Exhibit 10.4
Sun Healthcare Group, Inc., as Issuer
and
The Bank of New York, as Trustee
-----------------
Indenture
Dated as of May 4, 1998
$355,670,131.25
7% Convertible Junior Subordinated Debentures Due 2028
-----------------
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
--------------- --------------
Section 310(a)(1). . . . . . . . . . . . . . . . . . . . . . 609
(a)(2). . . . . . . . . . . . . . . . . . . . . . 609
(a)(3). . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4). . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . 701
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . 702(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . 703(b)
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . 704, 102
(b) . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1). . . . . . . . . . . . . . . . . . . . . . 102
(c)(2). . . . . . . . . . . . . . . . . . . . . . 102
(c)(3). . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316(a)(1)(A) . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . 513
(a)(2). . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . 104(c)
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . 107
______________
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
-i-
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Other Provisions of General Application . . . . . . . . . -2-
SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . -14-
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . -14-
SECTION 104. Acts of Holders; Record Dates. . . . . . . . . . . . . . . -15-
SECTION 105. Notices, Etc., to Trustee and the Company. . . . . . . . . -16-
SECTION 106. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . -17-
SECTION 107. Conflict with Trust Indenture Act. . . . . . . . . . . . . -17-
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . -17-
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . -18-
SECTION 110. Separability Clause. . . . . . . . . . . . . . . . . . . . -18-
SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . . . . . . -18-
SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . -18-
ARTICLE II
Convertible Debenture Forms. . . . . . . . . . . . . . . . . . . . . . . -19-
SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . -19-
SECTION 202. Initial Issuance to Property Trustee . . . . . . . . . . . -19-
ARTICLE III
The Convertible Debentures. . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 301. Title and Terms. . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . -23-
SECTION 304. Temporary Convertible Debentures . . . . . . . . . . . . . -23-
SECTION 305. Registration, Registration of Transfer and Exchange. . . . -24-
SECTION 306. Mutilated, Destroyed, Lost and Stolen
Convertible Debentures . . . . . . . . . . . . . . . . . . -25-
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . -26-
SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . -28-
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 310. Right of Set Off . . . . . . . . . . . . . . . . . . . . . -29-
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SECTION 311. CUSIP Numbers. . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 312. Option to Extend Interest Payment Period . . . . . . . . . -29-
SECTION 313. Paying Agent, Security Registrar and Conversion Agent. . . -31-
SECTION 314. Global Security. . . . . . . . . . . . . . . . . . . . . . -31-
ARTICLE IV
Satisfaction and Discharge. . . . . . . . . . . . . . . . . . . . . . . . -34-
SECTION 401. Satisfaction and Discharge of Indenture. . . . . . . . . . -34-
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . -35-
ARTICLE V
Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
SECTION 501. Events of Default. . . . . . . . . . . . . . . . . . . . . -35-
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . -37-
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . -38-
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . -39-
SECTION 505. Trustee May Enforce Claims Without Possession
of Convertible Debentures. . . . . . . . . . . . . . . . . -39-
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . -40-
SECTION 507. Limitation on Suits. . . . . . . . . . . . . . . . . . . . -40-
SECTION 508. Unconditional Right of Holders to Receive Principal and
Interest and Convert . . . . . . . . . . . . . . . . . . . -41-
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . -41-
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . -42-
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . -42-
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . -42-
SECTION 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . -42-
SECTION 514. Undertaking for Costs. . . . . . . . . . . . . . . . . . . -43-
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . -43-
SECTION 516. Enforcement by Holders of Convertible Preferred
Securities . . . . . . . . . . . . . . . . . . . . . . . . -44-
ARTICLE VI
The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
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Page
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SECTION 601. Certain Duties and Responsibilities. . . . . . . . . . . . -44-
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . -45-
SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . -45-
SECTION 604. Not Responsible for Recitals or Issuance of
Convertible Debentures . . . . . . . . . . . . . . . . . . -46-
SECTION 605. May Hold Convertible Debentures. . . . . . . . . . . . . . -46-
SECTION 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . -47-
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . -47-
SECTION 608. Disqualification; Conflicting Interests. . . . . . . . . . -48-
SECTION 609. Corporate Trustee Required; Eligibility. . . . . . . . . . -48-
SECTION 610. Resignation and Removal; Appointment of Successor. . . . . -48-
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . -50-
SECTION 612. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . -50-
SECTION 613. Preferential Collection of Claims Against Company. . . . . -50-
ARTICLE VII
Holders' Lists and Reports by Trustee and Company . . . . . . . . . . . . -51-
SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders . . . . . . . . . . . . . . . . . . . . . . . . -51-
SECTION 702. Preservation of Information; Communications to
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . -51-
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . -52-
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . -52-
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease. . . . . . . . . . . -53-
SECTION 801. Company May Consolidate, Etc., Only on
Certain Terms. . . . . . . . . . . . . . . . . . . . . . . -53-
SECTION 802. Successor Substituted. . . . . . . . . . . . . . . . . . . -54-
ARTICLE IX
Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . -54-
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . -54-
SECTION 902. Supplemental Indentures with Consent of Holders. . . . . . -55-
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . -56-
SECTION 904. Effect of Supplemental Indentures. . . . . . . . . . . . . -57-
-iv-
Page
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SECTION 905. Conformity with Trust Indenture Act. . . . . . . . . . . . -57-
SECTION 906. Reference in Convertible Debentures to Supplemental
Indentures . . . . . . . . . . . . . . . . . . . . . . . . -57-
ARTICLE X
Covenants; Representations and Warranties . . . . . . . . . . . . . . . . -57-
SECTION 1001. Payment of Principal and Interest. . . . . . . . . . . . . -57-
SECTION 1002. Maintenance of Office or Agency. . . . . . . . . . . . . . -57-
SECTION 1003. Money for Convertible Debenture Payments to Be
Held in Trust. . . . . . . . . . . . . . . . . . . . . . . -58-
SECTION 1004. Statement by Officers as to Default. . . . . . . . . . . . -59-
SECTION 1005. Limitation on Dividends; Covenants as to the Trust . . . . -59-
SECTION 1006. Payment of Expenses of the Trust . . . . . . . . . . . . . -60-
SECTION 1007. Registration Rights. . . . . . . . . . . . . . . . . . . . -61-
ARTICLE XI
Redemption of Convertible Debentures. . . . . . . . . . . . . . . . . . . -61-
SECTION 1101. Optional Redemption. . . . . . . . . . . . . . . . . . . . -61-
SECTION 1102. Tax Event Optional Redemption. . . . . . . . . . . . . . . -62-
SECTION 1103. Applicability of Article . . . . . . . . . . . . . . . . . -63-
SECTION 1104. Election to Redeem; Notice to Trustee. . . . . . . . . . . -63-
SECTION 1105. Selection by Trustee of Convertible Debentures to Be
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . -63-
SECTION 1106. Notice of Redemption . . . . . . . . . . . . . . . . . . . -64-
SECTION 1107. Deposit and Payment of Redemption Price. . . . . . . . . . -64-
SECTION 1108. Convertible Debentures Payable on Redemption Date. . . . . -65-
SECTION 1109. Convertible Debentures Redeemed in Part. . . . . . . . . . -65-
SECTION 1110. No Sinking Fund. . . . . . . . . . . . . . . . . . . . . . -66-
SECTION 1111. Mandatory Redemption . . . . . . . . . . . . . . . . . . . -66-
SECTION 1112. Exchange of Trust Securities for Convertible
Debentures . . . . . . . . . . . . . . . . . . . . . . . . -66-
ARTICLE XII
Subordination of Convertible Debentures . . . . . . . . . . . . . . . . . -67-
SECTION 1201. Agreement to Subordinate . . . . . . . . . . . . . . . . . -67-
SECTION 1202. Default on Senior Indebtedness . . . . . . . . . . . . . . -67-
SECTION 1203. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . -69-
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SECTION 1204. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . -70-
SECTION 1205. Trustee to Effectuate Subordination. . . . . . . . . . . . -70-
SECTION 1206. Notice by the Company. . . . . . . . . . . . . . . . . . . -70-
SECTION 1207. Rights of the Trustee; Holders of Senior Indebtedness . . -71-
SECTION 1208. Subordination May Not Be Impaired. . . . . . . . . . . . . -72-
ARTICLE XIII
Conversion of Convertible Debentures. . . . . . . . . . . . . . . . . . . -73-
SECTION 1301. Conversion Rights. . . . . . . . . . . . . . . . . . . . . -73-
SECTION 1302. Conversion Procedures. . . . . . . . . . . . . . . . . . . -73-
SECTION 1303. Conversion Price Adjustments . . . . . . . . . . . . . . . -76-
SECTION 1304. Fundamental Change.. . . . . . . . . . . . . . . . . . . . -81-
SECTION 1305. Notice of Adjustments of Conversion Price. . . . . . . . . -83-
SECTION 1306. Prior Notice of Certain Events . . . . . . . . . . . . . . -84-
SECTION 1307. Certain Defined Terms. . . . . . . . . . . . . . . . . . . -85-
SECTION 1308. Dividend or Interest Reinvestment Plans. . . . . . . . . . -85-
SECTION 1309. Certain Additional Rights. . . . . . . . . . . . . . . . . -86-
SECTION 1310. Restrictions on Sun Common Stock Issuable Upon
Conversion . . . . . . . . . . . . . . . . . . . . . . . . -86-
SECTION 1311. Trustee Not Responsible for Determining Conversion
Price or Adjustments . . . . . . . . . . . . . . . . . . . -88-
ARTICLE XIV
Immunity of Incorporators, Stockholders, Officers and Directors . . . . . -88-
SECTION 1401. No Recourse. . . . . . . . . . . . . . . . . . . . . . . . -88-
-vi-
Page
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EXHIBIT AND ANNEX
EXHIBIT A Form of Convertible Debenture
ANNEX A Amended and Restated Declaration of Trust among the Company,
as trust sponsor, The Bank of New York, as Property Trustee,
The Bank of New York (Delaware), as Delaware Trustee and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as
Administrative Trustees, dated as of May 4, 1998.
--------------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-vii-
INDENTURE, dated as of May 4, 1998, between Sun Healthcare Group,
Inc., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal office at ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and The Bank of New York, as
Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, Sun Financing I, a Delaware business trust (the "Trust"),
formed under the Amended and Restated Declaration of Trust among the Company, as
trust sponsor, The Bank of New York, as property trustee (the "Property
Trustee"), The Bank of New York (Delaware), as Delaware trustee (the "Delaware
Trustee"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as
administrative trustees (the "Administrative Trustees"), dated as of May 4, 1998
(the "Declaration"), pursuant to the Purchase Agreement (the "Purchase
Agreement") dated April 28, 1998, among the Company and the initial purchasers
named therein, will issue and sell up to 13,800,000 of its 7% Convertible Trust
Issued Preferred Securities (the "Convertible Preferred Securities") with a
liquidation amount of $25 per Preferred Security, having an aggregate
liquidation amount with respect to the assets of the Trust of 345,000,000;
WHEREAS, the trustees of the Trust, on behalf of the Trust, will
execute and deliver to the Company 7% Convertible Common Securities (the
"Common Securities") of the Trust, registered in the name of the Company, in an
aggregate amount equal to three percent of the capitalization of the Trust,
equivalent to 426,805.25 Common Securities, with a liquidation amount of $25 per
Common Security, having an aggregate liquidation amount with respect to the
assets of the Trust of $10,670,131.25) (the "Common Securities");
WHEREAS, the Trust will use the proceeds from the sale of the
Convertible Preferred Securities and the Common Securities to purchase from the
Company 7% Convertible Junior Subordinated Debentures Due 2028 (the "Convertible
Debentures") of the Company in an aggregate principal amount of $355,670,131.25;
WHEREAS, the Company is guaranteeing the payment of distributions on
the Convertible Preferred Securities, and payment of the Redemption Price and
payments on liquidation with respect to the Convertible Preferred Securities, to
the extent provided in the Preferred Securities Guarantee Agreement (the
"Guarantee") dated May 4, 1998 between the Company and The Bank of New York, as
guarantee trustee, for the benefit of the holders of the Convertible Preferred
Securities from time to time;
WHEREAS, the Company has duly authorized the creation of the
Convertible Debentures of the tenor and amount herein set forth and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture;
WHEREAS, so long as the Trust is a Holder of Convertible Debentures,
and any Convertible Preferred Securities are outstanding, the Trust Agreement
provides that the holders of Convertible Preferred Securities may cause the
Conversion Agent to (a) exchange such Convertible Preferred Securities for
Convertible Debentures held by the Trust and (b) immediately convert such
Convertible Debentures into Common Stock of the Company; and
WHEREAS, all things necessary to make the Convertible Debentures, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, and to make this
Indenture a valid agreement of the Company, in accordance with their and its
terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Convertible Debentures by the Holders thereof, it is mutually agreed, for the
equal and proportionate benefit of all Holders of the Convertible Debentures, as
follows:
ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
-2-
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles; and
(4) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"ACT", when used with respect to any Holder, has the meaning specified
in Section 104.
"ADDITIONAL INTEREST" has the meaning specified in Section 301.
"ADDITIONAL PAYMENTS" means Compounded Interest, Liquidated Damages,
if any, and Additional Interest, if any.
"ADMINISTRATIVE TRUSTEES" has the meaning specified in the Recitals of
this instrument.
"AFFILIATE" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"AGENT" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"APPLICABLE PRICE" means (i) in the case of a Non-Stock Fundamental
Change in which the holders of Sun Common Stock receive only cash, the amount of
cash received by the holder of one share of Sun Common Stock and (ii) in the
event of any other Non-Stock Fundamental Change or any Common Stock Fundamental
Change, the average of the Closing Prices for the Sun Common Stock during the
ten trading days prior to the record date for the determination of the holders
of Sun Common Stock entitled to receive such securities, cash, or other property
in connection with such Non-Stock Fundamental Change or Common Stock Fundamental
Change or, if there is no such record date, the date upon which the holders of
the Sun Common Stock shall have the right to receive such securities, cash, or
other property (such record date or distribution date being hereinafter referred
to as the "Entitlement Date"), in each case as adjusted in good faith by the
Company to appropriately reflect any of the events referred to in Section 1303.
"BOARD OF DIRECTORS" means either the board of directors of the
Company or any duly authorized committee of that board.
-3-
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"BUSINESS DAY" means any day other than a day on which banking
institutions in The City of New York or in Wilmington, Delaware are authorized
or required by law to close.
"CLOSING PRICE" has the meaning specified in Section 1307.
"COMMISSION" means 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, then the
body performing such duties at such time.
"COMMON SECURITIES" has the meaning specified in the recitals to this
Instrument.
"COMMON SECURITIES GUARANTEE" means any guarantee that the Company may
enter into that operate directly or indirectly for the benefit of holders of
Common Securities of the Trust.
"COMMON STOCK FUNDAMENTAL CHANGE" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Sun Common
Stock consists of common stock that for each of the ten consecutive trading days
prior to the Entitlement Date has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the Nasdaq National Market; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change unless either (i) the
Company continues to exist after the occurrence of such Fundamental Change and
the outstanding Convertible Preferred Securities continue to exist as
outstanding Convertible Preferred Securities or (ii) not later than the
occurrence of such Fundamental Change, the outstanding Convertible Preferred
Securities are converted into or exchanged for shares of convertible preferred
stock or debentures of an entity succeeding to the business of the Company or a
subsidiary thereof, which convertible preferred stock (or debentures, as the
case may be) has powers, preferences, and relative, participating, optional, or
other rights, and qualifications, limitations, and restrictions, substantially
similar to those of the Convertible Preferred Securities.
-4-
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President, its Chief Financial Officer, or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Controller, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"COMPOUNDED INTEREST" has the meaning specified in Section 312.
"CONVERSION AGENT" means the Person appointed to act on behalf of the
holders of Convertible Preferred Securities in effecting the conversion of
Convertible Preferred Securities as and in the manner set forth in the Trust
Agreement and Section 1302 hereof.
"CONVERSION DATE" has the meaning specified in Section 1302.
"CONVERSION PRICE" has the meaning specified in Section 1301.
"CONVERTIBLE DEBENTURES" has the meaning specified in the Recitals to
this instrument.
"CONVERTIBLE PREFERRED SECURITIES" has the meaning specified in the
Recitals to this instrument.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee in
New York, New York, at which at any particular time its corporate trust business
shall be administered and which at the date of this Indenture is ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10286, Attention: Corporate Trust Trustee
Administration.
"DECLARATION" has the meaning specified in the Recitals of this
instrument.
"DEFEASANCE TRUST" means a trust related to defeasance of
indebtedness.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DELAWARE TRUSTEE" has the meaning given it in the Recitals of this
instrument.
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"DEPOSITARY" means, with respect to any Convertible Debentures issued
in the form of one or more Global Security, a clearing agency registered under
the Exchange Act that is dedicated to act as Depositary for the Convertible
Debentures, and will initially be the Depository Trust Company.
"DESIGNATED SENIOR INDEBTEDNESS" has the meaning specified in Section
1202.
"DIRECT ACTION" means a proceeding directly instituted by a holder of
Convertible Preferred Securities for enforcement of payment to such holder of
the principal of or interest on the Convertible Debentures having a principal
amount equal to the aggregate liquidation amount of the Convertible Preferred
Securities of such holder on or after the respective due date specified in the
Convertible Debentures, if an Event of Default under the Trust Agreement has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Convertible Debentures on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date.)
"DISSOLUTION EVENT" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration and the Convertible Debentures held by the Property Trustee are
to be distributed to the holders of Trust Securities issued by the Trust PRO
RATA in accordance with the Declaration.
"DISSOLUTION TAX OPINION" has the meaning specified in the
Declaration.
"EVENT OF DEFAULT" has the meaning specified in Section 501.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder, or any
successor legislation.
"EXTENSION PERIOD" has the meaning specified in Section 312.
"FUNDAMENTAL CHANGE" means the occurrence of any Transaction or event
in connection with a plan pursuant to which all or substantially all of the Sun
Common Stock shall be exchanged for, converted into, acquired for, or constitute
solely the right to receive securities, cash, or other property (whether by
means of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization, or otherwise), provided, that,
in the case of a plan involving more than one such Transaction or event, for
purposes of adjustment of the conversion price, such Fundamental Change shall be
deemed
-6-
to have occurred when substantially all of the Sun Common Stock shall be
exchanged for, converted into, or acquired for or constitute solely the right
to receive securities, cash, or other property, but the adjustment shall be
based upon the consideration that a holder of the Sun Common Stock received
in such Transaction or event as a result of which more than 50% of the Sun
Common Stock shall have been exchanged for, converted into, or acquired for
or constitute solely the right to receive securities, cash, or other
property. The term "Non-Stock Fundamental Change" means any Fundamental
Change other than a Common Stock Fundamental Change.
"GLOBAL SECURITY" has the meaning specified in Section 314.
"GUARANTEE" has the meaning specified in the Recitals to this
instrument.
"HOLDER" means a Person in whose name a Convertible Debenture is
registered in the Security Register.
