EXHIBIT 4.1
EFFICIENT NETWORKS, INC.
5% CONVERTIBLE SUBORDINATED NOTES DUE MARCH 15, 2005
____________________
INDENTURE
DATED AS MARCH 1, 2000
____________________
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
AS TRUSTEE
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS AND INCORPORATION BY
REFERENCE 1
SECTION 1.1. DEFINITIONS...................................................................... 1
SECTION 1.2. OTHER DEFINITIONS................................................................ 6
SECTION 1.3. TRUST INDENTURE ACT PROVISIONS................................................... 6
SECTION 1.4. RULES OF CONSTRUCTION............................................................ 7
ARTICLE 2 THE SECURITIES 7
SECTION 2.1. FORM AND DATING.................................................................. 7
SECTION 2.2. EXECUTION AND AUTHENTICATION..................................................... 8
SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT..................................... 9
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.............................................. 10
SECTION 2.5. SECURITYHOLDER LISTS............................................................. 10
SECTION 2.6. TRANSFER AND EXCHANGE............................................................ 10
SECTION 2.7. REPLACEMENT SECURITIES........................................................... 11
SECTION 2.8. OUTSTANDING SECURITIES........................................................... 12
SECTION 2.9. TREASURY SECURITIES.............................................................. 12
SECTION 2.10. TEMPORARY SECURITIES............................................................. 12
SECTION 2.11. CANCELLATION..................................................................... 12
SECTION 2.12. ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS.................................... 13
SECTION 2.13. CUSIP NUMBERS.................................................................... 17
ARTICLE 3 REDEMPTION AND PURCHASES 18
SECTION 3.1. RIGHT TO REDEEM; NOTICE TO TRUSTEE............................................... 18
SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED........................................... 18
SECTION 3.3. NOTICE OF REDEMPTION............................................................. 18
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION................................................... 19
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE...................................................... 19
SECTION 3.6. SECURITIES REDEEMED IN PART...................................................... 20
SECTION 3.7. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.................................... 20
SECTION 3.8. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE IN CONTROL............ 20
SECTION 3.9. EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE...................................... 23
SECTION 3.10. DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE...................................... 23
SECTION 3.11. SECURITIES PURCHASED IN PART..................................................... 24
SECTION 3.12. COMPLIANCE WITH SECURITIES LAWS UPON PURCHASE OF SECURITIES...................... 24
SECTION 3.13. REPAYMENT TO THE COMPANY......................................................... 24
ARTICLE 4 CONVERSION 24
SECTION 4.1. CONVERSION PRIVILEGE............................................................. 24
SECTION 4.2. CONVERSION PROCEDURE............................................................. 25
SECTION 4.3. FRACTIONAL SHARES................................................................ 26
SECTION 4.4. TAXES ON CONVERSION.............................................................. 26
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SECTION 4.5. COMPANY TO PROVIDE STOCK......................................................... 27
SECTION 4.6. ADJUSTMENT OF CONVERSION PRICE................................................... 27
SECTION 4.7. NO ADJUSTMENT.................................................................... 30
SECTION 4.8. ADJUSTMENT FOR TAX PURPOSES...................................................... 31
SECTION 4.9. NOTICE OF ADJUSTMENT............................................................. 31
SECTION 4.10. NOTICE OF CERTAIN TRANSACTIONS................................................... 31
SECTION 4.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON CONVERSION PRIVILEGE 31
SECTION 4.12. TRUSTEE'S DISCLAIMER............................................................. 32
SECTION 4.13. VOLUNTARY REDUCTION.............................................................. 33
ARTICLE 5 SUBORDINATION 33
SECTION 5.1. AGREEMENT OF SUBORDINATION....................................................... 33
SECTION 5.2. PAYMENTS TO HOLDERS.............................................................. 33
SECTION 5.3. SUBROGATION OF SECURITIES........................................................ 35
SECTION 5.4. AUTHORIZATION TO EFFECT SUBORDINATION............................................ 36
SECTION 5.5. NOTICE TO TRUSTEE................................................................ 36
SECTION 5.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS........................................ 37
SECTION 5.7. NO IMPAIRMENT OF SUBORDINATION................................................... 37
SECTION 5.8. CERTAIN CONVERSIONS DEEMED PAYMENT............................................... 38
SECTION 5.9. ARTICLE APPLICABLE TO PAYING AGENTS.............................................. 38
SECTION 5.10. SENIOR INDEBTEDNESS ENTITLED TO RELY............................................. 38
ARTICLE 6 COVENANTS 38
SECTION 6.1. PAYMENT OF SECURITIES............................................................ 38
SECTION 6.2. SEC REPORTS...................................................................... 39
SECTION 6.3. COMPLIANCE CERTIFICATES.......................................................... 39
SECTION 6.4. FURTHER INSTRUMENTS AND ACTS..................................................... 39
