of the principal of, premium, if any, or interest on Senior Indebtedness occurs
and is continuing beyond any applicable period of grace or (b) any other default
occurs and is continuing with respect to Senior Indebtedness that permits
holders of the Senior Indebtedness as to which such default relates to
accelerate its maturity and the Trustee receives a notice of such default (a
"Payment Blockage Notice") from the representative or representatives of holders
of at least a majority in principal amount of Senior
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Indebtedness then outstanding. Payments on the Notes may and shall be resumed
(i) in the case of a Payment Default, upon the date on which such default is
cured or waived, or (ii) in the case of a Nonpayment Default, 179 days after the
date on which the applicable Payment Blockage Notice is received, unless the
maturity of any Senior Indebtedness has been accelerated. No new period of
payment blockage may be commenced within 360 days after the receipt by the
Trustee of any 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 shall be, or be made, the basis for a subsequent Payment Blockage Notice
unless such default shall have been cured or waived.
In the event that the Trustee (or paying agent if other than the
Trustee) or any holder of the Notes receives any payment of principal or
interest with respect to the Notes at a time when such payment is prohibited
under the Indenture, such payment shall be held in trust for the benefit of, and
shall be paid over and delivered to, the holders of Senior Indebtedness or their
representative as their respective interests may appear. After all Senior
Indebtedness is paid in full and until the Notes are paid in full, the holders
of the Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the holders of the Notes have
been applied to the payment of Senior Indebtedness.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the rights
of the holders of the Notes; PROVIDED that no such supplemental indenture shall
(i) extend the fixed maturity of any Note, or reduce the rate or extend the time
of payment of interest thereon, or reduce the principal amount thereof or
premium, if any, thereon, or reduce any amount payable on redemption thereof,
alter the obligation of the Company to repurchase the Notes at the option of the
holders upon the occurrence of a Change of Control or impair or affect the right
of any Noteholder to institute suit for the payment thereof, or make the
principal thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes, modify the subordination
provisions in a manner adverse to the holders of the Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth in the
Indenture without the consent of the holder of each Note so affected or (ii)
reduce the aforesaid percentage of Notes, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of all Notes then outstanding. It is also provided in the Indenture that, prior
to any declaration accelerating the maturity of the Notes, the holders of a
majority in aggregate principal amount of the Notes at the time outstanding may
on behalf of the holders of all of the Notes waive any past default or Event of
Default under the Indenture and its consequences except a default in the payment
of interest or any premium on or the principal of any of the Notes, a failure by
the Company to convert any Notes into Common Stock of the Company or a default
in respect of a covenant or provision of the Indenture that under Article X
thereof cannot be modified or amended without the consent of the holders of all
Notes then outstanding. Any such consent or waiver by the holder of this Global
Note (unless revoked as
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provided in the Indenture) shall be conclusive and binding upon such holder and
upon all future holders and owners of this Global Note and any Notes that may be
issued in exchange or substitution hereof, irrespective of whether or not any
notation thereof is made upon this Global Note or such other Notes.
No reference herein to the Indenture and no provision of this Global
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium and
interest on this Global Note at the place, at the respective times, at the rate
and in the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
The Notes are issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. At the
Corporate Trust Office of the Trustee and in the manner and subject to the
limitations provided in the Indenture, without payment of any service charge but
with payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration or exchange of Notes,
Notes may be exchanged for a like aggregate principal amount of Notes of other
authorized denominations.
No sinking fund is provided for the Notes.
The Notes are subject to Provisional Redemption by the Company, in
whole or in part, at any time prior to June 4, 2002, upon notice as set forth in
Section 3.2 of the Indenture, at a redemption price equal to $1,000 per $1,000
principal amount of Notes to be redeemed plus accrued and unpaid interest, if
any, to the Provisional Redemption Date if the closing price of the Common Stock
shall have exceeded 150% of the Conversion Price then in effect for at least 20
Trading Days within a period of 30 consecutive Trading Days ending on the
Trading Day prior to the Notice Date. Upon any such Provisional Redemption, the
Company shall make a Make-Whole Payment with respect to the Notes called for
Provisional Redemption to holders on the Notice Date in an amount equal to
$187.00 per $1,000 principal amount of Notes, less the amount of any interest
actually paid on such Notes prior to the Notice Date. The Company shall make the
Make-Whole Payment on all Notes called for Provisional Redemption, including any
Notes converted into Common Stock pursuant to the terms of the Indenture after
the Notice Date and prior to the Provisional Redemption Date.