"INDENTURE" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"INITIAL PURCHASERS" means Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇▇▇▇▇▇, Lufkin
& ▇▇▇▇▇▇▇▇ Securities Corporation, ▇.▇. ▇▇▇▇▇▇ Securities Inc., NationsBank
▇▇▇▇▇▇▇▇▇▇ Securities LLC and ▇▇▇▇▇▇▇▇ & Co. Inc., as initial purchasers under
the Purchase Agreement.
"INTEREST PAYMENT DATE" has the meaning specified in Section 301.
"INVESTMENT COMPANY EVENT" has the meaning specified in Annex I to the
Declaration.
"LIQUIDATED DAMAGES" has the meaning specified on the reverse side of
the form of debenture set forth in Exhibit A to this agreement
"MATURITY", when used with respect to any Convertible Debenture, means
the date on which the principal of such Convertible Debenture becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
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"MINISTERIAL ACTION" has the meaning specified in Section 1102.
"90-DAY PERIOD" has the meaning specified in Section 1102.
"NO RECOGNITION OPINION" has the meaning specified in Annex I to
the Declaration.
"NON BOOK-ENTRY PREFERRED SECURITIES" has the meaning specified in
section 314.
"NON-STOCK FUNDAMENTAL CHANGE" means any Fundamental Change other
than a Common Stock Fundamental Change.
"NOTICE OF CONVERSION" means the notice to be given by a holder of
Convertible Preferred Securities to the Conversion Agent directing the
Conversion Agent to exchange such Convertible Preferred Securities for
Convertible Debentures and to convert such Convertible Debentures into Sun
Common Stock on behalf of such holder.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the Chief Executive Officer,
the President, Chief Financial Officer or a Vice President, and by the
Treasurer, the Controller, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee. One of
the officers signing an Officers' Certificate given pursuant to Section 1004
shall be the principal executive, financial or accounting officer of the
Company.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Company.
"OUTSTANDING", when used with respect to Convertible Debentures,
means, as of the date of determination, all Convertible Debentures
theretofore authenticated and delivered under this Indenture, EXCEPT: (i)
Convertible Debentures theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation; (ii) Convertible Debentures for whose payment
or redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Convertible Debentures; PROVIDED,
that if such Convertible Debentures are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and (iii) Convertible
Debentures that have been paid pursuant to Section 307, converted into Sun
Common Stock pursuant to
-8-
Section 1301, or in exchange for or in lieu of which other Convertible
Debentures have been authenticated and delivered pursuant to this Indenture,
other than any such Convertible Debentures in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such
Convertible Debentures are held by a bona fide purchaser in whose hands such
Convertible Debentures are valid obligations of the Company, PROVIDED,
HOWEVER, that in determining whether the Holders of the requisite principal
amount of the Outstanding Convertible Debentures have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Convertible Debentures owned by the Company or any other obligor upon the
Convertible Debentures or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be outstanding, except that,
in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver,
only Convertible Debentures which the Trustee knows to be so owned shall be
so disregarded. Convertible Debentures so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to
such Convertible Debentures and that the pledgee is not the Company or any
other obligor upon the Convertible Debentures or any Affiliate of the Company
or of such other obligor.
"PAYING AGENT" means any Person authorized by the Company to pay
the principal of or interest on any Convertible Debentures on behalf of the
Company.
"PERSON" means any legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"PREDECESSOR SECURITY" of any particular Convertible Debenture
means every previous Convertible Debenture evidencing all or a portion of the
same debt as that evidenced by such particular Convertible Debenture; and,
for the purposes of this definition, any Convertible Debenture authenticated
and delivered under Section 306 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Convertible Debenture shall be deemed to evidence
the same debt as the mutilated, destroyed, lost or stolen Convertible
Debenture.
"PROPERTY TRUSTEE" has the meaning specified in the Recitals of
this instrument.
"PURCHASE AGREEMENT" has the meaning specified in the Recitals to
this instrument.
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"PURCHASED SHARES" has the meaning specified in Section 1303(e).
"PURCHASER STOCK PRICE" means, with respect to any Common Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in such Common Stock Fundamental Change for the ten consecutive
trading days prior to and including the Entitlement Date, as adjusted in good
faith by the Company to appropriately reflect any of the events referred to
in Section 1303.
"REDEMPTION DATE", when used with respect to any Convertible
Debenture to be redeemed, means the date fixed for such redemption by or
pursuant to this Indenture.
"REDEMPTION PRICE", when used with respect to any Convertible
Debenture to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture.
"REDEMPTION TAX OPINION" has the meaning set forth in Annex I to
the Declaration.
"REFERENCE DATE" has the meaning specified in Section 1303(c).
"REFERENCE MARKET PRICE" shall initially mean $11.00 (which is an
amount equal to 66 2/3% of the reported last sales price for Sun Common Stock
on the New York Stock Exchange Consolidated Transactions Tape on April 28,
1998) and in the event of any adjustment of the conversion price other than
as a result of a Non-Stock Fundamental Change, the Reference Market Price
shall also be adjusted so that the ratio of the Reference Market Price to the
conversion price after giving effect to any such adjustment shall always be
the same as the ratio of the initial Reference Market Price to the initial
conversion price of the Convertible Preferred Securities.
"REGULAR RECORD DATE" has the meaning specified in Section 301.
"RESPONSIBLE OFFICER", when used with respect to the Trustee, means
any vice-president, any assistant vice-president, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer or any
other officer in the Corporate Trust Department of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of
that officer's knowledge of and familiarity with the particular subject.
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"RESTRICTED CONVERTIBLE PREFERRED SECURITIES" means all Convertible
Preferred Securities required to bear any restricted securities legend
pursuant to the Declaration.
"RESTRICTED SECURITIES" means all the Convertible Debentures
required pursuant to Section 202 to bear the Restricted Securities Legend.
"RESTRICTED SECURITIES LEGEND" has the meaning specified in Section
202.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
"SENIOR CREDIT FACILITY" means that certain Credit Agreement, dated
as of October 8, 1997 as amended by the First Amendment thereto dated
November 12, 1997 and the Second Amendment thereto dated March 27, 1998, by
and among the Company and NationsBank of Texas, N.A. and the other banks that
are parties thereto, providing for availability of up to $1.2 billion of
loans to the Company in the following components: (a) a revolving credit
facility of up to $500.0 million and (b) three term loans in the amounts of
$200.0 million, $250.0 million and $250.0 million, respectively, including
any related notes, collateral documents, instruments and agreements executed
in connection therewith, and in each case as amended, increased, modified,
extended, renewed, refunded, replaced or refinanced, in whole or in part,
from time to time.
"SENIOR INDEBTEDNESS" means in respect of the Company: (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of
such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor,
including, without limitation, in the case of Sun, all indebtedness, and all
obligations of Sun to pay fees and other amounts, under the Senior Credit
Facility or under the indentures with respect to the Company's outstanding
9 1/2% Senior Subordinated Notes due 2007 (the "2007 Notes") and the Company's
9 3/8% Senior Subordinated Notes due 2008, and any refinancing of the Senior
Credit Facility in the bank credit market (including institutional
participants therein), including interest accruing on or after a bankruptcy
or other similar event, whether or not an allowed claim therein, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such
obligor issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such obligor and all obligations of such
obligor under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations of
such obligor for the reimbursement of any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction, (v) all
obligations of the type referred to in clauses (i) through (iv) above of
other Persons for the payment of which such obligor is responsible or
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liable as obligor, guarantor or otherwise, and (vi) all obligations of the
type referred to in clauses (i) through (v) above of other Persons secured by
any lien on any property or asset of such obligor (whether or not such
obligation is assumed by such obligor), except for (1) any such indebtedness
that is by its terms subordinated to or PARI PASSU with the Convertible
Debentures and (2) any indebtedness between or among such obligor or its
affiliates, including all other debt securities and guarantees in respect of
those debt securities issued to any other trust, or a trustee of such trust,
partnership, or other entity affiliated with the Company that is, directly or
indirectly, a financing vehicle of the Company (a "Financing Entity") in
connection with the issuance by such Financing Entity of Convertible
Preferred Securities or other securities which rank PARI PASSU with, or
junior to, the Convertible Preferred Securities, unless otherwise provided in
the terms of such debt securities. Such Senior Indebtedness shall continue
to be Senior Indebtedness and entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term
of such Senior Indebtedness, except as otherwise provided in the exception
clauses above.
"SPECIAL EVENT" has the meaning specified in Annex I to the
Declaration.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"STATED MATURITY", when used with respect to any Convertible
Debenture or any installment of interest thereon, means the date specified in
such Convertible Debenture as the fixed date on which the principal, together
with any accrued and unpaid interest (including Compounded Interest), of such
Convertible Debenture or such installment of interest is due and payable.
"SUBSIDIARY" of any Person means (i) a corporation more than 50% of
the outstanding Voting Stock of which is owned, directly or indirectly, by
such Person or by one or more other Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof or (ii) any other Person (other
than a corporation) in which such Person, or one or more other Subsidiaries
of such Person or such Person and one or more other Subsidiaries thereof,
directly or indirectly, has at least a majority ownership and power to direct
the policies, management and affairs thereof.
"SUN COMMON STOCK" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up
of the Company and which is not subject to redemption by the Company.
However, subject to the provisions of Article
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Thirteen, shares issuable on conversion of Convertible Debentures shall
include only shares of the class designated as Sun Common Stock of the
Company at the date of this instrument or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which
have no preference in respect of dividends or of amounts payable in the event
of any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which are not subject to redemption by the Company; PROVIDED,
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable on conversion shall be
substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number of
shares of all such classes resulting from all such reclassifications.
"TAX EVENT" has the meaning specified in Annex I to the Declaration.
"TRADING DAY" has the meaning specified in Section 1307.
"TRANSACTION" has the meaning specified in Section 1304.
"TRUST" has the meaning specified in the Recitals to this
instrument.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended from time to time, and the rules and regulations promulgated
thereunder, or any successor legislation.
"TRUST SECURITIES" means Common Securities and Convertible
Preferred Securities.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"VICE PRESIDENT," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"VOTING STOCK" of any Person means capital stock of such Person
which ordinarily has voting power for the election of directors (or Persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of Convertible Debentures has such voting power by
reason of any contingency.
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SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act or reasonably requested by the Trustee in
connection with such application or request. Each such certificate or
opinion shall be given in the form of an Officers' Certificate, if to be
given by an officer of the Company, or an Opinion of Counsel, if to be given
by counsel, and shall comply with the applicable requirements of the Trust
Indenture Act and any other applicable requirement set forth in this
Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, 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, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel,
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unless such officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the
matters upon which his certificate or opinion is based are erroneous. Any
such certificate or opinion of counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an
Agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such Agent
shall be sufficient for any purpose of this Indenture and (subject to Section
601) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee or the
Company, as the case may be, deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining
the Holders of Outstanding
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Convertible Debentures entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote
on any action, authorized or permitted to be given or taken by Holders. If
not set by the Company prior to the first solicitation of a Holder made by
any Person in respect of any such action, or, in the case of any such vote,
prior to such vote, the record date for any such action or vote shall be the
30th day (or, if later, the date of the most recent list of Holders required
to be provided pursuant to Section 701) prior to such first solicitation or
vote, as the case may be. With regard to any record date, only the Holders
on such date (or their duly designated proxies) shall be entitled to give or
take, or vote on, the relevant action.
(d) The ownership of Convertible Debentures shall be proved by the
Security Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Convertible Debenture shall
bind every future Holder of the same Convertible Debenture and the Holder of
every Convertible Debenture issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Convertible
Debenture.
Without limiting the foregoing, a Holder entitled hereunder to give or take
any such action with regard to any particular Convertible Debenture may do so
with regard to all or any part of the principal amount of such Convertible
Debenture or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any different part of such
principal amount.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND THE COMPANY.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust & Agency Department, or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at the address of its principal
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office specified in the first paragraph of this instrument (Attention: Chief
Financial Officer) or at any other address previously furnished in writing to
the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at such Holder's address as it appears in the
Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice.
In any case where notice to Holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Any notice when mailed to a Holder in the aforesaid manner shall be
conclusively deemed to have been received by such Holder whether or not
actually received by such Holder. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall
be the equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If
any provision of this Indenture modifies or excludes any provision of the
Trust Indenture Act that may be so modified or excluded, the latter provision
shall be deemed to apply to this Indenture as so modified or to be excluded,
as the case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
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SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Convertible
Debentures shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Convertible Debentures, express
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the holders of Senior Indebtedness, the holders of
Convertible Preferred Securities (to the extent provided herein) and the
Holders of Convertible Debentures, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
THIS INDENTURE AND THE CONVERTIBLE DEBENTURES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Convertible Debenture or the last date on which a
Holder has the right to convert his Convertible Debentures shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or
of the Convertible Debentures) payment of interest or principal or conversion
of the Convertible Debentures need not be made on such date, but may be made
on the next succeeding Business Day (except that, if such Business Day is in
the next succeeding calendar year, such Interest Payment Date, Redemption
Date or Stated Maturity, as the case may be, shall be the immediately
preceding Business Day) with the same force and effect as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity or on
such last day for conversion, PROVIDED, that no interest shall accrue for
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the period from and after such Interest Payment Date, Redemption Date or
Stated Maturity, as the case may be.
ARTICLE II
Convertible Debenture Forms
SECTION 201. FORMS GENERALLY.
The Convertible Debentures and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A, which is
hereby incorporated in and expressly made a part of this Indenture. The
Convertible Debentures may have letters, numbers, notations or other marks of
identification or designation and such legends or endorsements required by
law, stock exchange rule, agreements to which the Company is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). The Company shall furnish any such legend not
contained in Exhibit A to the Trustee in writing. Each Convertible Debenture
shall be dated the date of its authentication. The terms and provisions of
the Convertible Debentures set forth in Exhibit A are part of the terms 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.
The definitive Convertible Debentures shall be typewritten or
printed, lithographed or engraved or produced by any combination of these
methods on steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Convertible
Debentures may be listed, all as determined by the officers executing such
Convertible Debentures, as evidenced by their execution thereof.
SECTION 202. INITIAL ISSUANCE TO PROPERTY TRUSTEE.
The Convertible Debentures initially issued to the Property Trustee
of the Trust shall be in the form of one or more individual certificates in
definitive, fully registered form without coupons and shall bear the
following legend (the "Restricted Securities Legend") unless the Company
determines otherwise in accordance with applicable law.
THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN
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MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
WHICH IS AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES
THEREOF UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR RULE)
(THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO SUN HEALTHCARE GROUP,
INC., (THE "COMPANY") (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR,"
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING
CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER
AGENT, THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
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ARTICLE III
The Convertible Debentures
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Convertible Debentures that may
be authenticated and delivered under this Indenture is limited to
$355,670,131.25, except for Convertible Debentures authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Convertible Debentures pursuant to Section 304, 305, 306, 906, 1109
or 1301.
The Convertible Debentures shall be known and designated as the "7%
Convertible Junior Subordinated Debentures Due 2028" of the Company. Their
Stated Maturity shall be May 1, 2028, and they shall bear interest at the
rate of 7% per annum, from May 4, 1998 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, as the
case may be, payable quarterly (subject to deferral as set forth herein), in
arrears, on February 1, May 1, August 1 and November 1 (each an "Interest
Payment Date") of each year, commencing August 1, 1998, until the principal
thereof is paid or made available for payment, and they shall be paid to the
Person in whose name the Convertible Debenture is registered at 5:00 p.m.
(New York City time) on the regular record date for such interest
installment, which shall be the close of business on the Business Day next
preceding such interest payment date (the "Regular Record Date"); provided,
however, in the event the Convertible Debentures are held by any entity other
than the Trust, the Company may set other record dates. Interest will
compound quarterly and will accrue at the rate of 7% per annum on any
interest installment in arrears for more than one quarter or during an
extension of an interest payment period as set forth in Section 312 hereof.
The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Except as provided in
the following sentence, the amount of interest payable for any period shorter
than a full quarterly period for which interest is computed, will be computed
on the basis of the actual number of days elapsed per 90-day quarter. In the
event that any date on which interest is payable on the Convertible
Debentures is not a Business Day, then payment of interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
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If at any time while the Property Trustee is the Holder of any
Convertible Debentures, the Trust or the Property Trustee is required to pay
any taxes, duties, assessments or governmental charges of whatever nature
(other than withholding taxes) imposed by the United States, or any other
taxing authority, then, in any such case, the Company will pay as additional
interest ("Additional Interest") on the Convertible Debentures held by the
Property Trustee, such amounts as shall be required so that the net amounts
received and retained by the Trust and the Property Trustee after paying any
such taxes, duties, assessments or other governmental charges will be not
less than the amounts the Trust and the Property Trustee would have received
had no such taxes, duties, assessments or other governmental charges been
imposed.
The principal of and interest on the Convertible Debentures shall
be payable at the office or agency of the Company in the United States
maintained for such purpose and at any other office or agency maintained by
the Company for such purpose in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; PROVIDED, HOWEVER, that unless the Convertible Debentures are
held by the Trust or any successor permissible under Section 612 of this
Indenture, at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register.
The Convertible Debentures shall be redeemable as provided in
Article Eleven hereof.
The Convertible Debentures shall be subordinated in right of
payment to Senior Indebtedness as provided in Article Twelve hereof.
The Convertible Debentures shall be convertible as provided in
Article Thirteen hereof.
SECTION 302. DENOMINATIONS.
The Convertible Debentures shall be issuable only in registered
form without coupons.
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SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Convertible Debentures shall be executed on behalf of the
Company by its Chairman of the Board, its Vice Chairman of the Board, its
Chief Executive Officer, its President, its Chief Financial Officer, or one
of its Vice Presidents, and if the Company so chooses, under its corporate
seal reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Convertible
Debentures may be manual or facsimile.
Convertible Debentures bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Convertible Debentures or did not hold such offices at the date of such
Convertible Debentures.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Convertible Debentures executed by
the Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Convertible Debentures; and the
Trustee in accordance with such Company Order shall authenticate and make
available for delivery such Convertible Debentures as in this Indenture
provided and not otherwise.
The Convertible Debentures shall be dated the date of
authentication.
No Convertible Debenture shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears
on such Convertible Debenture a certificate of authentication substantially
in the form provided for herein executed by the Trustee by manual signature,
and such certificate upon any Convertible Debenture shall be conclusive
evidence, and the only evidence, that such Convertible Debenture has been
duly authenticated and delivered hereunder.
SECTION 304. TEMPORARY CONVERTIBLE DEBENTURES.
Pending the preparation of definitive Convertible Debentures, the
Company may execute, and upon Company Order the Trustee shall authenticate
and deliver, temporary Convertible Debentures which are typewritten, printed,
lithographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Convertible Debentures in lieu
of which they are issued and with such appropriate insertions, omissions,
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substitutions and other variations as the officers executing such Convertible
Debentures may determine, as evidenced by their execution of such Convertible
Debentures.