SECTION 6.5. MAINTENANCE OF CORPORATE EXISTENCE............................................... 39
SECTION 6.6. RULE 144A INFORMATION REQUIREMENT................................................ 39
SECTION 6.7. STAY, EXTENSION AND USURY LAWS................................................... 40
SECTION 6.8. PAYMENT OF ADDITIONAL INTEREST................................................... 40
ARTICLE 7 CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE 40
SECTION 7.1. COMPANY MAY CONSOLIDATE, ETC, ONLY ON CERTAIN TERMS.............................. 40
SECTION 7.2. SUCCESSOR SUBSTITUTED............................................................ 41
ARTICLE 8 DEFAULT AND REMEDIES 41
SECTION 8.1. EVENTS OF DEFAULT................................................................ 41
SECTION 8.2. ACCELERATION..................................................................... 42
SECTION 8.3. OTHER REMEDIES................................................................... 43
SECTION 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT......................................... 43
SECTION 8.5. CONTROL BY MAJORITY.............................................................. 43
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SECTION 8.6. LIMITATIONS ON SUITS............................................................. 43
SECTION 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT.............................. 44
SECTION 8.8. COLLECTION SUIT BY TRUSTEE....................................................... 44
SECTION 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM................................................. 44
SECTION 8.10. PRIORITIES....................................................................... 45
SECTION 8.11. UNDERTAKING FOR COSTS............................................................ 45
ARTICLE 9 TRUSTEE 45
SECTION 9.1. DUTIES OF TRUSTEE................................................................ 45
SECTION 9.2. RIGHTS OF TRUSTEE................................................................ 46
SECTION 9.3. INDIVIDUAL RIGHTS OF TRUSTEE..................................................... 47
SECTION 9.4. TRUSTEE'S DISCLAIMER............................................................. 47
SECTION 9.5. NOTICE OF DEFAULT OR EVENTS OF DEFAULT........................................... 47
SECTION 9.6. REPORTS BY TRUSTEE TO HOLDERS.................................................... 48
SECTION 9.7. COMPENSATION AND INDEMNITY....................................................... 48
SECTION 9.8. REPLACEMENT OF TRUSTEE........................................................... 49
SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC................................................. 49
SECTION 9.10. ELIGIBILITY; DISQUALIFICATION.................................................... 50
SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY................................ 50
ARTICLE 10 SATISFACTION AND DISCHARGE OF
INDENTURE 50
SECTION 10.1. SATISFACTION AND DISCHARGE OF INDENTURE.......................................... 50
SECTION 10.2. APPLICATION OF TRUST MONEY....................................................... 51
SECTION 10.3. REPAYMENT TO COMPANY............................................................. 51
SECTION 10.4. REINSTATEMENT.................................................................... 51
ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND
WAIVERS 52
SECTION 11.1. WITHOUT CONSENT OF HOLDERS....................................................... 52
SECTION 11.2. WITH CONSENT OF HOLDERS.......................................................... 52
SECTION 11.3. COMPLIANCE WITH TRUST INDENTURE ACT.............................................. 53
SECTION 11.4. REVOCATION AND EFFECT OF CONSENTS................................................ 53
SECTION 11.5. NOTATION ON OR EXCHANGE OF SECURITIES............................................ 53
SECTION 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC.................................................. 54
ARTICLE 12 MISCELLANEOUS 54
SECTION 12.1. TRUST INDENTURE ACT CONTROLS..................................................... 54
SECTION 12.2. NOTICES.......................................................................... 54
SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS..................................... 55
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT............................... 55
SECTION 12.5. RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS............................... 55
SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT................... 56
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SECTION 12.7. LEGAL HOLIDAYS................................................................... 56
SECTION 12.8. GOVERNING LAW.................................................................... 56
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.................................... 56
SECTION 12.10. NO RECOURSE AGAINST OTHERS....................................................... 56
SECTION 12.11. SUCCESSORS....................................................................... 56
SECTION 12.12. MULTIPLE COUNTERPARTS............................................................ 56
SECTION 12.13. SEPARABILITY..................................................................... 56
SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC................................................. 57
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CROSS-REFERENCE TABLE*
TIA INDENTURE
SECTION SECTION
-------- ---------
Section 310(a)(1).......................................................... 9.10
(a)(2)............................................................. 9.10
(a)(3)............................................................. N.A.**
(a)(4)............................................................. N.A.
(a)(5)............................................................. 9.10
(b)................................................................ 9.8; 9.10
(c)................................................................ N.A.