The Notes are also subject to redemption at the option of the Company
at any time on or after June 5, 2002, in whole or in part, upon not less than 30
or more than 60 days' notice to the holders of the Notes prior to the redemption
date at the following optional redemption prices (expressed as percentages of
the principal amount), together with accrued and unpaid interest to the date
fixed for redemption, if redeemed on or after:
B-6
DATE REDEMPTION PRICE
---- ----------------
June 4, 2002 101.00%
June 1, 2003 100.00%
If a Change of Control (as defined in the Indenture) shall occur at any
time, then each holder of Notes shall have the right to require that the Company
repurchase such holder's Notes in whole or in part in integral multiples of
$1,000, at a purchase price in cash in an amount equal to 100% of the principal
amount of such Notes, plus accrued and unpaid interest, if any, to the
repurchase date pursuant to an offer to be made by the Company and in accordance
with the procedures set forth in the Indenture.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time prior to the close of business on the Business
Day immediately preceding June 1, 2004, or, as to all or any portion hereof
called for redemption, immediately prior to the close of business on the
Business Day immediately preceding the date fixed for redemption (unless the
Company shall default in payment due upon redemption thereof), to convert the
principal hereof or any portion of such principal that is $1,000 or an integral
multiple thereof, into that number of fully paid and non-assessable shares of
Company's Common Stock, as said shares shall be constituted at the date of
conversion, obtained by dividing the principal amount of this Global Note or
portion thereof to be converted by the Conversion Price of $35.67 or such
Conversion Price as adjusted from time to time as provided in the Indenture,
which conversion shall be effected either by surrender of this Global Note,
together with a conversion notice as provided in the Indenture, to the Corporate
Trust Office of the Trustee or without surrendering of this Global Note, by
appropriate notations on the Schedule of Exchanges, Conversions, Redemptions,
Repurchases, Cancellations and Transfers made by the Trustee, or the Custodian
at the direction of the Trustee, to reflect the appropriate reduction in the
aggregate principal amount of this Global Note resulting therefrom. No
adjustment in respect of interest or dividends will be made upon any conversion;
PROVIDED that if this Global Note shall be surrendered for conversion during the
period from the close of business on any record date for the payment of interest
and through the opening of business on the next succeeding interest payment
date, this Global Note (unless it or the portion being converted shall have been
called for redemption on a date during the period from the close of business on
or after any record date to the close of business on the business day following
the corresponding payment date) on a date during the period from the close of
business on or after any record date to the close of business on the business
day following the corresponding payment date must be accompanied by an amount,
in funds acceptable to the Company, equal to the interest payable on such
interest payment date on the principal amount being converted. The interest
payment with respect to a Note called for redemption will be payable on the
corresponding interest payment date to the registered Holder at the close of
business on that record date (notwithstanding the conversion of such Note before
the corresponding interest payment date) and a Holder who elects to convert need
not include funds equal to the interest paid. No fractional shares will be
issued upon any conversion, but an
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adjustment in cash will be made, as provided in the Indenture, in respect of any
fraction of a share that would otherwise be issuable upon the surrender of any
Note or Notes for conversion.