If temporary Convertible Debentures are issued, the Company will
cause definitive Convertible Debentures to be prepared without unreasonable
delay. After the preparation of definitive Convertible Debentures, the
temporary Convertible Debentures shall be exchangeable for definitive
Convertible Debentures upon surrender of the temporary Convertible Debentures
at any office or agency of the Company designated pursuant to Section 1002,
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Convertible Debentures the Company shall execute and the
Trustee shall authenticate and make available for delivery in exchange
therefor a like principal amount of definitive Convertible Debentures of
authorized denominations. Until so exchanged the temporary Convertible
Debentures shall in all respects be entitled to the same benefits under this
Indenture as definitive Convertible Debentures.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
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 designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Convertible Debentures and of transfers of
Convertible Debentures. The Trustee is hereby appointed "Security Registrar"
for the purpose of registering Convertible Debentures and transfers of
Convertible Debentures as herein provided.
Upon surrender for registration of transfer of any Convertible
Debenture at an office or agency of the Company designated pursuant to
Section 1002 for such purpose, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Convertible Debentures of any authorized
denominations and of a like aggregate principal amount.
At the option of the Holder, Convertible Debentures may be
exchanged for other Convertible Debentures of any authorized denominations
and of a like aggregate principal amount, upon surrender of the Convertible
Debentures to be exchanged at such office or agency. Whenever any
Convertible Debentures are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and make available for delivery,
the Convertible Debentures which the Holder making the exchange is entitled
to receive.
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All Convertible Debentures issued upon any registration of transfer
or exchange of Convertible Debentures shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Convertible Debentures surrendered upon such
registration of transfer or exchange.
Every Convertible Debenture presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company
or the Trustee) be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar
duly executed, by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer or
exchange of Convertible Debentures, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Convertible Debentures, other than exchanges pursuant to Section 304, 906,
1109 or 1301 not involving any transfer.
The Company shall not be required (i) in the case of a partial
redemption of the Securities, to issue, register the transfer of or exchange
any Convertible Debenture during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Convertible Debenture selected for redemption under the Section 1105 and
ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Convertible Debenture so selected
for redemption in whole or in part, except the unredeemed portion of any
Convertible Debenture being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN CONVERTIBLE DEBENTURES.
If any mutilated Convertible Debenture is surrendered to the
Trustee, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Convertible Debenture of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Convertible Debenture and (ii) such Convertible Debenture or indemnity as may
be required by them to save each of them and any Agent of either of them
harmless, then, in the absence of notice to the Company or the Trustee that
such Convertible Debenture has been acquired by a bona fide purchaser, the
Company shall execute and the Trustee shall authenticate and deliver, in lieu
of any such
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destroyed, lost or stolen Convertible Debenture, a new Convertible Debenture
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Convertible
Debenture has become or is about to become due and payable, the Company in
its discretion may, instead of issuing a new Convertible Debenture, pay such
Convertible Debenture.
Upon the issuance of any new Convertible Debenture under this
Section, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Convertible Debenture issued pursuant to this Section in
lieu of any destroyed, lost or stolen Convertible Debenture shall constitute
an original additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Convertible Debenture shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Convertible
Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Convertible
Debentures.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Convertible Debenture which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name that Convertible Debenture (or one or more
Predecessor Securities) is registered at 5:00 p.m. (New York City time) on
the Regular Record Date.
Any interest on any Convertible Debenture which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may 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 Convertible Debentures (or their
respective Predecessor Securities) are registered at 5:00 p.m. (New York City
time) on a Special Record Date for the
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payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Convertible Debenture and the
date of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed 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
(a) 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 proposed 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 proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Security 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 Convertible Debentures (or their respective Predecessor Securities) are
registered at 5:00 p.m. (New York City time) 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 Convertible Debentures may be listed, and, if so
listed, 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 (B), such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section 307, each
Convertible Debenture delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Convertible Debenture
shall carry the rights to interest accrued and unpaid, and to accrue
(including in each such case Additional Payments, if any), which were carried
by such other Convertible Debenture.
In the case of any Convertible Debenture which is converted after
any Regular Record Date and on or prior to the next succeeding Interest
Payment Date (other than any Convertible Debenture whose Maturity is prior to
such Interest Payment Date), interest whose Stated Maturity is on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not punctually
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paid or duly provided for) shall be paid to the Person in whose name that
Convertible Debenture (or one or more Predecessor Securities) is registered
at 5:00 p.m. (New York City time) on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the
case of any Convertible Debenture that is converted prior to any Regular
Record Date, interest whose Stated Maturity is after the date of conversion
of such Convertible Debenture shall not be payable, and the Company shall not
make nor be required to make any other payment, adjustment or allowance with
respect to accrued but unpaid interest (including Additional Payments, if
any) on the Convertible Debentures being converted, which shall be deemed to
be paid in full. Subject to any right of the Holder of such Convertible
Debenture or any Predecessor Security to receive interest as provided in this
paragraph and the second paragraph of Clause (a) of Section 1302, the
Company's delivery upon conversion of the fixed number of shares of Sun
Common Stock into which the Convertible Debentures are convertible (together
with the cash payment, if any, in lieu of fractional shares) shall be deemed
to satisfy the Company's obligation to pay the principal amount at Maturity
of the portion of Convertible Debentures so converted and any unpaid interest
(including Additional Payments, if any) accrued on such Convertible
Debentures at the time of such conversion. If any Convertible Debenture
called for redemption is converted, any money deposited with the Trustee or
with any Paying Agent or so segregated and held in trust for the redemption
of such Convertible Debenture shall (subject to any right of the Holder of
such Convertible Debenture or any Predecessor Security to receive interest as
provided in this paragraph) be paid to the Company upon Company Request or,
if then held by the Company, shall be discharged from such trust.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Convertible Debenture for
registration of transfer, the Company, the Trustee and any Agent of the
Company or the Trustee may treat the Person in whose name such Convertible
Debenture is registered as the owner of such Convertible Debenture for the
purpose of receiving payment of principal of and (subject to Section 307)
interest (including Additional Payments, if any) on such Convertible
Debenture and for all other purposes whatsoever, whether or not such
Convertible Debenture be overdue, and neither the Company, the Trustee nor
any Agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 309. CANCELLATION.
All Convertible Debentures surrendered for payment, redemption,
registration of transfer or exchange or conversion shall, if surrendered to
any Person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by it. The Company
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may at any time deliver to the Trustee for cancellation any Convertible
Debentures previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Convertible Debentures so
delivered shall be promptly cancelled by the Trustee. No Convertible
Debentures shall be authenticated in lieu of or in exchange for any
Convertible Debentures cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Convertible Debentures
held by the Trustee shall be disposed of as directed by a Company Order;
PROVIDED, HOWEVER, that the Trustee shall not be required to destroy the
certificates representing such cancelled Convertible Debentures.
SECTION 310. RIGHT OF SET OFF.
Notwithstanding anything to the contrary in this Indenture, the
Company shall have the right to set off any payment it is otherwise required
to make hereunder to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the
Guarantee.
SECTION 311. CUSIP NUMBERS.
The Company in issuing the Convertible Debentures 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 Convertible Debentures
or as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Convertible
Debentures, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 312. OPTION TO EXTEND INTEREST PAYMENT PERIOD.
(a) So long as no Event of Default has occurred and is continuing,
the Company shall have the right at any time during the term of the
Convertible Debentures to defer interest payments (including Additional
Payments) from time to time by extending the interest payment period for
successive periods (each, an "Extension Period") not exceeding 20 consecutive
quarters for each such period; PROVIDED that no Extension Period may extend
beyond the maturity date of the Convertible Debentures. At the end of each
Extension Period, the Company shall pay all interest then accrued and unpaid
(including Additional Interest and Liquidated Damages) together with interest
thereon compounded quarterly at the rate specified for the Convertible
Debentures to the extent permitted by applicable law ("Compounded Interest");
PROVIDED that during any Extension Period, the Company shall (i)
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not declare or pay dividends on, or make a distribution with respect to, or
redeem or purchase or acquire, or make a liquidation payment with respect to,
any of its capital stock (other than (A) purchases or acquisitions of shares
of Sun Common Stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans or the satisfaction by the
Company of its obligations pursuant to any contract or security requiring the
Company to purchase shares of Sun Common Stock, (B) as a result of a
reclassification of the Company's capital stock or the exchange or conversion
of one class or series of the Company's capital stock for another class or
series of the Company's capital stock or (C) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged (or make any guarantee payments with respect to the foregoing),
(ii) not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities (including guarantees) issued
by the Company that rank PARI PASSU with or junior to the Convertible
Debentures (except by conversion into or exchange for shares of its capital
stock) and (iii) not make any guarantee payments with respect to the
foregoing (other than pursuant to the Guarantee). Prior to the termination
of any such Extension Period, the Company may further extend such Extension
Period; PROVIDED that such Extension Period, together with all such previous
and further extensions thereof, may not exceed 20 consecutive quarters or
extend beyond the maturity date of the Convertible Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due,
the Company may commence a new Extension Period, subject to the above
requirements. No interest during an Extension Period, except at the end
thereof, shall be due and payable.
(b) If the Property Trustee is the sole Holder of the Convertible
Debentures at the time the Company selects an Extension Period, the Company
shall give written notice to the Administrative Trustees and the Property
Trustee of its selection of such Extension Period at least one Business Day
prior to the earlier of (i) the date the distributions on the Convertible
Preferred Securities are payable or (ii) if the Convertible Preferred
Securities are listed on the New York Stock Exchange or other stock exchange
or quotation system, the date the Trust is required to give notice to the New
York Stock Exchange or other applicable self-regulatory organization or to
holders of the Convertible Preferred Securities of the record date or the
date such distributions are payable, but in any event not less than 10
Business Days prior to such record date. The Company shall cause the Trust
to give notice of the Company's selection of such Extension Period to the
holders of the Convertible Preferred Securities.
(c) If the Property Trustee is not the sole holder of the
Convertible Debentures at the time the Company selects an Extension Period,
the Company shall give the Holders of the Convertible Debentures and the
Trustee written notice of its selection of such
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Extension Period at least 10 Business Days prior to the earlier of (i) the
next succeeding Interest Payment Date or (ii) if the Convertible Preferred
Securities are listed on the New York Stock Exchange or other stock exchange
or quotation system, the date the Company is required to give notice to the
New York Stock Exchange or other applicable self-regulatory organization or
to holders of the Convertible Debentures on the record or payment date of
such related interest payment, but in any event not less than two Business
Days prior to such record date.
(d) The quarter in which any notice is given pursuant to
paragraphs (b) and (c) hereof shall be counted as one of the 20 quarters
permitted in the maximum Extension Period permitted under paragraph (a)
hereof.
SECTION 313. PAYING AGENT, SECURITY REGISTRAR AND CONVERSION AGENT.
The Trustee will initially act as Paying Agent, Security Registrar
and Conversion Agent. The Company may change any Paying Agent, Security
Registrar, co-registrar or Conversion Agent without prior notice. The
Company or any of its Affiliates may act in any such capacity. The Trustee
is entitled to the protections of Article VI in its capacity as Paying Agent,
Registrar and Conversion Agent.
SECTION 314. GLOBAL SECURITY.
(a) In connection with a Dissolution Event,
(1) the Convertible Debentures in book-entry certificated
form may be presented to the Trustee by the Property Trustee in exchange for
a global Convertible Debenture in an aggregate principal amount equal to the
aggregate principal amount of all outstanding Convertible Debentures (a
"Global Security"), to be registered in the name of the Depositary, or its
nominee, and delivered by the Trustee to the Depositary for crediting to the
accounts of its participants pursuant to the instructions of the
Administrative Trustees. The Company upon any such presentation shall
execute a Global Security in such aggregate principal amount and deliver the
same to the Trustee for authentication and delivery in accordance with this
Indenture. Payments on the Convertible Debentures issued as a Global
Security will be made to the Depositary; and
(2) if any Convertible Preferred Securities are held in non
book-entry certificated form, the Convertible Debentures in certificated form
may be presented to the Trustee by the Property Trustee and any Preferred
Security Certificate which represents Convertible Preferred Securities other
than Convertible Preferred Securities held by the
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Depositary or its nominee ("Non Book-Entry Preferred Securities") will be
deemed to represent beneficial interests in Convertible Debentures presented
to the Trustee by the Property Trustee having an aggregate principal amount
equal to the aggregate liquidation amount of the Non Book-Entry Preferred
Securities until such Preferred Security Certificates are presented to the
Security Registrar for transfer or reissuance at which time such Convertible
Preferred Security Certificates will be cancelled and a Convertible
Debenture, registered in the name of the holder of the Convertible Preferred
Security Certificate or the transferee of the holder of such Preferred
Security Certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Convertible Preferred
Security Certificate cancelled, will be executed by the Company and delivered
to the Trustee for authentication and delivery in accordance with this
Indenture. On issue of such Convertible Debentures, Convertible Debentures
with an equivalent aggregate principal amount that were presented by the
Property Trustee to the Trustee will be deemed to have been cancelled.
(b) A Global Security may be transferred, in whole but not in
part, only to another nominee of the Depositary, or to a nominee of such
successor Depositary.
(c) If (i) the Depositary notifies the Company that it is
unwilling or unable to continue as a depositary for such Global Security and
no successor depositary shall have been appointed, (ii) the Depositary, at
any time, ceases to be a clearing agency registered under the Exchange Act at
which time the Depositary is required to be so registered to act as such
depositary and no successor depositary shall have been appointed, (iii) the
Company, in its sole discretion, determines that such Global Security shall
be so exchangeable or (iv) there shall have occurred an Event of Default with
respect to such Convertible Debentures, as the case may be, the Company will
execute, and, subject to Article Three of this Indenture, the Trustee, upon
written notice from the Company and receipt of a Company Order, will
authenticate and deliver the Convertible Debentures in definitive registered
form without coupons, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the Global Security in
exchange for such Global Security. In addition, upon an Event of Default or
if the Company may at any time determine that the Convertible Debentures
shall no longer be represented by a Global Security, in such event the
Company will execute, and subject to Section 305 of this Indenture, the
Trustee, upon receipt of an Officers' Certificate evidencing such
determination by the Company, will authenticate and make available for
delivery the Convertible Debentures in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal amount
equal to the principal amount of the Global Security in exchange for such
Global Security. Upon the exchange of the Global Security for such
Convertible Debentures in definitive registered form without coupons, in
authorized denominations, the Global Security shall be cancelled
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by the Trustee. Such Convertible Debentures in definitive registered form
issued in exchange for the Global Security 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. The Trustee shall deliver such Convertible Debentures
to the Depositary for delivery to the Persons in whose names such Convertible
Debentures are so registered.
(d) Every Global Security authenticated and delivered hereunder shall
bear a legend in substantially the following form, in capital letters and
bold-face type:
THIS CONVERTIBLE 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 CONVERTIBLE DEBENTURE MAY NOT
BE EXCHANGED IN WHOLE OR IN PART FOR A CONVERTIBLE DEBENTURE
REGISTERED, AND NO TRANSFER OF THIS CONVERTIBLE 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.
(e) If the Depositary is The Depository Trust Company, the Global
Security 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 ("DTC") TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
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(f) The Convertible Debentures may not be transferred except in
compliance with the Restricted Securities Legend unless otherwise determined
by the Company in accordance with applicable law. Upon any distribution of
the Convertible Debentures to the holders of the Convertible Preferred
Securities in accordance with the Declaration, the Company and the Trustee
shall enter into a supplemental indenture pursuant to Section 901(f) to
provide for transfer procedures and restrictions with respect to the
Convertible Debentures substantially similar to those contained in the
Declaration to the extent applicable in the circumstances existing at the
time of such distribution.
ARTICLE IV
Satisfaction and Discharge
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to
any surviving rights of conversion, registration of transfer or exchange of
Convertible Debentures herein expressly provided for), and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(a) either
(i) all Convertible Debentures theretofore authenticated
and delivered (other than (A) Convertible Debentures which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 306 and (B) Convertible Debentures for whose
payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(ii) all such Convertible Debentures not theretofore
delivered to the Trustee for cancellation have become due and payable,
and the Company has deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount sufficient
to pay and discharge the entire indebtedness on such Convertible
Debentures not theretofore delivered to the Trustee for cancellation,
for principal and interest (including Additional Payments, if any) to
the date of such deposit (in the case of Convertible
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Debentures which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be, along with, if requested by the
Trustee, an accountant's (or investment or commercial bank's)
certificate stating such funds are sufficient to pay principal and
interest on the Convertible Debentures when and as due;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money
shall have been deposited with the Trustee pursuant to subclause (ii) of
Clause (a) of this Section, the obligations of the Trustee under Section 402
and the last paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the Convertible
Debentures and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the Trustee.
All moneys deposited with the Trustee pursuant to Section 401 (and held by it
or any Paying Agent) for the payment of Convertible Debentures subsequently
converted shall be returned to the Company upon Company Request.
ARTICLE V
Remedies
SECTION 501. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events that has occurred and is continuing (whatever the reason for
such Event of Default and
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whether it shall be occasioned by the provisions of Article Twelve or 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):
(a) failure for 30 days to pay interest on the Convertible
Debentures, including any Additional Interest and Compounded Interest, in
respect thereof, when due; PROVIDED that a valid extension of an interest
payment period will not constitute a default in the payment of interest
(including Additional Interest or Compounded Interest, if any) for this
purpose;
(b) failure to pay principal of or premium, if any, on the
Convertible Debentures when due, whether at maturity, upon redemption, by
Declaration or otherwise;
(c) failure by the Company to deliver shares of Sun Common Stock
upon an election by a holder of Convertible Preferred Securities to convert
such Convertible Preferred Securities;
(d) failure to observe or perform any other covenant contained in
the Indenture for 90 days after notice to the Company by the Trustee or by
the holders of not less than 25% in aggregate outstanding principal amount of
the Convertible Debentures;
(e) entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or of substantially all of the
property of the Company, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days;
(f) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by the Company or to the
entry of a decree or order for relief in respect of itself in an involuntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against the Company, or the
filing by the Company of a
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petition or answer or consent seeking reorganization or relief under any
applicable federal or state law, or the consent by the Company to the filing
of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of substantially all of the property of
the Company, or the making by the Company of an assignment for the benefit of
creditors, or the admission by the Company in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action by
the Company in furtherance of any such action; or
(g) the voluntary or involuntary dissolution, winding up or
termination of the Trust, except in connection with (i) the distribution of
Convertible Debentures to holders of Convertible Preferred Securities in
liquidation of the Trust upon the redemption of all of the outstanding
Convertible Preferred Securities of the Trust or (ii) certain mergers,
consolidations or amalgamations, each as permitted by the Declaration.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Convertible Debentures may declare the principal of all
the Convertible Debentures and any other amounts payable hereunder to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal
and all accrued interest shall become immediately due and payable.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been
obtained by the Trustee as provided in this Article, the Holders of a
majority in aggregate principal amount of the Outstanding Convertible
Debentures, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all overdue interest (including Additional Payments, if
any) on all Convertible Debentures,
(ii) the principal of any Convertible Debentures which have
become due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Convertible Debentures, and
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(iii) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel;
and
(b) all Events of Default, other than the non-payment of the
principal of Convertible Debentures which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if:
(a) default is made in the payment of any interest (including
Additional Interest and Compounded Interest, if any) on any Convertible
Debenture when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of any
Convertible Debenture at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Convertible Debentures, the whole amount then due and
payable on such Convertible Debentures for principal and interest (including
Additional Interest and Compounded Interest, if any) and, to the extent that
payment thereof shall be legally enforceable, interest on any overdue
principal and on any overdue interest (including Additional Interest and
Compounded Interest, if any), at the rate borne by the Convertible
Debentures, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement
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in this Indenture or in aid of the exercise of any power granted herein, or
to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Convertible Debentures), its property or its
creditors, the Trustee shall be entitled and empowered, by intervention in
such proceeding or otherwise, to take any and all actions authorized under
the Trust Indenture Act in order to have claims of the Holders and the
Trustee allowed in any such proceeding. In particular, the Trustee shall be
authorized to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Convertible Debentures or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF CONVERTIBLE
DEBENTURES.