Upon due presentment for registration of transfer of this Global Note
at the Corporate Trust Office of the Trustee, or at the option of the holder of
this Global Note, at any other office or agency of the Company maintained for
that purpose pursuant to the Indenture, a new Global Note or Global Notes of
authorized denominations for an equal aggregate principal amount will be issued
to the transferee in exchange thereof, subject to the conditions and limitations
provided in the Indenture, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Global Note (whether or not this
Global Note shall be overdue and notwithstanding any notation of ownership or
other writing hereon made by anyone other than the Company or any Note
registrar), for the purpose of receiving payment hereof, or on account hereof,
for the conversion hereof and for all other purposes, and neither the Company
nor the Trustee nor any other authenticating agent nor any paying agent nor any
other conversion agent nor any Note registrar shall be affected by any notice to
the contrary. All payments made to or upon the order of such registered holder
shall, to the extent of the sum or sums paid, satisfy and discharge liability
for monies payable on this Global Note.
No recourse for the payment of the principal of or any premium or
interest on this Global Note, or for any claim based hereon or otherwise in
respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Note, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any Successor
Company, either directly or through the Company or any Successor Company,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
B-8
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties Custodian
--------------------
(Cust)
JT TEN - as joint tenants with under
right of survivorship and --------------------
not as tenants in (Minor)
common
Uniform Gifts to
Minors Act
-------------------
(State)
Additional abbreviations may also be used
though not in the above list.
B-9
[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
To: NET.B@NK, INC.
The undersigned registered owner of this Global Note hereby irrevocably
exercises the option to convert this Global Note, or the portion hereof (which
is $1,000 principal amount or an integral multiple thereof) below designated,
into shares of Common Stock in accordance with the terms of the Indenture
referred to in this Global Note, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Notes representing any unconverted principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this Global
Note not converted are to be issued in the name of a person other than the
undersigned, the undersigned will check the appropriate box below and pay all
transfer taxes payable with respect thereto. Any amount required to be paid to
the undersigned on account of interest accompanies this Global Note.
Dated:
------------------------------
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----------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or
Notes are to be delivered, other than to and in the name of the registered
holder.
------------------------------------
Signature Guarantee
Fill in for registration of shares if to be issued, and Notes if to be
delivered, other than to and in the name of the registered holder:
------------------------------------
(Name)
------------------------------------
(Street Address)
------------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less than all) $
---------
-------------------------------------------------------------
Social Security or other Taxpayer
Identification Number
B-10
[FORM OF OPTION TO ELECT REPAYMENT
UPON A CHANGE OF CONTROL]
To: NET.B@NK, INC.
The undersigned registered owner of this Global Note hereby irrevocably
acknowledges receipt of a notice from Net.B@nk, Inc. (the "Company") as to the
occurrence of a Change of Control with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Global Note,
or the portion thereof (which is $1,000 principal amount or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Global Note, together with accrued interest to such date, to
the registered holder hereof.
Dated:
------------------------------
----------------------------------------
----------------------------------------
Signature(s)
----------------------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less than all): $
------
B-11
[FORM OF ASSIGNMENT]
For value received ________________ hereby sell(s), assign(s) and
transfer(s) unto __________ (please insert social security or other identifying
number of assignee) the within Note, and hereby irrevocably constitutes and
appoints _________________ attorney to transfer the said Note on the books of
the Company, with full power of substitution in the premises.
Dated:
-------------------------------
------------------------------------
------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor
Institution (banks, stock brokers, savings and loan
associations and credit unions) with membership in an
approved signature guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15.
---------------------------------------------------------
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect
payment upon a Change of Control or the assignment must correspond with
the name as written upon the face of the Note in every particular
without alteration or enlargement or any change whatever.
B-12
SCHEDULE OF EXCHANGES, CONVERSIONS, REDEMPTIONS, REPURCHASES,
CANCELLATIONS AND TRANSFERS
The initial principal amount of this Global Note is U.S.
$_____________. The following additions to principal, redemptions, repurchases,
exchanges of a part of this Global Note or definitive Notes and conversions into
Common Stock have been made:
---------------------------------------------------------------------------------------------------------------------
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Principal Amount
Date of Addition to Redeemed,
Principal, Repurchased, Remaining Principal
Redemption, Principal Amount Exchanged for Amount
Repurchase, Added on Interest in Definitive Outstanding Notation Made by
Exchange or Exchange of Interest Notes or Converted Following such or on behalf of the
Conversion in Definitive Notes into Common Stock Transaction Trustee
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