All rights of action and claims under this Indenture or the
Convertible Debentures may be prosecuted and enforced by the Trustee without
the possession of any of the Convertible Debentures or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Convertible Debentures in respect of which such judgment has been recovered.
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SECTION 506. APPLICATION OF MONEY COLLECTED.
Subject to Article Twelve, any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date
or dates fixed by the Trustee and, in case of the distribution of such money
on account of principal or interest (including Additional Payments, if any),
upon presentation of the Convertible Debentures and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of all Senior Indebtedness of the
Company to the extent required by Article Twelve;
THIRD: To the payment of the amounts then due and unpaid for
principal of and interest (including Additional Payments, if any) on
the Convertible Debentures in respect of which or for the benefit of
which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Convertible Debentures for principal and interest (including
Additional Payments, if any), respectively; and
FOURTH: To the payment of the remainder, if any, to the
Company.
SECTION 507. LIMITATION ON SUITS.
Subject to Section 516, no Holder of any Convertible Debenture shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) if the Trust is not the sole holder of Convertible Debentures,
the Holders of not less than 25% in aggregate principal amount of the
Outstanding Convertible Debentures shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
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(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Convertible Debentures;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST
AND CONVERT.
Notwithstanding any other provision in this Indenture, the Holder
of any Convertible Debenture shall have the right, which is absolute and
unconditional, to receive payment of the principal of and (subject to Section
307) interest (including Additional Payments, if any) on such Convertible
Debenture on the respective Stated Maturities expressed in such Convertible
Debenture (or, in the case of redemption, on the Redemption Date) and to
convert such Convertible Debenture in accordance with Article Thirteen and to
institute suit for the enforcement of any such payment and right to convert,
and such rights shall not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
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SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Convertible Debentures in the
last paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Convertible Debenture to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Convertible Debentures 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; and
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
Subject to Sections 502 and 902 hereof, the Holders of not less
than a majority in principal amount of the Outstanding Convertible Debentures
may on behalf of the Holders of all the Convertible Debentures waive any past
default hereunder and its consequences, except a default
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(a) in the payment of the principal of, premium, if any, or
interest (including Additional Payments, if any) on any Convertible Debenture
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Trustee); or
(b) in respect of a covenant or provision hereof that under
Article Nine cannot be modified or amended without the consent of the Holder
of each Outstanding Security affected; PROVIDED, HOWEVER, that if the
Convertible Debentures are held by the Trust or a trustee of the Trust, such
waiver shall not be effective until the holders of a majority in liquidation
amount of Trust Securities shall have consented to such waiver; PROVIDED,
FURTHER, that if the consent of the Holder of each outstanding Convertible
Debenture is required, such waiver shall not be effective until each holder
of the Trust Securities shall have consented to such waiver.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, a court may require any party litigant in such
suit to file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent
provided in the Trust Indenture Act; PROVIDED, that neither this Section nor
the Trust Indenture Act shall be deemed to authorize any court to require
such an undertaking or to make such an assessment in any suit instituted by
the Company or the Trustee or in any suit for the enforcement of the right to
receive the principal of and interest (including Additional Payments, if any)
on any Convertible Debenture or to convert any Convertible Debenture in
accordance with Article Thirteen.
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may affect
the covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
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advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 516. ENFORCEMENT BY HOLDERS OF CONVERTIBLE PREFERRED SECURITIES.
Notwithstanding the foregoing, if an Event of Default has occurred
and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Convertible Debentures on the
date such interest or principal is otherwise payable, the Company
acknowledges that, in such event, a holder of Convertible Preferred
Securities may institute a Direct Action for payment on or after the
respective due date specified in the Convertible Debentures. The Company may
not amend this Indenture to remove the foregoing right to bring a Direct
Action without the prior written consent of all the holders of Convertible
Preferred Securities. Notwithstanding any payment made to such holder of
Convertible Preferred Securities by the Company in connection with a Direct
Action, the Company shall remain obligated to pay the principal of and
interest on the Convertible Debentures (including Additional Payments, if
any) held by the Trust or the Property Trustee and the Company shall be
subrogated to the rights of the holder of such Convertible Preferred
Securities with respect to payments on the Convertible Preferred Securities
to the extent of any payments made by the Company to such holder in any
Direct Action. The holders of Convertible Preferred Securities will not be
able to exercise directly any other remedy available to the Holders of the
Convertible Debentures.
ARTICLE VI
The Trustee
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee shall be as provided
by the Trust Indenture Act. Notwithstanding the foregoing, no provision of
this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Indenture
or indemnity reasonably satisfactory to the Trustee against such risk or
liability is not reasonably assured to it. Whether or not therein expressly
so provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 601.
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SECTION 602. NOTICE OF DEFAULTS.
The Trustee shall give the Holders notice of any Event of Default
hereunder as and to the extent provided by the Trust Indenture Act; PROVIDED,
HOWEVER, that in the case of any default of the character specified in
Section 501(d), no such notice to Holders shall be given until at least 30
days after the occurrence thereof. For all purposes hereof, the Trustee
shall not be deemed to have notice or knowledge of any default described in
Section 501(e), (f) or (g) unless a Responsible Officer assigned to and
working in the Corporate Trust Office has actual knowledge thereof or unless
written notice thereof is received at the Corporate Trust Office.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security
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or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to reasonable examination of the books, records and
premises of the Company, personally or by Agent or attorney;
(g) 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 with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith, without gross
negligence or wilful misconduct, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CONVERTIBLE
DEBENTURES.
The recitals contained herein and in the Convertible Debentures,
except the Trustee's certificates of authentication, shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Convertible Debentures. The
Trustee shall not be accountable for the use or application by the Company of
the Convertible Debentures or the proceeds thereof.
SECTION 605. MAY HOLD CONVERTIBLE DEBENTURES.
The Trustee, any Paying Agent, any Security Registrar or any other
Agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Convertible Debentures and, subject to Sections 608 and
613, may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Paying Agent, Security Registrar, or such other Agent.
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SECTION 606. MONEY HELD IN TRUST.
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 otherwise agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(a) to pay to the Trustee from time to time such reasonable
compensation as the Company and the Trustee shall from time to time agree in
writing for all services rendered by it hereunder;
(b) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, fees, disbursements
and advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee and any predecessor Trustee for, and
to hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(f) or Section 501(g), the
expenses (including the reasonable charges and expenses of its counsel) and
the compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency
or other similar law.
The provisions of this Section shall survive the termination of
this Indenture.
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SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, 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 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $25,000,000 as set forth
in its most recent published annual report of conditions and has its
Corporate Trust Office in New York, New York. If such Person publishes
reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, 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 so published. 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.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount of the Outstanding Convertible Debentures,
delivered to the Trustee and to the Company. If an instrument of acceptance
by a successor Trustee shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
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(d) If at any time:
(i) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been
a bona fide Holder of a Convertible Debenture for at least six months,
or
(ii) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request therefor by
the Company or by any such Holder, 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, (A) the Company by Board Resolution may remove the
Trustee, or (B) subject to Section 514, any Holder who has been a bona fide
Holder of a Convertible Debenture 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.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor
Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Convertible Debentures delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee and supersede
the successor Trustee appointed by the Company. If no successor Trustee
shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a
bona fide Holder of a Convertible Debenture for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner
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provided in Section 106. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee;
PROVIDED, that on request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder. Upon request of any such successor Trustee, the Company shall
execute any and all instruments required to more fully and certainly vest in
and confirm to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
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 the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Convertible Debentures
shall have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the
Convertible Debentures so authenticated with the same effect as if such
successor Trustee had itself authenticated such Convertible Debentures.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Convertible Debentures), the Trustee
shall be subject to the provisions
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of the Trust Indenture Act regarding the collection of claims against the
Company (or any such other obligor).
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not later than February 15 and August 15 in each
year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of a date not more than 15 days prior
to the delivery thereof to the extent such list is not already held by the
Trustee, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in
its capacity as Security Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 701 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Convertible
Debentures, and the corresponding rights and duties of the Trustee, shall be
as provided by the Trust Indenture Act.
(c) Every Holder of Convertible Debentures, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any Agent of either of them shall be held
accountable by reason of any disclosure of information as to names and
addresses of Holders made pursuant to the Trust Indenture Act.
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SECTION 703. REPORTS BY TRUSTEE.
(a) Within 60 days after May 15 of each year, commencing May 15,
1999 (unless a report is required to be transmitted before such date by the
TIA, in which case before such date so as to comply with the TIA), the
Trustee shall transmit by mail to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange
upon which the Convertible Debentures are listed, with the Commission and
with the Company. The Company will notify the Trustee when the Convertible
Debentures are listed on any stock exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant to such Act; PROVIDED, that any
such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed
with the Trustee within 15 days after the same is so required to be filed
with the Commission.
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).
The Company shall also provide to the Trustee on a timely basis
such information as the Trustee requires to enable the Trustee to prepare and
file any form required to be submitted by the Company with the Internal
Revenue Service and the Holders of the Convertible Debentures relating to
original issue discount, if any, including, without limitation, Form 1099-OID
or any successor form.
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ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge with or into any
other Person or, directly or indirectly, convey, transfer or lease all or
substantially all of its properties and assets on a consolidated basis to any
Person, unless:
(a) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer or
lease, all or substantially all of the properties and assets of the Company
on a consolidated basis shall be a corporation, partnership or trust, shall
be organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, the due and punctual
payment of the principal of (and premium, if any) and interest (including
Additional Payments, if any) on all the Convertible Debentures and the
performance or observance of every covenant of this Indenture on the part of
the Company to be performed or observed and shall have provided for
conversion rights in accordance with Article Thirteen;
(b) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or a
Subsidiary as a result of such transaction as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with.
This Section shall only apply to a merger or consolidation in which
the Company is not the surviving corporation and to conveyances, leases and
transfers by the Company as transferor or lessor.
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SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of all or
substantially all the properties and assets of the Company on a consolidated
basis in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor Person had been named as
the Company herein, and thereafter the predecessor Person shall be relieved
of all obligations and covenants under this Indenture and the Convertible
Debentures.
ARTICLE IX
Supplemental Indentures
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory
to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Convertible Debentures; or
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(c) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article Thirteen; or
(d) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make
any other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture; PROVIDED, that such action pursuant to this Clause (d) shall not
adversely affect in any material respect the interests of the Holders of the
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Convertible Debentures or, so long as any of the Convertible Preferred
Securities shall remain outstanding, the holders of the Convertible Preferred
Securities; or
(e) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(f) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if any, to
be placed on Convertible Debentures, and all other matters required pursuant
to Sections 305 and 314 or otherwise necessary, desirable or appropriate in
connection with the issuance of Convertible Debentures to holders of
Convertible Preferred Securities in the event of a distribution of
Convertible Debentures by the Trust if a Special Event occurs and is
continuing.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Convertible Debentures, by Act of said
Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may 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 of modifying in any manner the rights of the Holders under this
Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected
thereby,
(a) extend the Stated Maturity of the principal of, or any
installment of interest (including Additional Payments, if any) on, any
Convertible Debenture, or reduce the principal amount thereof, or reduce the
rate or extend the time for payment of interest thereon (other than pursuant
to terms hereof on the date of the first issuance of the Convertible
Debentures hereunder), or extend the Extension Period, or reduce any premium
payable upon the redemption thereof, or change the place of payment to a
location outside the United States where, or the coin or currency in which,
any Convertible Debenture or interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or adversely affect the right to convert any Convertible
Debenture as provided in Article Thirteen (except as permitted by Section
901(c) and (f)), or modify the provisions of this Indenture with respect to
the subordination of the Convertible Debentures in a manner adverse to the
Holders, or
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(b) reduce the percentage in principal amount of the Outstanding
Convertible Debentures, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
modify any of the provisions of this Section or Section 513, except to
increase any such percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the Holder
of each Outstanding Security affected thereby;
PROVIDED that if the Convertible Debentures are held by the Trust or a
trustee of the Trust, such supplemental indenture shall not be effective
until the holders of a majority in liquidation amount of Trust Securities
shall have consented to such supplemental indenture; PROVIDED, FURTHER, that
if the consent of the Holder of each Outstanding Security is required, such
supplemental indenture shall not be effective until each holder of the Trust
Securities of the Trust shall have consented to such supplemental indenture.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Persons entitled to consent to any
indenture supplemental hereto. If a record date is fixed, the Holders on
such record date, or their duly designated proxies, and only such Persons,
shall be entitled to consent to such supplemental indenture, whether or not
such Holders remain Holders after such record date; PROVIDED that unless such
consent shall have become effective by virtue of the requisite percentage
having been obtained prior to the date which is 90 days after such record
date, any such consent previously given shall automatically and without
further action by any Holder be cancelled and of no further effect.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
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SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Convertible Debentures theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby. No such
supplemental indenture shall directly or indirectly modify the provisions of
Article Twelve in any manner which might terminate or impair the rights of
the Senior Indebtedness pursuant to such subordination provisions.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. REFERENCE IN CONVERTIBLE DEBENTURES TO SUPPLEMENTAL INDENTURES.
Convertible Debentures authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Convertible Debentures so modified as to
conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Convertible Debentures.
ARTICLE X
Covenants; Representations and Warranties
SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay the principal of and
interest on the Convertible Debentures and Additional Payments, if any, in
accordance with the terms of the Convertible Debentures and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the United States an office or agency
where Convertible
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Debentures may be presented or surrendered for payment, where Convertible
Debentures may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the
Convertible Debentures and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its Agent to receive
all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in the United States) where the Convertible Debentures
may be presented or surrendered for any or all such purposes and may from
time to time rescind such designations; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the United States for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 1003. MONEY FOR CONVERTIBLE DEBENTURE PAYMENTS TO BE HELD
IN TRUST.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of or interest on any of
the Convertible Debentures, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of or interest on any Convertible
Debentures, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held as provided by the Trust Indenture Act, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of
its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (i) comply with the provisions of the Trust Indenture
Act applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Convertible Debentures)
in the making of any payment in respect of the Convertible Debentures, upon
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the written request of the Trustee, forthwith pay to the Trustee all sums
held in trust by such Paying Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or interest
on (including Additional Payments, if any) any Convertible Debenture and
remaining unclaimed for two years after such principal or interest has become
due and payable shall be paid to the Company on Company Request, or (if then
held by the Company) shall be discharged from such trust; and the Holder of
any such Convertible Debenture shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease.
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance
of any of the material terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and, if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
SECTION 1005. LIMITATION ON DIVIDENDS; COVENANTS AS TO THE TRUST.
(a) The Company covenants that so long as the Convertible
Debentures are outstanding, if (i) there shall have occurred and be
continuing any event that with the giving of notice or the lapse of time or
both, would constitute an Event of Default, (ii) the Company shall be in
default with respect to its payment of any obligations under the Guarantee,
or (iii) the Company has exercised its option to defer interest payments on
the Convertible Debentures by extending the interest payment period and such
period, or any extension
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thereof, shall be continuing, then the Company shall (A) not declare or pay
dividends on, or make a distribution with respect to, or redeem or purchase
or acquire, or make a liquidation payment with respect to, any of its capital
stock (other than (x) purchases or acquisitions of shares of Sun Common Stock
in connection with the satisfaction by the Company of its obligations under
any employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security requiring the Company to
purchase shares of Sun Common Stock, (y) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or
series of the Company's capital stock for another class or series of the
Company's capital stock or (z) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged
(or make any guarantee payments with respect to the foregoing), (B) not make
any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company that rank PARI PASSU with or junior to the Convertible Debentures
(except by conversion into or exchange for shares of its capital stock) and
(C) not make any guarantee payments with respect to the foregoing (other than
pursuant to the Guarantee).
(b) The Company also covenants and agrees (i) that it shall
directly or indirectly maintain 100% ownership of the Common Securities of
the Trust; PROVIDED, HOWEVER, that any permitted successor of the Company
hereunder may succeed to the Company's ownership of such Common Securities
and (ii) that it shall use its reasonable efforts, consistent with the terms
and provisions of the Declaration, to cause the Trust (x) to remain a
statutory business trust, except in connection with the distribution of the
Convertible Debentures to the holders of Trust Securities in liquidation of
the Trust, the redemption of all of the Trust Securities of the Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration, and (y) to otherwise continue to be classified as a grantor
trust for United States Federal income tax purposes.
SECTION 1006. PAYMENT OF EXPENSES OF THE TRUST.
In connection with the offering, sale and issuance of the
Convertible Debentures to the Property Trustee in connection with the sale of
the Trust Securities by the Trust, the Company shall:
(a) pay for all costs, fees and expenses relating to the offering,
sale and issuance of the Convertible Debentures, including commissions,
discounts and expenses payable pursuant to the Purchase Agreement and
compensation of the Trustee under the Indenture in accordance with the
provisions of Section 607 of the Indenture;
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(b) be responsible for and pay for all debts and obligations
(other than with respect to the Trust Securities) of the Trust, pay for all
costs and expenses of the Trust (including, but not limited to, costs and
expenses relating to the organization of the Trust, the offering, sale and
issuance of the Trust Securities (including commissions, discounts and
expenses in connection therewith), the fees and expenses of the Property
Trustee and the Delaware Trustee, the costs and expenses relating to the
operation of the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying
Agent(s), registrar(s), transfer Agent(s), duplicating, travel and telephone
and other telecommunications expenses and costs and expenses incurred in
connection with the acquisition, financing, and disposition of Trust assets);
and
pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
SECTION 1007. REGISTRATION RIGHTS.
The holders of the Convertible Preferred Securities, the Holders of
Convertible Debentures, the holders of the Guarantee and the shares of Sun
Common Stock issuable upon conversion of the Convertible Debentures are
entitled to the benefits of the Registration Rights Agreement as of May 4,
1998 between the Company and the Initial Purchasers (the "REGISTRATION RIGHTS
AGREEMENT").
ARTICLE XI
Redemption of Convertible Debentures
SECTION 1101. OPTIONAL REDEMPTION.
(a) The Company shall have the right to redeem the Convertible
Debentures, in whole or in part, at any time or from time to time after
May 3, 2001 upon not less than 30 nor more than 60 days notice, at the optional
redemption prices (expressed as a percentage of the principal amount of
Convertible Debentures to be redeemed) shown below, plus any accrued and
unpaid interest (including Additional Payments, if any) to the Redemption
Date, if redeemed during the 12-month period beginning May 3:
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Percentage of
Principal
Year Amount
---- -------------
2001.................................. 104.000%
2002.................................. 103.000%
2003.................................. 102.000%
2004.................................. 101.000%
2005 and thereafter................... 100.000%
If the Company has deferred interest payments, all unpaid interest must be
paid in cash prior to any notice of redemption. Any redemption pursuant to
this Section 1101 shall be made pursuant to the provisions of Sections 1103
through 1108 hereof.
(b) If a partial redemption of the Convertible Debentures would
result in the delisting of the Convertible Preferred Securities issued by the
Trust from any national securities exchange or other organization on which
the Convertible Preferred Securities are listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the
Convertible Debentures in whole.
SECTION 1102. TAX EVENT OPTIONAL REDEMPTION.
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Administrative
Trustees shall have been informed by tax counsel rendering the Dissolution
Tax Opinion that a No Recognition Opinion cannot be delivered to the Trust,
then, notwithstanding Section 1101(a) but subject to Section 1101(b), the
Company shall have the right upon not less than 30 days nor more than 60 days
notice to the Holders of the Convertible Debentures to redeem the Convertible
Debentures in whole (but not in part) for cash at a redemption price equal to
100% of the principal amount of the Convertible Debentures plus accrued and
unpaid interest (including Additional Payments) if any, within 90 days
following the occurrence of such Tax Event (the "90-Day Period"); PROVIDED,
HOWEVER, that if, at the time there is available to the Company or the Trust
the opportunity to eliminate within the 90-Day Period, the Tax Event by
taking some ministerial action ("Ministerial Action"), such as filing a form
or making an election, or pursuing some other similar reasonable measure
which, in the sole judgment of the Company, has or will cause no adverse
effect on the Company, the Trust or the Holders
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of the Trust Securities and will involve no material cost, the Company or the
Trust shall pursue such Ministerial Action or other measure in lieu of
redemption, and PROVIDED, FURTHER, that the Company shall have no right to
redeem the Convertible Debentures while the Trust is pursuing any Ministerial
Action or other similar measure pursuant to its obligations under the
Declaration.
SECTION 1103. APPLICABILITY OF ARTICLE.
Redemption of Convertible Debentures at the election of the
Company, as permitted by Sections 1101 and 1102, shall be made in accordance
with such provision and this Article.
SECTION 1104. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem Convertible Debentures
pursuant to Section 1101 or 1102 shall be evidenced by a Board Resolution.
In case of any redemption at the election of the Company, the Company shall,
at least 45 days and no more than 90 days prior to the Redemption Date fixed
by the Company, notify the Trustee in writing of such Redemption Date and of
the principal amount of Convertible Debentures to be redeemed and provide a
copy of the notice of redemption given to Holders of Convertible Debentures
to be redeemed pursuant to Section 1105.
SECTION 1105. SELECTION BY TRUSTEE OF CONVERTIBLE DEBENTURES TO BE REDEEMED.
If less than all the Convertible Debentures are to be redeemed
(unless such redemption affects only a single Convertible Debenture), the
particular Convertible Debentures to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Convertible Debentures not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to $25 or any
integral multiple thereof) of the principal amount of the Convertible
Debentures.
The Trustee shall promptly notify the Company in writing of the
Convertible Debentures selected for redemption as aforesaid and, in case of
any Convertible Debentures selected for partial redemption as aforesaid, the
principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Convertible Debenture,
whether such Convertible Debenture is to be redeemed in whole or in part.
In the case of any such redemption in part,
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the unredeemed portion of the principal amount of the Convertible Debenture
shall be in an authorized denomination (which shall not be less than the
minimum authorized denomination) for such Convertible Debenture.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Convertible Debentures
shall relate, in the case of any Convertible Debentures redeemed or to be
redeemed only in part, to the portion of the principal amount of such
Convertible Debentures which has been or is to be redeemed.
SECTION 1106. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Convertible Debentures to be redeemed, at
such Holder's address appearing in the Security Register.
All notices of redemption shall identify the Convertible Debentures
to be redeemed (including, if relevant, CUSIP number or ISIN) and shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) that on the Redemption Date the Redemption Price will become
due and payable upon each such Convertible Debenture to be redeemed and that
interest thereon will cease to accrue on and after said date, and
(d) the place or places where such Convertible Debentures are to
be surrendered for payment of the Redemption Price.
Notice of redemption of Convertible Debentures to be redeemed at
the election of the Company shall be given by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the
Company.
SECTION 1107. DEPOSIT AND PAYMENT OF REDEMPTION PRICE.
Prior to 10:30 a.m. (New York City time) on the Redemption Date,
the Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount
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of money sufficient to pay the Redemption Price of, plus (except if the
Redemption Date shall be an Interest Payment Date) accrued and unpaid
interest (including Additional Payments, if any) on all the Convertible
Debentures which are to be redeemed on that date. If the Convertible
Debentures or the Convertible Preferred Securities are held by a Depository,
such redemption payment shall be made to the Holders prior to 12:00 noon (New
York City time) on the Redemption Date or such earlier time as the Company
determines.
If any Convertible Debenture called for redemption is converted,
any money deposited with the Trustee or with any Paying Agent or so
segregated and held in trust for the redemption of such Convertible Debenture
shall (subject to any right of the Holder of such Convertible Debenture or
any Predecessor Security to receive interest as provided in the last
paragraph of Section 307) be paid to the Company upon Company Request or, if
then held by the Company, shall be discharged from such trust.
SECTION 1108. CONVERTIBLE DEBENTURES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the
Convertible Debentures so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified, and from
and after such date (unless the Company shall default in the payment of the
Redemption Price and accrued and unpaid interest, including Additional
Payments, if any) such Convertible Debentures shall cease to bear interest.
Upon surrender of any such Convertible Debenture for redemption in accordance
with said notice, such Convertible Debenture shall be paid by the Company at
the Redemption Price, together with accrued and unpaid interest (including
Additional Payments, if any) to the Redemption Date; PROVIDED, HOWEVER, that
installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Convertible
Debentures, or one or more Predecessor Convertible Debentures, registered as
such at 5:00 p.m. (New York City time) on the relevant Record Dates according
to the terms and the provisions of Section 307.
If any Convertible Debenture called for redemption shall not be so
paid upon surrender thereof for redemption, the principal shall, until paid,
bear interest from the Redemption Date at the rate borne by the Convertible
Debenture.
SECTION 1109. CONVERTIBLE DEBENTURES REDEEMED IN PART.
In the event of any redemption in part, the Company shall not be
required to (i) issue, register the transfer of or exchange any Convertible
Debenture during a period beginning at 9:00 a.m. (New York City time)
15 Business Days before any selection for
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redemption of Convertible Debentures and ending 5:00 p.m. (New York City
time) on the earliest date in which the relevant notice of redemption is
deemed to have been given to all holders of Convertible Debentures to be so
redeemed or (ii) register the transfer of or exchange any Convertible
Debentures so selected for redemption, in whole or in part, except for the
unredeemed portion of any Convertible Debentures being redeemed in part.
Any Convertible Debenture which is to be redeemed only in part
shall be surrendered at a place of payment therefor (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and make available
for delivery to the Holder of such Convertible Debenture without service
charge, a new Convertible Debenture or Convertible Debentures, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal
of the Convertible Debenture so surrendered.
SECTION 1110. NO SINKING FUND.
The Convertible Debentures are not entitled to the benefit of any
sinking fund.
SECTION 1111. MANDATORY REDEMPTION.
Upon (i) repayment at maturity or (ii) as a result of acceleration
upon the occurrence and continuation of an Event of Default, the Company
shall redeem the Outstanding Convertible Debentures in whole but not in part,
at a redemption price equal to 100% of the principal amount of such
Convertible Debentures plus any accrued and unpaid interest, including any
Additional Payments, to the date fixed for redemption. Any payment pursuant
to this section shall be made prior to 12:00 noon, New York City time, on the
date of such repayment or acceleration or at such other time on such earlier
date as the parties thereto shall agree.
SECTION 1112. EXCHANGE OF TRUST SECURITIES FOR CONVERTIBLE DEBENTURES.
At any time, the Company shall have the right to dissolve the Trust
and cause the Convertible Debentures to be distributed to the holders of the
Convertible Preferred Securities in dissolution of the Trust after
satisfaction of liabilities to creditors of the Trust in accordance with
Section 314 and as provided by applicable law.
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ARTICLE XII
Subordination of Convertible Debentures
SECTION 1201. AGREEMENT TO SUBORDINATE.
The Company covenants and agrees, and each Holder of Convertible
Debentures by such Holder's acceptance thereof likewise covenants and agrees,
that all Convertible Debentures shall be issued subject to the provisions of
this Article Twelve; and each Holder of a Convertible Debenture, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to
be bound by such provisions. The payment by the Company of the principal of,
premium, if any, and interest (including Additional Payments, if any) on all
Convertible Debentures issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment
to the prior payment in full of all existing and future Senior Indebtedness,
whether outstanding at the date of this Indenture or thereafter incurred;
PROVIDED HOWEVER, that no provision of this Article Twelve shall prevent the
occurrence of any default or Event of Default hereunder.
SECTION 1202. DEFAULT ON SENIOR INDEBTEDNESS.
(a) No payment (by set-off or otherwise) shall be made by or on
behalf of the Company on account of the principal of, premium, if any, or
interest on the Convertible Debentures (including any repurchases of
Convertible Debentures), or on account of the redemption provisions of the
Convertible Debentures, for cash or property (other than Junior Convertible
Debentures or from a Defeasance Trust), (i) upon the maturity of any Senior
Indebtedness of the Company by lapse of time, acceleration (unless waived) or
otherwise, unless and until all principal of, premium, if any, and the
interest on such Senior Indebtedness are first paid in full in cash or Cash
Equivalents (or such payment is duly provided for) or otherwise to the extent
holders accept satisfaction of amounts due by settlement in other than cash
or Cash Equivalents, or (ii) in the event of default in the payment of any
principal of, premium, if any, or interest on Senior Indebtedness of the
Company having an aggregate principal amount outstanding in excess of $5.0
million when it becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise (a "PAYMENT DEFAULT"),
unless and until (in the case of both (i) and (ii)) such Payment Default has
been cured or waived or otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a
Payment Default) that permits the holder of Senior Indebtedness to declare
such Senior Indebtedness to be due and payable and (ii) written notice of
such event of default given to the Company
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and the Trustee by the Representative under the Credit Agreement or the
holders of an aggregate of at least $50 million principal amount outstanding
of any other Senior Indebtedness, which Senior Indebtedness is designated by
the Company ("Designated Senior Indebtedness") or their representative
(a "PAYMENT NOTICE"), then, unless and until such event of default has been
cured or waived or otherwise has ceased to exist, no payment (by set-off or
otherwise) may be made by or on behalf of the Company which is an obligor
under such Designated Senior Indebtedness on account of the principal of,
premium, if any, or interest on the Convertible Debentures (including any
repurchases of any of the Convertible Debentures), or on account of the
redemption provisions of the Convertible Debentures, in any such case, other
than payments made with Junior Convertible Debentures or from a Defeasance
Trust. Notwithstanding the foregoing, unless the Designated Senior
Indebtedness in respect of which such event of default exists has been
declared due and payable in its entirety within 179 days after the Payment
Notice is delivered as set forth above (the "PAYMENT BLOCKAGE PERIOD") (and
such declaration has not been rescinded or waived), at the end of the Payment
Blockage Period, the Company shall be required to pay all sums not paid to
the Holders of the Convertible Debentures during the Payment Blockage Period
due to the foregoing prohibitions and to resume all other payments as and
when due on the Convertible Debentures. Any number of Payment Notices may be
given; PROVIDED that (i) not more than one Payment Notice shall be given
within a period of any 360 consecutive days, and (ii) no default that existed
upon the date of such Payment Notice or the commencement of such Payment
Blockage Period (whether or not such event of default is on the same issue of
Senior Indebtedness) shall be made the basis for the commencement of any
other Payment Blockage Period unless such other Payment Blockage Period is
commenced by a Payment Notice from the Representative under the Credit
Agreement and such event of default shall have been cured or waived for a
period of at least 90 consecutive days.
(c) Upon any distribution of assets of the Company upon any
dissolution, winding up, total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit of
creditors or any marshalling of assets or liabilities, the provisions of
Section 1203 of this Indenture shall apply.
The subordination provisions hereof shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of any
Senior Indebtedness is rescinded or must otherwise be returned by any holder
of such Senior Indebtedness upon the insolvency, bankruptcy or reorganization
of the Company or otherwise, all as though such payment has not been made.
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SECTION 1203. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution of assets of the Company or upon any
dissolution, winding up, total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit of
creditors or any marshalling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the Company, will
first be entitled to receive payment in full in cash or Cash Equivalents (or
have such payment duly provided for to the satisfaction of such holders) or
otherwise to the extent holders accept satisfaction of amounts due by
settlement in other than cash or Cash Equivalents before the Holders are
entitled to receive any payment on account of the principal of, premium, if
any, and interest on the Convertible Debentures or any Obligation in respect
of the Convertible Debentures (other than Junior Convertible Debentures or
from a Defeasance Trust);
(b) any payment or distribution of assets of the Company of any
kind or character from any source, whether in cash, property or securities
(other than Junior Convertible Debentures or from a Defeasance Trust) to
which the Holders or the Trustee on behalf of the Holders would be entitled
(by set-off or otherwise), except for the provisions of this Article Twelve,
shall be paid by the liquidating trustee or Agent or other person making such
a payment or distribution directly to the holders of such Senior Indebtedness
or their representative to the extent necessary to make payment in full (or
have such payment duly provided for) on all such Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company (other than Junior Convertible
Debentures or from a Defeasance Trust) shall be received by the Trustee or
the Holders at a time when such payment or distribution is prohibited by the
foregoing provisions, such payment or distribution shall be held in trust for
the benefit of the holders of such Senior Indebtedness, and shall be paid or
delivered by the Trustee or such Holders, as the case may be, to the holders
of such Senior Indebtedness remaining unpaid or unprovided for or to their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate
principal amounts remaining unpaid on account of such Senior Indebtedness
held or represented by each, for application to the payment of all such
Senior Indebtedness remaining unpaid, to the extent necessary to pay all such
Senior Indebtedness in full in cash or Cash Equivalents or otherwise to the
extent holders accept
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satisfaction of amounts due by settlement in other than cash or Cash
Equivalents after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness.
SECTION 1204. SUBROGATION.
Subject to the payment in full in cash or Cash Equivalents of all
Senior Indebtedness of the Company as provided herein, the Holders of
Convertible Debentures shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments or distributions of assets of
the Company applicable to the Senior Indebtedness until all amounts owing on
the Convertible Debentures shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of such Senior
Indebtedness by or on behalf of the Company, or by or on behalf of the
Holders by virtue of this Article Twelve, which otherwise would have been
made to the Holders shall, as between the Company and the Holders, be deemed
to be payment by the Company or on account of such Senior Indebtedness, it
being understood that the provisions of this Article Twelve are and are
intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of such Senior Indebtedness, on the
other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article Twelve shall have
been applied, pursuant to the provisions of this Article Twelve, to the
payment of amounts payable under Senior Indebtedness of the Company, then the
Holders shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount sufficient to pay all amounts payable
under or in respect of such Senior Indebtedness in full in cash or Cash
Equivalents.
SECTION 1205. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of Convertible Debentures by such Holder's acceptance
thereof authorizes and directs the Trustee on such Holder's behalf to take
such action as may be necessary or appropriate to effectuate the
subordination provided in this Article Twelve and appoints the Trustee as
such Holder's attorney-in-fact for any and all such purposes.
SECTION 1206. NOTICE BY THE COMPANY.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company which would prohibit
the making of any payment of monies to or by the Trustee in respect of the
Convertible Debentures pursuant to the
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provisions of this Article Twelve. Notwithstanding the provisions of this
Article Twelve or any other provision of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts which would
prohibit the making of any payment of monies to or by the Trustee in respect
of the Convertible Debentures pursuant to the provision of this Article
Twelve, unless and until a Responsible Officer of the Trustee shall have
received written notice thereof at the Corporate Trust Office of the Trustee
from the Company or a holder or holders of Senior Indebtedness or from any
trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 603 hereof, shall be entitled
in all respects to assume that no such facts exist; PROVIDED, HOWEVER, that
if the Trustee shall not have received the notice provided for in this
Section 1206 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (and premium, if any) or interest
(including Additional Payments, if any) on any Convertible Debenture), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to
the purposes for which they were received, and shall not be affected by any
notice to the contrary which may be received by it within two Business Days
prior to such date.
The Trustee, subject to the provisions of Section 603, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a
holder of such Senior Indebtedness or a trustee on behalf of any such holder
or holders. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Twelve, 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 right of such Person under this Article Twelve,
and, if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 1207. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Twelve in respect of any Senior Indebtedness
at any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any
of its rights as such holder.
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With respect to the holders of Senior Indebtedness of the Company,
the Trustee undertakes to perform or to observe only such of its covenants
and obligations as are set forth in this Article Twelve, and no implied
covenants or obligations with respect to the holders of such 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 such
Senior Indebtedness and, subject to the provisions of Section 603, the
Trustee shall not be liable to any holder of such Senior Indebtedness if it
shall pay over or deliver to Holders of Convertible Debentures, the Company
or any other Person money or assets to which any holder of such Senior
Indebtedness shall be entitled by virtue of this Article Twelve or otherwise.
With respect to the holders of Senior Indebtedness, the Trustee undertakes to
perform or to observe only such of its covenants or obligations as are
specifically set forth in this Article Twelve and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read into
this Indenture against the Trustee.
SECTION 1208. SUBORDINATION MAY NOT BE IMPAIRED.
No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof which any
such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders of
the Convertible Debentures, without incurring responsibility to the holders
of the Convertible Debentures and without impairing or releasing the
subordination provided in this Article Twelve or the obligations hereunder of
the Holders of the Convertible Debentures to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any
manner such Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (iii) release any Person liable
in any manner for the collection of such Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Company and any
other Person.
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ARTICLE XIII
Conversion of Convertible Debentures
SECTION 1301. CONVERSION RIGHTS.
Subject to and upon compliance with the provisions of this Article,
the Convertible Debentures are convertible, at the option of the Holder, at
any time after June 28, 1998 and on or prior to 5:00 p.m. (New York City
time) on the Business Day immediately preceding the date of repayment of such
Convertible Debentures, whether at maturity or upon redemption (either at the
option of the Company or pursuant to a Tax Event), into fully paid and
nonassessable shares of Sun Common Stock of the Company at an initial
conversion rate of 1.2419 shares of Sun Common Stock for each $25 in
aggregate principal amount of Convertible Debentures (equal to a conversion
price of $20.13 per share of Sun Common Stock), subject to adjustment as
described in this Article Thirteen. A Holder of Convertible Debentures may
convert any portion of the principal amount of the Convertible Debentures
into that number of fully paid and nonassessable shares of Sun Common Stock
(calculated as to each conversion to the nearest 1/100th of a share) obtained
by dividing the principal amount of the Convertible Debentures to be
converted by such conversion price. In case a Convertible Debenture or
portion thereof is called for redemption, such conversion right in respect of
the Convertible Debenture or portion so called shall expire at 5:00 p.m. (New
York City time) on the Business Day immediately preceding the corresponding
Redemption Date, unless the Company defaults in making the payment due upon
redemption.
SECTION 1302. CONVERSION PROCEDURES.
(a) In order to convert all or a portion of the Convertible
Debentures, the Holder thereof shall deliver to the Conversion Agent an
irrevocable Notice of Conversion setting forth the principal amount of
Convertible Debentures to be converted, together with the name or names, if
other than the Holder, in which the shares of Sun Common Stock should be
issued upon conversion and, if such Convertible Debentures are definitive
Convertible Debentures, surrender to the Conversion Agent the Convertible
Debentures to be converted, duly endorsed or assigned to the Company or in
blank. In addition, a holder of Convertible Preferred Securities may
exercise its right under the Declaration to convert such Convertible
Preferred Securities into Sun Common Stock by delivering to the Conversion
Agent an irrevocable Notice of Conversion setting forth the information
called for by the preceding sentence and directing the Conversion Agent (i)
to exchange such Convertible Preferred Security for a portion of the
Convertible Debentures held by the Trust
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(at an exchange rate of $25 liquidation amount of Convertible Debentures for
each Convertible Preferred Security) and (ii) to immediately convert such
Convertible Debentures, on behalf of such holder, into Sun Common Stock of
the Company pursuant to this Article Thirteen and, if such Convertible
Preferred Securities are in definitive form, surrendering such Convertible
Preferred Securities, duly endorsed or assigned to the Company or in blank.
So long as any Convertible Preferred Securities are outstanding, the Trust
shall not convert any Convertible Debentures except pursuant to a Notice of
Conversion delivered to the Conversion Agent by a holder of Convertible
Preferred Securities.
If a Notice of Conversion is delivered on or after the Regular
Record Date and prior to the subsequent Interest Payment Date, the Holder
will be entitled to receive the interest payable on the subsequent Interest
Payment Date on the portion of Convertible Debentures to be converted
notwithstanding the conversion thereof prior to such Interest Payment Date.
Except as otherwise provided in the immediately preceding sentence, in the
case of any Convertible Debenture which is converted, interest whose Stated
Maturity is after the date of conversion of such Convertible Debenture shall
not be payable, and the Company shall not make nor be required to make any
other payment, adjustment or allowance with respect to accrued but unpaid
interest (including Additional Payments, if any) on the Convertible
Debentures being converted, which shall be deemed to be paid in full. If any
Convertible Debenture called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or so segregated and held in trust
for the redemption of such Convertible Debenture shall (subject to any right
of the Holder of such Convertible Debenture or any Predecessor Security to
receive interest as provided in the last paragraph of Section 307 and this
paragraph) be paid to the Company upon Company Request or, if then held by
the Company, shall be discharged from such trust.
Each conversion shall be deemed to have been effected immediately
prior to 5:00 p.m. (New York City time) on the day on which the Notice of
Conversion was received (the "Conversion Date") by the Conversion Agent from
the Holder or from a holder of the Convertible Preferred Securities effecting
a conversion thereof pursuant to its conversion rights under the Declaration,
as the case may be. The Person or Persons entitled to receive the Sun Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Sun Common Stock as of the Conversion Date.
As promptly as practicable on or after the Conversion Date, the Company shall
issue and deliver at the office of the Conversion Agent, unless otherwise
directed by the Holder in the Notice of Conversion, a certificate or
certificates for the number of full shares of Sun Common Stock issuable upon
such conversion, together with the cash payment, if any, in lieu of any
fraction of any share to the Person or Persons entitled to receive the same.
The Conversion Agent shall deliver such certificate or certificates to such
Person or Persons.
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(b) Subject to any right of the Holder of such Convertible
Debenture or any Predecessor Security to receive interest as provided in the
last paragraph of Section 307 and the second paragraph of Clause (a) of
Section 1302, the Company's delivery upon conversion of the fixed number of
shares of Sun Common Stock into which the Convertible Debentures are
convertible (together with the cash payment, if any, in lieu of fractional
shares) shall be deemed to satisfy the Company's obligation to pay the
principal amount at Maturity of the portion of Convertible Debentures so
converted and any unpaid interest (including Additional Payments, if any)
accrued on such Convertible Debentures at the time of such conversion.
(c) No fractional shares of Sun Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the last reported sale price of such fractional interest on the date on which
the Convertible Debentures or Convertible Preferred Securities, as the case
may be, were duly surrendered to the Conversion Agent for conversion, or, if
such day is not a Trading Day, on the next Trading Day, and the Conversion
Agent in turn will make such payment, if any, to the Holder of the
Convertible Debentures or the holder of the Convertible Preferred Securities
so converted.
(d) In the event of the conversion of any Convertible Debenture in
part only, a new Convertible Debenture or Convertible Debentures for the
unconverted portion thereof will be issued in the name of the Holder thereof
upon the cancellation thereof in accordance with Section 305.
(e) In effecting the conversion transactions described in this
Section, the Conversion Agent is acting as Agent of the holders of
Convertible Preferred Securities (in the exchange of Convertible Preferred
Securities for Convertible Debentures) and as Agent of the Holders of
Convertible Debentures (in the conversion of Convertible Debentures into Sun
Common Stock), as the case may be, directing it to effect such conversion
transactions. The Conversion Agent is hereby authorized (i) to exchange
Convertible Debentures held by the Trust from time to time for Convertible
Preferred Securities in connection with the conversion of such Convertible
Preferred Securities in accordance with this Article Thirteen and (ii) to
convert all or a portion of the Convertible Debentures into Sun Common Stock
and thereupon to deliver such shares of Sun Common Stock in accordance with
the provisions of this Article Thirteen and to deliver to the Trust a new
Convertible Debenture or Convertible Debentures for any resulting unconverted
principal amount.
(f) Except as provided in Section 202, all shares of Sun Common
Stock delivered upon any conversion of Restricted Securities shall bear a
Restrictive Securities Legend substantially in the form of the legend
required to be set forth on such Convertible
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Debentures and shall be subject to the restrictions on transfer provided in
such legend and in Section 314 hereof. Neither the Trustee nor the
Conversion Agent shall have any responsibility for the inclusion or content
of any such Restrictive Securities Legend on such Sun Common Stock; PROVIDED,
HOWEVER, that the Trustee or the Conversion Agent shall have provided to the
Company or to the Company's transfer Agent for such Sun Common Stock, prior
to or concurrently with a request to the Company to deliver to such
Conversion Agent certificates for such Sun Common Stock, written notice that
the Convertible Debentures delivered for conversion are Restricted Securities.
SECTION 1303. CONVERSION PRICE ADJUSTMENTS.
The conversion price shall be subject to adjustment (without
duplication) from time to time as follows:
(a) In case the Company shall, while any of the Convertible
Debentures are outstanding, (i) pay a dividend or make a distribution with
respect to its Sun Common Stock in shares of Sun Common Stock, (ii) subdivide
its outstanding shares of Sun Common Stock, (iii) combine its outstanding
shares of Sun Common Stock into a smaller number of shares or (iv) issue by
reclassification of its shares of Sun Common Stock any shares of capital
stock of the Company, the conversion price in effect immediately prior to
such action shall be adjusted so that the Holder of any Convertible
Debentures thereafter surrendered for conversion shall be entitled to receive
the number of shares of capital stock of the Company which he would have
owned immediately following such action had such Convertible Debentures been
converted immediately prior thereto. An adjustment made pursuant to this
Section 1303(a) shall become effective immediately after the record date in
the case of a dividend or other distribution and shall become effective
immediately after the effective date in case of a subdivision, combination or
reclassification (or immediately after the record date if a record date shall
have been established for such event). If, as a result of an adjustment made
pursuant to this Section 1303(a), the Holder of any Convertible Debenture
thereafter surrendered for conversion shall become entitled to receive shares
of two or more classes or series of capital stock of the Company, the Board
of Directors (whose determination shall be conclusive and shall be described
in a Board Resolution filed with the Trustee) shall determine the allocation
of the adjusted conversion price between or among shares of such classes or
series of capital stock.
(b) In case the Company shall, while any of the Convertible
Debentures are outstanding, issue rights or warrants to all holders of its
Sun Common Stock entitling them (for a period expiring within 45 days after
the record date mentioned in this Section 1303(b)) to subscribe for or
purchase shares of Sun Common Stock at a price per share less than the
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current market price per share of Sun Common Stock (as determined pursuant to
1303(f) below) on such record date, the conversion price for the Convertible
Debentures shall be adjusted so that the same shall equal the price
determined by multiplying the conversion price in effect immediately prior to
the date of issuance of such rights or warrants by a fraction of which the
numerator shall be the number of shares of Sun Common Stock outstanding on
the date of issuance of such rights or warrants plus the number of shares
which the aggregate offering price of the total number of shares so offered
for subscription or purchase would purchase at such current market price, and
of which the denominator shall be the number of shares of Sun Common Stock
outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Sun Common Stock offered for subscription or
purchase. Such adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights or warrants. For the purposes of this subsection, the number of
shares of Sun Common Stock at any time outstanding shall not include shares
held in the treasury of the Company. The Company shall not issue any rights
or warrants in respect of shares of Sun Common Stock held in the treasury of
the Company. In case any rights or warrants referred to in this subsection
in respect of which an adjustment shall have been made shall expire
unexercised within 45 days after the same shall have been distributed or
issued by the Company, the conversion price shall be readjusted at the time
of such expiration to the conversion price that would have been in effect if
no adjustment had been made on account of the distribution or issuance of
such expired rights or warrants. In determining whether any rights, options
or warrants entitle the holder to subscribe for or purchase Sun Common Stock
at less than the Current Market Price, and in determining the aggregate
offering price of such shares of Sun Common Stock, there shall be taken into
account any 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. Notwithstanding this Article XIII, no adjustment will
be made pursuant to this Article if the Company makes proper provision for
each Holder of Convertible Preferred Securities who converts a Convertible
Preferred Security to receive, in addition to the Sun Common Stock issuable
upon such conversion, the kind and amount of assets (including securities) if
such Holder had been a holder of the Common Stock at the time of the
distribution of such assets or securities. Rights, options or warrants
distributed by the Company to all holders of the Sun Common Stock that
entitle the holders thereof to purchase shares of the Company's capital stock
and that, until the occurrence of an event (a "Triggering Event"), (i) are
deemed to be transferred with the Sun Common Stock, (ii) are not exercisable
and (iii) are also issued in respect of future issuances of Sun Common Stock,
shall not be deemed to be distributed until the occurrence of the Triggering
Event.
(c) Subject to the last sentence of this Section 1303(c), in case
the Company shall, by dividend or otherwise, distribute to all holders of its
Sun Common Stock evidences
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of its indebtedness, shares of any class or series of capital stock, cash or
assets (including securities, but excluding any rights or warrants referred
to in Section 1303(b) and dividends and distributions in connection with the
liquidation, dissolution or winding up of the Company and dividends and
distributions paid exclusively in cash and any dividend or distribution
referred to in Section 1303(a)), the conversion price shall be reduced so
that the same shall equal the price determined by multiplying the conversion
price in effect immediately prior to the effectiveness of the conversion
price reduction contemplated by this Section 1303(c) by a fraction of which
the numerator shall be the current market price per share (determined as
provided in Section 1303(f)) of Sun Common Stock on the date fixed for the
payment of such distribution (the "Reference Date") less the fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board
of Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed
applicable to one share of Sun Common Stock and the denominator shall be such
current market price per share of the Sun Common Stock, such reduction to
become effective immediately prior to the opening of business on the day
following the Reference Date. In the event that such dividend or
distribution is not so paid or made, the conversion price shall again be
adjusted to be the conversion price which would then be in effect if such
dividend or distribution had not occurred. If the Board of Directors
determines the fair market value of any distribution for purposes of this
Section 1303(c) by reference to the actual or when issued trading market for
any securities comprising such distribution, it must in doing so consider the
prices in such market over the same period used in computing the current
market price per share of Sun Common Stock (determined as provided in Section
1303(f)). For purposes of this Section 1303(c), any dividend or distribution
that includes shares of Sun Common Stock or rights or warrants to subscribe
for or purchase shares of Sun Common Stock shall be deemed instead to be (1)
a dividend or distribution of the evidences of indebtedness, shares of
capital stock, cash or assets other than such shares of Sun Common Stock or
such rights or warrants (making any conversion price reduction required by
this Section 1303(c)) immediately followed by (2) a dividend or distribution
of such shares of Sun Common Stock or such rights or warrants (making any
further conversion price reduction required by Section 1303(a) or 1303(b)),
except (A) the Reference Date of such dividend or distribution as defined in
this 1303(c) shall be substituted as (a) "the record date in the case of a
dividend or other distribution," and (b) "the record date for the
determination of stockholders entitled to receive such rights or warrants"
and (c) "the date fixed for such determination" within the meaning of
Sections 1303(a) and 1303(b) and (B) any shares of Sun Common Stock included
in such dividend or distribution shall not be deemed outstanding for purposes
of computing any adjustment of the conversion price in Section 1303(a).
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(d) In case the Company shall pay or make a dividend or other
distribution on its Sun Common Stock exclusively in cash (excluding any cash
portion of distributions referred to in Section 1303(c) or in connection with
a consolidation, merger or sale of assets of the Company as referred to in
Section 1304(c)), excluding cash dividends if such dividends (and other
distributions) together with all other such all-cash dividends and
distributions made within the preceding 12 months in respect of which no
adjustment has been made do not exceed 20% of the Company's current
capitalization (being the product of the then current market price per share
determined as provided in Section 1303(f) of Sun Common Stock times the
number of shares of Sun Common Stock then outstanding) on the Trading Day
immediately preceding the date of declaration of such dividend, the
conversion price shall be reduced so that the same shall equal the price
determined by multiplying the conversion price in effect immediately prior to
the effectiveness of the conversion price reduction contemplated by this
Section 1303(d) by a fraction of which the numerator shall be the current
market price per share (determined as provided in Section 1303(f)) of the Sun
Common Stock on the date fixed for the payment of such distribution less the
amount of cash so distributed and not excluded as provided applicable to one
share of Sun Common Stock and the denominator shall be such current market
price per share of the Sun Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the date
fixed for the payment of such distribution; PROVIDED, HOWEVER, that in the
event the portion of the cash so distributed applicable to one share of Sun
Common Stock is equal to or greater than the current market price per share
(as defined in Section 1303(f)) of the Sun Common Stock on the record date
mentioned above, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Holder of Convertible Debentures shall have the
right to receive upon conversion the amount of cash such Holder would have
received had such Holder converted each Convertible Debenture immediately
prior to the record date for the distribution of the cash. In the event that
such dividend or distribution is not so paid or made, the conversion price
shall again be adjusted to be the conversion price which would then be in
effect if such record date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot
offer) made by the Company or any Subsidiary of the Company for all or any
portion of the Sun Common Stock shall expire and such tender or exchange
offer shall involve the payment by the Company or such Subsidiary of
consideration per share of Sun Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose determination shall
be conclusive and described in a resolution of the Board of Directors) at the
last time (the "Expiration Time") tenders or exchanges may be made pursuant
to such tender or exchange offer (as it shall have been amended) that exceeds
110% of the current market price per share (determined as provided in Section
1303(f)) of the Sun Common Stock on the Trading Day next succeeding the
Expiration Time, the conversion price shall be reduced so
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that the same shall equal the price determined by multiplying the conversion
price in effect immediately prior to the effectiveness of the conversion
price reduction contemplated by this Section 1303(e) by a fraction of which
the numerator shall be the number of shares of Sun Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time
multiplied by the current market price per share (determined as provided in
Section 1303(f)) of the Sun Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate consideration payable
to stockholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Sun Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the
current market price per share (determined as provided in Section 1303(f)) of
the Sun 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.
(f) For the purpose of any computation under Section 1303(b),
1303(c), 1303(d) or 1303(e), the current market price per share of Sun Common
Stock on any date in question shall be deemed to be the average of the daily
Closing Prices for the five consecutive Trading Days selected by the Company
commencing not more than 20 Trading Days before, and ending not later than,
the earlier of the day in question or, if applicable, the day before the "ex"
date with respect to the issuance or distribution requiring such computation;
PROVIDED, HOWEVER, that if another event occurs that would require an
adjustment pursuant to Section 1303(a) through (e), inclusive, the Board of
Directors may make such adjustments to the Closing Prices during such five
Trading Day period as it deems appropriate to effectuate the intent of the
adjustments in this Section 1303, in which case any such determination by the
Board of Directors shall be set forth in a Board Resolution and shall be
conclusive. For purposes of this paragraph, the term "ex" date, (i) when
used with respect to any issuance or distribution, means the first date on
which the Sun Common Stock trades regular way on the New York Stock Exchange
or on such successor securities exchange as the Sun Common Stock may be
listed or in the relevant market from which the Closing Prices were obtained
without the right to receive such issuance or distribution, and (ii) when
used with respect to any tender or exchange offer, means the first date on
which the Sun Common Stock trades regular way on such securities exchange or
in such market after the Expiration Time of such offer.
(g) The Company may make such reductions in the conversion price, in
addition to those required by Sections 1303 (a) through (e), as it considers to
be advisable to
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avoid or diminish any income tax to holders of Sun Common Stock or rights to
purchase Sun 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. The Company from time to time may reduce the conversion
price by any amount for any period of time if the period is at least 20 days,
the reduction is irrevocable during the period, and the Board of Directors of
the Company shall have made a determination that such reduction would be in
the best interest of the Company, which determination shall be conclusive.
Whenever the conversion price is reduced pursuant to the preceding sentence,
the Company shall mail to holders of record of the Convertible Debentures 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 will be in effect.
(h) No adjustment in the conversion price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
conversion price; PROVIDED, HOWEVER, that any adjustments which by reason of
this Section 1303(h) are not required to be made shall be carried forward and
taken into account in determining whether any subsequent adjustment shall be
required.
(i) If any action would require adjustment of the conversion price
pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value to the Holder of the
Convertible Debentures.
(j) Except as stated above, the conversion price will not be
adjusted for the issuance of Sun Common Stock or any securities convertible
into or exchangeable into Sun Common Stock or carrying the right to purchase
any of the foregoing.
SECTION 1304. FUNDAMENTAL CHANGE.
(a) In the event that the Company is party to any transaction
(including, without limitation, a merger other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Sun Common
Stock), consolidation, sale of all or substantially all of the assets of the
Company, recapitalization or reclassification of Sun Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination of Sun Common Stock) or
any compulsory share exchange (each of the foregoing being referred to as a
"Transaction"), in each case, as a result of which shares of Sun Common Stock
shall be converted into the right to receive, or shall be exchanged for, (i) in
the case of any Transaction other than a Transaction involving a Common Stock
Fundamental Change (and
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subject to funds being legally available for such purpose under applicable
law at the time of such conversion), securities, cash or other property, each
Convertible Preferred Security shall thereafter be convertible into the kind
and, in the case of a Transaction which does not involve a Fundamental
Change, amount of securities, cash and other property receivable upon the
consummation of such Transaction by a holder of that number of shares of Sun
Common Stock into which a Convertible Preferred Security was convertible
immediately prior to such Transaction, or (ii) in the case of a Transaction
involving a Common Stock Fundamental Change, common stock, each Convertible
Preferred Security shall thereafter be convertible (in the manner described
therein) into common stock of the kind received by holders of Sun Common
Stock (but in each case after giving effect to any adjustment discussed below
relating to a Fundamental Change if such Transaction constitutes a
Fundamental Change). The holders of Convertible Preferred Securities will
have no voting rights with respect to any Transaction.
(b) If any Fundamental Change occurs, then the conversion price in
effect will be adjusted immediately after such Fundamental Change as
described below. In addition, in the event of a Common Stock Fundamental
Change, each Convertible Preferred Security shall be convertible solely into
common stock of the kind received by holders of Sun Common Stock as a result
of such Common Stock Fundamental Change.
(c) The conversion price in the case of any Transaction involving
a Fundamental Change will be adjusted immediately after such Fundamental
Change:
(i) in the case of a Non-Stock Fundamental Change, the
conversion price of the Convertible Preferred Securities will
thereupon become the lower of (A) the conversion price in effect
immediately prior to such Non-Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to the
preceding paragraphs, and (B) the greater of the Applicable Price or
the then applicable Reference Market Price plus any then-accrued and
unpaid distributions on one Convertible Preferred Security; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the Convertible Preferred Securities in effect
immediately prior to such Common Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to the
preceding paragraphs, will thereupon be adjusted by multiplying such
conversion price by a fraction of which the numerator will be the
Purchaser Stock Price and the denominator will be the Applicable
Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% of the value of the
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consideration received by a holder of Sun Common Stock is common
stock of the successor, acquirer, or other third party (and cash,
if any, is paid only with respect to any fractional interests in
such common stock resulting from such Common Stock Fundamental
Change) and (B) all Sun Common Stock will be have been exchanged
for, converted into, or acquired for common stock (and cash with
respect to fractional interests) of the successor, acquirer, or
other third party, the conversion price of the Convertible
Preferred Securities in effect immediately prior to such Common
Stock Fundamental Change will thereupon be adjusted by multiplying
such conversion price by a fraction of which the numerator will be
one and the denominator will be the number of shares of common
stock of the successor, acquirer, or other third party received by
a holder of one share of Sun Common Stock as a result of such
Common Stock Fundamental Change.
The Company or the Person formed by such consolidation or resulting
from such merger or which acquired such assets or which acquires the Company's
shares, as the case may be, shall make provision in its certificate or articles
of incorporation or other constituent document to establish such right. Such
certificate or articles of incorporation or other constituent document shall
provide for adjustments which, for events subsequent to the effective date of
such certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article Thirteen. The above provisions shall similarly apply to
successive transactions of the foregoing type.
SECTION 1305. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price and shall
prepare a certificate signed by the Chief Financial Officer or the Treasurer of
the Company setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Trustee, the Conversion Agent and
the transfer Agent for the Convertible Preferred Securities and the Convertible
Debentures; and
(b) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Company to all record holders of Convertible Preferred Securities
and the Convertible Debentures at their last addresses as they appear upon the
stock transfer books of the Company and the Trust.
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SECTION 1306. PRIOR NOTICE OF CERTAIN EVENTS.
In case:
(a) the Company shall (i) declare any dividend (or any other
distribution) on its Sun Common Stock, other than (A) a dividend payable in
shares of Sun Common Stock or (B) a dividend payable in cash that would not
require an adjustment pursuant to Section 1303(c) or 1303(d), or (ii) authorize
a tender or exchange offer that would require an adjustment pursuant to Section
1303(e);
(b) the Company shall authorize the granting to all holders of Sun
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants;
(c) of any reclassification of Sun Common Stock (other than a
subdivision or combination of the outstanding Sun Common Stock, or a change in
par value, or from par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company shall be required, or of
the sale or transfer of all or substantially all of the assets of the Company or
of any compulsory share exchange whereby the Sun Common Stock is converted into
other securities, cash or other property; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall (1) if any Convertible Preferred Securities are
outstanding, cause to be filed with the transfer Agent for the Convertible
Preferred Securities, and shall cause to be mailed to the holders of record of
the Convertible Preferred Securities, at their last addresses as they shall
appear upon the stock transfer books the Trust or (2) shall cause to be mailed
to all Holders at their last addresses as they shall appear in the Security
Register, at least 15 days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record (if any)
is to be taken for the purpose of such dividend, distribution, rights or
warrants or, if a record is not to be taken, the date as of which the holders of
Sun Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effective, and the date as of which it is
expected that holders of Sun Common Stock of record shall be entitled to
exchange their shares of Sun Common Stock for securities, cash
-84-
or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding
up (but no failure to mail such notice or any defect therein or in the
mailing thereof shall affect the validity of the corporate action required to
be specified in such notice).
SECTION 1307. CERTAIN DEFINED TERMS.
The following definitions shall apply to terms used in this Article
Thirteen:
(a) "CLOSING PRICE" of any Sun Common Stock on any day shall mean
the reported last sale price on such day or in case no sale takes place on
such day, the average of the reported closing bid and asked prices in each
case on the New York Stock Exchange Consolidated Transactions Tape or, if the
stock is not listed or admitted to trading on the New York Stock Exchange, on
the principal national securities exchange on which such stock is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm, selected by the
Debenture Trustee for that purpose.
(b) "TRADING DAY" shall mean a day on which securities are traded
on the national securities exchange or quotation system used to determine the
Closing Price.
SECTION 1308. DIVIDEND OR INTEREST REINVESTMENT PLANS.
Notwithstanding the foregoing provisions, the issuance of any
shares of Sun Common Stock pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of the Company
and the investment of additional optional amounts in shares of Sun Common
Stock under any such plan, and the issuance of any shares of Sun Common Stock
or options or rights to purchase such shares pursuant to any employee benefit
plan or program of the Company or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the date
the Convertible Debentures were first issued, shall not be deemed to
constitute an issuance of Sun Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment
provisions described above applies. There shall also be no adjustment of the
conversion price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of the Company except as
specifically described in this Article Thirteen.
-85-
SECTION 1309. CERTAIN ADDITIONAL RIGHTS.
In case the Company shall, by dividend or otherwise, declare or
make a distribution on its Sun Common Stock referred to in Section 1303(c) or
1303(d) (including, without limitation, dividends or distributions referred
to in the last sentence of Section 1303(c)), the Holder of the Convertible
Debentures, upon the conversion thereof subsequent to 5:00 p.m. (New York
City time) on the date fixed for the determination of stockholders entitled
to receive such distribution and prior to the effectiveness of the conversion
price adjustment in respect of such distribution, shall also be entitled to
receive for each share of Sun Common Stock into which the Convertible
Debentures are converted, the portion of the shares of Sun Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash
and assets so distributed applicable to one share of Sun Common Stock;
PROVIDED, HOWEVER, that, at the election of the Company (whose election shall
be evidenced by a resolution of the Board of Directors) with respect to all
Holders so converting, the Company may, in lieu of distributing to such
Holder any portion of such distribution not consisting of cash or securities
of the Company, pay such Holder an amount in cash equal to the fair market
value thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board
of Directors). If any conversion of Convertible Debentures described in the
immediately preceding sentence occurs prior to the payment date for a
distribution to holders of Sun Common Stock which the Holder of Convertible
Debentures so converted is entitled to receive in accordance with the
immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
Holder a due ▇▇▇▇ for the shares of Sun Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets to which
such Holder is so entitled, PROVIDED, that such due ▇▇▇▇ (i) meets any
applicable requirements of the principal national securities exchange or
other market on which the Sun Common Stock is then traded and (ii) requires
payment or delivery of such shares of Sun Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets no later
than the date of payment or delivery thereof to holders of shares of Sun
Common Stock receiving such distribution.
SECTION 1310. RESTRICTIONS ON SUN COMMON STOCK ISSUABLE UPON CONVERSION.
(a) Shares of Sun Common Stock to be issued upon conversion of a
Convertible Debenture in respect of Restricted Convertible Preferred
Securities shall bear the following legend (the "Restricted Common Stock
Legend") unless the Company determines otherwise in accordance with
applicable law.
-86-
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
WHICH IS AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES
THEREOF UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR RULE)
(THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO SUN HEALTHCARE GROUP,
INC. (THE "COMPANY") (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY
IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
(b) If shares of Sun Common Stock to be issued upon conversion of
a Convertible Debenture in respect of Restricted Convertible Preferred
Securities are to be registered in a name other than that of the Holder of
such Convertible Preferred Security, then the Person in whose name such
shares of Sun Common Stock are to be registered must deliver to the
Conversion Agent a certificate satisfactory to the Company and signed by such
Person, as to compliance with the restrictions on transfer applicable to such
Convertible Preferred Security. Neither the Trustee nor any Conversion Agent
or Registrar shall be
-87-
required to register in a name other than that of the Holder shares of Sun
Common Stock issued upon conversion of any such Convertible Debenture in
respect of such Convertible Preferred Securities not so accompanied by a
properly completed certificate.
SECTION 1311. TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR
ADJUSTMENTS.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder of any Convertible Debenture
to determine whether any facts exist which may require any adjustment of the
conversion price, or with respect to the nature or extent 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.
Neither the Trustee nor any Conversion Agent shall be accountable with
respect to the validity or value (or the kind of account) of any shares of
Sun Common Stock or of any securities or property, which may at any time be
issued or delivered upon the conversion of any Convertible Debenture; and
neither the Trustee nor any Conversion Agent makes any representation with
respect thereto. Neither the Trustee nor any Conversion Agent shall be
responsible for any failure of the Company to make any cash payment or to
issue, transfer or deliver any shares of Sun Common Stock or stock
certificates or other securities or property upon the surrender of any
Convertible Debenture for the purpose of conversion, or, except as expressly
herein provided, to comply with any of the covenants of the Company contained
in Article Ten or this Article Thirteen.
ARTICLE XIV
Immunity of Incorporators, Stockholders,
Officers and Directors
SECTION 1401. NO RECOURSE.
No recourse under or upon any obligation, covenant or agreement of
this Indenture, or of any Convertible Debenture, or for any claim based
thereon or otherwise in respect thereof, shall be had against any
incorporator, stockholder, officer or director, past, present or future as
such, of the Company or of any predecessor or successor corporation, either
directly or through the Company or any such predecessor or successor
corporation, 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 this Indenture and the obligations issued hereunder
are solely corporate obligations, and that no such personal liability
whatever shall attach to, or is or shall be incurred by, the incorporators,
stockholders,
-88-
officers or directors as such, of the Company or of any predecessor or
successor corporation, or any of them, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the
Convertible Debentures or implied therefrom; and that any and all such
personal liability of every name and nature, either at common law or in
equity or by constitution or statute, of, and any and all such rights and
claims against, every such incorporator, stockholder, officer or director as
such, because of the creation of the indebtedness hereby authorized, or under
or by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Convertible Debentures or implied therefrom, are
hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issuance of such
Convertible Debentures.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
-89-
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
SUN HEALTHCARE GROUP, INC.,
as Issuer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant Vice President
EXHIBIT A
FORM OF CONVERTIBLE DEBENTURE
[FACE OF CONVERTIBLE DEBENTURE]
[Include if Convertible Debenture is in global form:
THIS CONVERTIBLE DEBENTURE IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITARY OR A NOMINEE THEREOF. THIS CONVERTIBLE DEBENTURE MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CONVERTIBLE DEBENTURE
REGISTERED, AND NO TRANSFER OF THIS CONVERTIBLE 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.]
[Include if Convertible Debenture is in global form and The Depository
Trust Company is the Depositary:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED SIGNATORY OF THE
DEPOSITORY TRUST COMPANY ("DTC") TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURI-
TIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS AFTER THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES THEREOF UNDER RULE
144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR RULE) (THE "RESALE
RESTRICTION TERMINATION DATE") ONLY (A) TO SUN HEALTHCARE GROUP, INC.,
(THE "COMPANY") (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (C) OR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN
-2-
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRANSFER AGENT, THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
-3-
7% Convertible Junior Subordinated Debenture Due 2028
No. 1
$_____
Sun Healthcare Group, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Sun
Financing I, or registered assigns, the principal sum of
______________________ Dollars ($___________) on May 1, 2028 and to pay
interest thereon from May 4, 1998 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, as the case may
be, payable quarterly (subject to deferral as set forth in the Indenture), in
arrears, on February 1, May 1, August 1 and November 1 (each an "Interest
Payment Date") of each year, commencing August 1, 1998, until the principal
thereof is paid or made available for payment, and they shall be paid to the
Person in whose name the Convertible Debenture is registered at 5:00 p.m.
(New York City time) on the regular record date for such interest
installment, which shall be the close of business on the Business Day next
preceding such Interest Payment Date (provided that the Company has not set a
new record date pursuant to the Indenture) (the "Regular Record Date").
Reference is hereby made to the further provisions of this
Convertible Debenture set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set forth at
this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Convertible Debenture shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
-4-
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated: May 4, 1998
SUN HEALTHCARE GROUP, INC.
By:
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
[Seal]
Attest:
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
-5-
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Debentures referred to in the
within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK, as Trustee
By:
--------------------------------
Authorized Signatory
-6-
[FORM OF REVERSE OF CONVERTIBLE DEBENTURE]
This Convertible Debenture is one of a duly authorized issue of
securities of the Company designated as its 7% Convertible Junior
Subordinated Debenture Due 2028 (herein called the "Convertible
Debentures"), in aggregate principal amount of $355,670,131.25, issued and to
be issued under an Indenture, dated as of May 4, 1998 (herein called the
"Indenture"), between the Company and The Bank of New York, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Convertible Debentures, and of the terms upon
which the Convertible Debentures are, and are to be, authenticated and
delivered. The terms of the Convertible Debentures include those stated in
the Indenture and those made part of the Indenture by the Trust Indenture Act
of 1939 (15 U.S.C. Sections 77aaa-77bbbb) ("TIA") as in effect on the date
of the Indenture. The Convertible Debentures are subject to, and qualified
by, all such terms, certain of which are summarized hereon, and holders are
referred to the Indenture and the TIA for a statement of such terms. No
reference herein to the Indenture and no provision of this Convertible
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Convertible Debenture at the times, place and rate, and in
the coin or currency, herein prescribed or to convert this Convertible
Debenture as provided in the Indenture. All terms used in this Convertible
Debenture which are defined in the Indenture shall have the meanings assigned
to them in the Indenture. The Company will furnish to any Holder upon
written request and without charge a copy of the Indenture.
(1) INTEREST. The Convertible Debentures shall bear interest at
the rate of 7% per annum, from May 4, 1998 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, as the
case may be, payable quarterly (subject to deferral as set forth herein), in
arrears, on February 1, May 1, August 1 and November 1 (each an "Interest
Payment Date") of each year, commencing August 1, 1998, until the principal
thereof is paid or made available for payment, and they shall be paid to the
Person in whose name the Convertible Debenture is registered at 5:00 p.m.
(New York City time) on the regular record date for such interest
installment, which shall be the close of business on the Business Day next
preceding such Interest Payment Date (provided that the Company has not set a
new record date pursuant to the Indenture) (the "Regular Record Date").
Interest will compound quarterly and will accrue at the rate of 7% per annum
on any interest installment in arrears for more than one quarter or during an
extension of an interest payment period as set forth below.
-7-
The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Except as provided in
the following sentence, the amount of interest payable for any period shorter
than a full quarterly period for which interest in computed, will be computed
on the basis of the actual number of days elapsed per 90-day quarter. In the
event that any date on which interest is payable on the Convertible
Debentures is not a Business Day, then payment of interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
If at any time while the Property Trustee is the Holder of any
Convertible Debentures, the Trust or the Property Trustee is required to pay
any taxes, duties, assessments or governmental charges of whatever nature
(other than withholding taxes) imposed by the United States, or any other
taxing authority, then, in any such case, the Company shall pay as additional
interest ("Additional Interest") on the Convertible Debentures held by the
Property Trustee, such amounts as shall be required so that the net amounts
received and retained by the Trust and the Property Trustee after paying any
such taxes, duties, assessments or other governmental charges will be not
less than the amounts the Trust and the Property Trustee would have received
had no such taxes, duties, assessments or other governmental charges been
imposed.
The principal of and interest on the Convertible Debentures shall
be payable [insert, if global security is issued to the Depositary Trust
Company or its nominee] [insert, if securities in definitive form are issued
at the corporate office of the Indenture Trustee in the City of New York or
at the office or agency of the Paying Agent in the United States maintained
for such purpose] in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; PROVIDED, HOWEVER, that at the option of the Company payment of
interest may be made by (i) check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register, or
(ii) by wire transfer to an account maintained by the Person entitled thereto
as specified in the Securities Register, provided that proper transfer
instructions have been received by the Regular Record Date.
(2) OPTION TO EXTEND INTEREST PAYMENT PERIOD. The Company shall
have the right at any time during the term of the Convertible Debentures to
defer interest payments (including Additional Payments) from time to time by
extending the interest payment period for successive periods (each, an
"Extension Period") not exceeding 20 consecutive quarters for each such
period; PROVIDED, no Extension Period may extend beyond the maturity date of
the
-8-
Convertible Debentures. At the end of each Extension Period, the Company
shall pay all interest then accrued and unpaid (including Additional
Interest) together with interest thereon compounded quarterly at the rate
specified for the Convertible Debentures to the extent permitted by
applicable law ("Compounded Interest"); PROVIDED, that during any Extension
Period, the Company shall (i) not declare or pay dividends on, or make a
distribution with respect to, or redeem or purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (A)
purchases or acquisitions of shares of Sun Common Stock in connection with
the satisfaction by the Company of its obligations under any employee benefit
plans or the satisfaction by the Company of its obligations pursuant to any
contract or security requiring the Company to purchase shares of Sun Common
Stock, (B) as a result of a reclassification of the Company's capital stock
or the exchange or conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock or (C) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged) or make any guarantee payments
with respect to the foregoing, (ii) not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by the Company that rank PARI PASSU
with or junior to the Convertible Debentures (except by conversion into or
exchange for shares of its capital stock) and (iii) not make any guarantee
payments with respect to the foregoing (other than pursuant to the
Guarantee). Prior to the termination of any such Extension Period, the
Company may further extend such Extension Period; PROVIDED, that such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters or extend beyond the maturity
date of the Convertible Debentures. Upon the termination of any Extension
Period and the payment of all amounts then due, the Company may commence a
new Extension Period, subject to the above requirements. No interest during
an Extension Period shall be due and payable. Notwithstanding anything to
the contrary, the Company shall not have the right at any time to defer any
Additional Interest, including by extending the interest payment period.
If the Property Trustee is the sole Holder of the Convertible
Debentures at the time the Company selects an Extension Period, the Company
shall give written notice to the Administrative Trustees, the Property
Trustee and the Trustee of its selection of such Extension Period at least
one Business Day prior to the earlier of (i) the date the distributions on
the Convertible Preferred Securities are payable or (ii) if the Convertible
Preferred Securities are listed on the New York Stock Exchange or other stock
exchange or quotation system, the date the Trust is required to give notice
to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Convertible Preferred Securities of the
record date or the date such distributions are payable, but in any event not
less than 10 Business Days prior to such record date.
-9-
If the Property Trustee is not the sole holder of the Convertible
Debentures at the time the Company selects an Extension Period, the Company
shall give the Holders of the Convertible Debentures and the Trustee written
notice of its selection of such Extension Period at least ten Business Days
prior to the earlier of (i) the next succeeding Interest Payment Date or (ii)
if the Convertible Preferred Securities are listed on the New York Stock
Exchange or other stock exchange or quotation system, the date the Company is
required to give notice to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Convertible Debentures on
the record or payment date of such related interest payment, but in any event
not less than two Business Days prior to such record date.
The quarter in which any notice is given pursuant to paragraphs
second and third of this Section 2 shall be counted as one of the 20 quarters
permitted in the maximum Extension Period permitted under paragraph one of
this Section 2.
(3) PAYING AGENT AND SECURITY REGISTRAR. The Trustee will act as
Paying Agent, Security Registrar and Conversion Agent. The Company may
change any Paying Agent, Security Registrar, co-registrar or Conversion Agent
without prior notice. The Company or any of its Affiliates may act in any
such capacity.
(4) REDEMPTION. The Company shall have the right to redeem the
Convertible Debentures, in whole or in part, at any time or from time to time
after May 3, 2001 upon not less than 30 nor more than 60 days' notice, at
the optional redemption prices (expressed as a percentage of the principal
amount of Convertible Debentures to be redeemed) shown below, plus any
accrued and unpaid interest (including Additional Payments, if any) to the
Redemption Date, if redeemed during the 12-month period beginning May 3,:
Percentage of
Principal
Year Amount
---- -------------
2001 . . . . . . . . . . . . . . . . 104.000%
2002 . . . . . . . . . . . . . . . . 103.000%
2003 . . . . . . . . . . . . . . . . 102.000%
2004 . . . . . . . . . . . . . . . . 101.000%
2005 and thereafter . . . . . . . . 100.000%
If the Company has deferred interest payments, all unpaid interest
must be paid in cash prior to redemption. Any redemption pursuant to this
Section 1101 shall be made pursuant to the provisions of Sections 1103
through 1108 hereof.
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The Convertible Debentures are subject to redemption in whole (but
not in part), at any time within 90 days, if a Tax Event (as defined in the
Declaration) shall occur and be continuing, at a redemption price equal to
100% of the principal amount thereof plus accrued but unpaid interest
(including Additional Payments, if any) to the Redemption Date. On and after
the Redemption Date, interest ceases to accrue on the Convertible Debentures
or portions of them called for redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Convertible Debentures to be redeemed, at
such Holder's address appearing in the Security Register. The Convertible
Debentures in denominations larger than $25 may be redeemed in part but only
in integral multiples of $25. In the event of a redemption of less than all
of the Convertible Debentures, the Convertible Debentures will be chosen for
redemption by the Trustee in accordance with the Indenture.
If this Convertible Debenture is redeemed subsequent to a Regular
Record Date with respect to any Interest Payment Date specified above and on
or prior to such Interest Payment Date, then any accrued interest will be
paid to the person in whose name this Convertible Debenture is registered at
the close of business on such record date.
(5) SINKING FUND. The Convertible Debentures are not entitled to
the benefit of any sinking fund.
(6) SUBORDINATION. The payment of the principal of, premium, if
any, and interest (including Additional Payments, if any) on all Convertible
Debentures is subordinated and junior in right of payment to the prior
payment in full of all existing and future Senior Indebtedness, whether
outstanding at the date of this Indenture or thereafter incurred. Each
holder, by accepting a Convertible Debenture, agrees to such subordination
and authorizes and directs the Trustee on its behalf to take such action as
may be necessary or appropriate to effectuate the subordination so provided
and appoints the Trustee as its attorney-in-fact for such purpose.
"SENIOR CREDIT FACILITY" means that certain Credit Agreement, dated
as of October 8, 1997, as amended by the First Amendment thereto dated
November 12, 1997 and the Second Amendment thereto dated March 27, 1998, by
and among the Company and NationsBank of Texas, N.A. and the other banks that
are parties thereto, providing for availability of up to $1.2 billion of
loans to the Company in the following components: (a) a revolving credit
facility of up to $500.0 million and (b) three term loans in the amounts of
$200.0 million, $250.0 million and $250.0 million, respectively, including
any related notes,
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collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, increased, modified, extended,
renewed, refunded, replaced or refinanced, in whole or in part, from time to
time.
"SENIOR INDEBTEDNESS" means in respect of the Company: (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of
such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor,
including, without limitation, in the case of Sun, all indebtedness, and all
obligations of Sun to pay fees and other amounts, under the Senior Credit
Facility or under the indentures with respect to the Company's outstanding
9 1/2% notes due 2007 (the "2007 Notes") and the Company's 9 3/8% Senior
Subordinated Notes due 2008, and any refinancing of the Senior Credit
Facility in the bank credit market (including institutional participants
therein), including interest accruing on or after a bankruptcy or other
similar event, whether or not an allowed claim therein, (ii) all capital
lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under
any title retention agreement (but excluding trade accounts payable arising
in the ordinary course of business), (iv) all obligations of such obligor for
the reimbursement of any letter of credit, banker's acceptance, security
purchase facility or similar credit transaction, (v) all obligations of the
type referred to in clauses (i) through (iv) above of other Persons for the
payment of which such obligor is responsible or liable as obligor, guarantor
or otherwise, and (vi) all obligations of the type referred to in clauses (i)
through (v) above of other Persons secured by any lien on any property or
asset of such obligor (whether or not such obligation is assumed by such
obligor), except for (1) any such indebtedness that is by its terms
subordinated to or PARI PASSU with the Convertible Debentures and (2) any
indebtedness between or among such obligor or its affiliates, including all
other debt securities and guarantees in respect of those debt securities
issued to any trust, or a trustee of such trust, partnership, or other entity
affiliated with the Company that is, directly or indirectly, a financing
vehicle of the Company (a "Financing Entity") in connection with the issuance
by such Financing Entity of Convertible Preferred Securities or other
securities which rank PARI PASSU with, or junior to, the Convertible
Preferred Securities, unless otherwise provided in the terms of such debt
securities. Such Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of such
Senior Indebtedness, except as otherwise provided in the exception clauses
above.
(7) CONVERSION. The Holder of any Convertible Debenture has the
right, exercisable at any time on or before 5:00 p.m. (New York City time) on
the Business Day immediately preceding the date of repayment of such
Convertible Debentures, whether at maturity or upon redemption (either at the
option of the Company or pursuant to a Tax Event),
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to convert the principal amount thereof (or any portion thereof that is an
integral multiple of $25) into fully paid and nonassessable shares of Sun
Common Stock of the Company at an initial conversion rate of 1.2419 shares of
Sun Common Stock for each $25 in aggregate principal amount of Convertible
Debentures (equal to a conversion price of $20.13 per share of Sun Common
Stock), subject to adjustment under certain circumstances as set forth in
Section 1303 and 1304. The number of shares issuable upon conversion of a
Convertible Debenture is determined by dividing the principal amount of the
Convertible Debenture converted by the conversion price in effect on the
Conversion Date. No fractional shares will be issued upon conversion but a
cash adjustment will be made for any fractional interest. The outstanding
principal amount of any Convertible Debenture shall be reduced by the portion
of the principal amount thereof converted into shares of Sun Common Stock.
To convert a Convertible Debenture, a Holder must (i) complete and
sign a conversion notice substantially in the form attached hereto,
(ii) surrender the Convertible Debenture to a Conversion Agent, (iii) furnish
appropriate endorsements or transfer documents if required by the Security
Registrar or Conversion Agent and (iv) pay any transfer or similar tax, if
required. If a Notice of Conversion is delivered on or after the Regular
Record Date and prior to the subsequent Interest Payment Date, the Holder
will be entitled to receive the interest payable on the subsequent Interest
Payment Date on the portion of Convertible Debentures to be converted
notwithstanding the conversion thereof prior to such Interest Payment Date.
Except as otherwise provided in the immediately preceding sentence, in the
case of any Convertible Debenture which is converted, interest whose Stated
Maturity is after the date of conversion of such Convertible Debenture shall
not be payable, and the Company shall not make nor be required to make any
other payment, adjustment or allowance with respect to accrued but unpaid
interest (including Additional Payments, if any) on the Convertible
Debentures being converted, which shall be deemed to be paid in full. If any
Convertible Debenture called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or so segregated and held in trust
for the redemption of such Convertible Debenture shall (subject to any right
of the Holder of such Convertible Debenture or any Predecessor Security to
receive interest as provided in the last paragraph of Section 307 and this
paragraph) be paid to the Company upon Company Request or, if then held by
the Company, shall be discharged from such trust.
(8) REGISTRATION RIGHTS. The holders of the Convertible Preferred
Securities, the Convertible Debentures issuable in respect of the Convertible
Preferred Securities, the shares of Sun Common Stock issuable upon conversion
of the Convertible Preferred Securities and the Convertible Debentures, and
the Guarantee (collectively, the "REGISTRABLE SECURITIES") are entitled to
the benefits of a Registration Rights Agreement, dated as of May 4, 1998,
between the Company and the Initial Purchasers (the "REGISTRATION RIGHTS
AGREEMENT").
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Pursuant to the Registration Rights Agreement, the Company has agreed for the
benefit of the holders of Registrable Securities that (i) it will, at its
cost, use its reasonable best efforts within 90 days after the date of
original issuance of the Registrable Securities, to file a shelf registration
statement (the "SHELF REGISTRATION STATEMENT") with the Commission with
respect to the resales of the Registrable Securities, (ii) it will use its
reasonable best efforts to cause such Shelf Registration Statement to be
declared effective by the Commission within 150 days after the date of
issuance of the Registrable Securities and (iii) it will use its reasonable
best efforts to maintain such Shelf Registration Statement continuously
effective under the Securities Act until two years after the date of original
issuance of the Convertible Preferred Securities (or such earlier date as the
holders of Registrable Securities are able to sell all Registrable Securities
immediately without restriction, whether pursuant to Rule 144(k) under the
Securities Act or any successor rule thereto or otherwise) (the
"EFFECTIVENESS PERIOD") or such holders have sold all such Registrable
Securities pursuant to an effective Registration Statement. The Trust and
the Company will be permitted to suspend the use of the prospectus (which is
a part of the Shelf Registration Statement) in connection with sales of
Registrable Securities by holders during certain periods of time under
certain circumstances relating to pending corporate developments relating to
the Company and public filings with the Commission and similar events.
If (i) on or prior to 90 days following the date of original issuance
of the Registrable Securities, a Shelf Registration Statement has not
been filed with the Commission or (ii) on or prior to the 150th day
following the original issuance of the Registrable Securities, such
Shelf Registration Statement has not been declared effective (each
such event a "REGISTRATION DEFAULT"), additional interest ("LIQUIDATED
DAMAGES") will accrue on the Convertible Debentures and, accordingly,
additional distributions will accrue on the Convertible Preferred
Securities, from and including the day following such Registration
Default until such time as such Shelf Registration Statement is filed
or such Shelf Registration Statement is declared effective, as the
case may be. Liquidated Damages will be paid quarterly in arrears
(subject to the Company's ability to defer payment of Liquidated
Damages during any Extension Period), with the first quarterly payment
due on the first Interest Payment Date following the date on which
such Liquidated Damages begin to accrue, and will accrue at a rate per
annum equal to an additional 0.25% of the principal amount or
liquidation amount, as applicable, to and including the 90th day
following such Registration Default and 0.50% thereof from and after
the 91st day following such Registration Default. The curing of any
Registration Default will reset the rate at which Liquidated Damages
begin to accrue for any subsequent new Registration Default to a rate
per annum equal to an additional one-quarter of one percent (0.25%) of
the
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principal amount or liquidation amount, as applicable, to and
including the 90th day following such Registration Default and
one-half of one percent (0.50%) thereof from and after the 91st day
following such new Registration Default. The Guarantor shall have the
right to suspend the Shelf Registration Statement under certain
circumstances for up to 90 consecutive days. In the event that during
the Effectiveness Period the Shelf Registration Statement ceases to be
effective for more than 90 consecutive days or any 120 days, whether
or not consecutive, during any 12-month period then the interest rate
borne by the Debentures and the distribution rate borne by the
Convertible Preferred Securities will each increase by an additional
0.25% per annum from such 91st or 121st day, as applicable, of the
applicable 12-month period such Shelf Registration Statement ceases to
be effective until the earlier of such time as (i) the Shelf
Registration Statement again becomes effective or (ii) the
Effectiveness Period expires.
The summary of certain provisions of the Registration Rights
Agreement in this Section 8 is subject to, and is qualified in its entirety,
by reference to the Registration Rights Agreement.
(9) REGISTRATION, TRANSFER, EXCHANGE AND DENOMINATIONS. As
provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Convertible Debenture is registrable in the
Security Register, upon surrender of this Convertible Debenture for
registration of transfer at the office or agency of the Company in New York,
New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Convertible Debentures, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
The Convertible Debentures are issuable only in registered form
without coupons in denominations of $25 and integral multiples thereof. No
service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Prior
to due presentment of this Convertible Debenture for registration of
transfer, the Company, the Trustee and any Agent of the Company or the
Trustee may treat the Person in whose name this Convertible Debenture is
registered as the owner hereof for all purposes, whether or not this
Convertible Debenture be overdue, and neither the Company, the Trustee nor
any such Agent shall be affected by notice to the contrary. In the event of
redemption or conversion of this Convertible Debenture in part only, a new
Convertible Debenture or Convertible Debentures
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for the unredeemed or unconverted portion hereof will be issued in the name
of the Holder hereof upon the cancellation hereof.
(10) PERSONS DEEMED OWNERS. Except as provided in the Indenture,
the registered Holder of a Convertible Debenture may be treated as its owner
for all purposes.
(11) UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent
shall pay the money back to the Company at its written request. After that,
Holders of Convertible Debentures entitled to the money must look to the
Company for payment unless an abandoned property law designates another
Person and all liability of the Trustee and such Paying Agent with respect to
such money shall cease.
(12) DEFAULTS AND REMEDIES. The Convertible Debentures shall have
the Events of Default as set forth in Section 501 of the Indenture. Subject
to certain limitations in the Indenture, if an Event of Default occurs and is
continuing, the Trustee by notice to the Company or the Holders of at least
25% in aggregate principal amount of the then outstanding Convertible
Debentures by notice to the Company and the Trustee may declare all the
Convertible Debentures to be due and payable immediately.
The Holders of a majority in principal amount of the Convertible
Debentures then outstanding by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default have been cured
or waived except nonpayment of principal or interest that has become due
solely because of the acceleration. Holders may not enforce the Indenture or
the Convertible Debentures except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Convertible Debentures issued under the Indenture may direct the
Trustee in its exercise of any trust or power. The Convertible Debentures
are unsecured general obligations of the Company. The Company must furnish
annually compliance certificates to the Trustee. The above description of
Events of Default and remedies is qualified by reference to, and subject in
its entirety by, the more complete description thereof contained in the
Indenture.
(13) AMENDMENTS, SUPPLEMENTS AND WAIVERS. The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of
the Holders of the Convertible Debentures under the Indenture at any time by
the Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Convertible Debentures at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
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specified percentages in aggregate principal amount of the Convertible
Debentures at the time Outstanding, on behalf of the Holders of all the
Convertible Debentures, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this
Convertible Debenture shall be conclusive and binding upon such Holder and
upon all future Holders of this Convertible Debenture and of any Convertible
Debenture issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Convertible Debenture.
(14) TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its
individual or any other capacity may become the owner or pledgee of the
Convertible Debentures and may otherwise deal with the Company or an
Affiliate with the same rights it would have, as if it were not Trustee,
subject to certain limitations provided for in the Indenture and in the TIA.
Any Agent may do the same with like rights.
(15) NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Debentures or the Indenture
or for any claim based on, in respect of or by reason of such obligations or
their creation. Each Holder of the Convertible Debentures by accepting a
Convertible Debenture waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Convertible
Debentures.
(16) GOVERNING LAW. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THE INDENTURE AND THE CONVERTIBLE DEBENTURES WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF.
(17) AUTHENTICATION. The Convertible Debentures shall not be valid
until authenticated by the manual signature of an authorized officer of the
Trustee or an authenticating Agent.
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Convertible
Debenture to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Agent to transfer this Convertible Debenture on the books of the Company. The
Agent may substitute another to act for him or her.
Date: ________________________
_____________________________________________
(Sign exactly as your name appears on the
other side of this Convertible Debenture)
Signature Guarantee:* _______________________
______________
* Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
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[Include the following if the Convertible Debenture bears a Restricted
Securities Legend -
In connection with any transfer of any of the Convertible Debentures evidenced
by this certificate, the undersigned confirms that such Convertible Debentures
are being:
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without transfer; or
(2) / / transferred to a "qualified institutional buyer" pursuant to and
in compliance with Rule 144A under the Securities Act; or
(3) / / transferred to an institutional "accredited investor"; or
(4) / / transferred pursuant to another available exemption from the
registration requirements of the Securities Act; or
(5) / / transferred pursuant to an effective Registration Statement under
the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Convertible Debentures evidenced by this certificate in the name of
any person other than the registered Holder thereof; PROVIDED, HOWEVER, that
if box (2), (3) or (4) is checked, the Trustee may require, prior to
registering any such transfer of the Convertible Debentures such legal
opinions, certifications and other information as the Company has reasonably
requested in writing and directed the Trustee to require confirmation that
such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act, such as the exemption provided by Rule 144 under such Act; PROVIDED,
FURTHER, that after the date that a Shelf Registration Statement under the
Securities Act has been filed and so long as such Shelf Registration
Statement continues to be effective, the Trustee may only permit transfers
for which box (5) has been checked.
______________________
Signature
Signature Guarantee:*
______________
Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee
programs acceptable to the Trustee.
______________
* Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
-19-
____________________________________ ____________________________________
Signature must be guaranteed Signature
________________________________________________________________________________
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Convertible Debenture for its own account or an account with respect to which
it exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in
order to claim the exemption from registration provided by Rule 144A.
Dated: _________________________ _________________________________________
NOTICE: To be executed by an executive officer]
[TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Convertible Debenture for its own account or an account with respect to which
it exercises sole investment discretion and that it and any such account is
an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act.
Dated: _________________________ _________________________________________
NOTICE: To be executed by an executive officer]
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NOTICE OF CONVERSION
To:
The undersigned owner of this Convertible Debenture hereby
irrevocably exercises the option to convert this Convertible Debenture, or
the portion below designated, into common stock of Sun Healthcare Group, Inc.,
a Delaware corporation (the "Company") (the "Sun Common Stock") in accordance
with the terms of the Indenture, between the Company and The Bank of New York
as Trustee, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a different
name has been indicated in the assignment below. If shares are to be issued
in the name of a person other than the undersigned, the undersigned will pay
all transfer taxes payable with respect thereto.
Any Holder, upon the exercise of its conversion rights in
accordance with the terms of the Indenture and the Convertible Debenture,
agrees to be bound by the terms of the Registration Rights Agreement relating
to the Sun Common Stock issuable upon conversion of the Convertible Debenture.
Date: ________________________
Number of Convertible Debentures to be converted ($25 or integral
multiples thereof): ______________
If a name or names other than the undersigned, please indicate in the spaces
below the name or names in which the shares of Sun Common Stock are to be
issued, along with the address or addresses of such person or persons.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________
(Sign exactly as your name appears on the
the Convertible Debenture) (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number.
________________________________________________
________________________________________________
________________________________________________
________________________________________________
Signature Guarantee:*___________________________
______________
* Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.*
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