Section 311(a)............................................................. 9.11
(b)................................................................ 9.11
(c)................................................................ N.A.
Section 312(a)............................................................. 2.5
(b)................................................................ 12.3
(c)................................................................ 12.3
Section 313(a)............................................................. 9.6
(b)(1)............................................................. N.A.
(b)(2)............................................................. 9.6
(c)................................................................ 9.6; 12.2
(d)................................................................ 9.6
Section 314(a)............................................................. 6.2; 6.4; 12.2
(b)................................................................ N.A.
(c)(1)............................................................. 12.4(a)
(c)(2)............................................................. 12.4(a)
(c)(3)............................................................. N.A.
(d)................................................................ N.A.
(e)................................................................ 12.4(b)
(f)................................................................ N.A.
Section 315(a)............................................................. 9.1(b)
(b)................................................................ 9.5; 12.2
(c)................................................................ 9.1(a)
(d)................................................................ 9.1(c)
(e)................................................................ 8.11
Section 316(a)(last sentence).............................................. 2.9
(a)(1)(A).......................................................... 8.5
(a)(1)(B).......................................................... 8.4
(a)(2)............................................................. N.A.
(b)................................................................ 8.7
(c)................................................................ 12.5
Section 317(a)(1).......................................................... 8.8
(a)(2)............................................................. 8.9
(b)................................................................ 2.4
______________________
* This Cross-Reference Table shall not, for any purpose, be deemed a part of
this Indenture.
** N.A. means Not Applicable.
THIS INDENTURE dated as of March 1, 2000 is between Efficient Networks,
Inc., a Delaware corporation (the "Company"), and State Street Bank and Trust
Company of California, N.A., a national banking association organized and
existing under the laws of the United States, as Trustee (the "Trustee").
In consideration of the premises and the purchase of the Securities by the
Holders thereof, both parties agree as follows for the benefit of the other and
for the equal and ratable benefit of the registered Holders of the Company's 5%
Convertible Subordinated Notes Due March 15, 2005.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Additional Interest" has the meaning specified in Section 2(e) of the
Registration Rights Agreement. All references herein to interest accrued or
payable as of any date shall include any Additional Interest accrued or payable
as of such date as provided in the Registration Rights Agreement.
"Affiliate" means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control" when used with respect to any person means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or Conversion Agent.
"Applicable Procedures" means, with respect to any transfer or exchange of
beneficial ownership interests in a Global Security, the rules and procedures of
the Depositary that are applicable to such transfer or exchange.
"Board of Directors" means the board of directors of the Company or any
authorized committee of the Board of Directors.
"Business Day" means each day that is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, but excluding any debt
securities convertible into such equity.
"Cash" or "cash" means such coin or currency of the United States as at any
time of payment is legal tender for the payment of public and private debts.
"Certificated Security" means a Security that is in substantially the form
attached hereto as Exhibit A and that does not include the information or the
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schedule called for by footnotes 1, 3 and 4 thereof.
"Common Stock" means the common stock of the Company, $.001 par value, as
it exists on the date of this Indenture and any shares of any class or classes
of capital stock of the Company resulting from any
1
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; provided, however, that if at any time
-----------------
there shall be more than one such resulting class, the shares of each such class
then so issuable on conversion of Securities shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Company" means the party named as such in this Indenture until a successor
replaces it pursuant to this Indenture, and thereafter means the successor.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered which
office at the date of the execution of this Indenture is located at ▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration (Efficient Networks, Inc. -- 5% Convertible Subordinated Notes
due March 15, 2005) or at any other time at such other address as the Trustee
may designate from time to time by notice to the Company.
"Default" or "default" means, when used with respect to the Securities, any
event which is or, after notice or passage of time or both, would be an Event of
Default.
"Designated Senior Indebtedness" means any particular Senior Indebtedness
in which the instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the Company is a
party) expressly provides that such Indebtedness shall be "Designated Senior
Indebtedness" for purposes of this Indenture (provided that such instrument,
agreement or other document may place limitations and conditions on the right of
such Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness). If any payment made to any holder of any Designated Senior
Indebtedness or its Representative with respect to such Designated Senior
Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Designated Senior Indebtedness
effective as of the date of such rescission or return.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, as in effect from time to
time.
"Final Maturity Date" means March 15, 2005.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of this Indenture, including those set
forth in (1) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (2) the statements
and pronouncements of the Financial Accounting Standards Board, (3) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (4) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial statements) in
registration statements filed under the Securities Act and periodic reports
required to be filed pursuant to Section 13 of the Exchange Act, including
opinions and pronouncements in staff accounting bulletins and similar written
statements from the accounting staff of the SEC.
"Global Security" means a permanent Global Security that is in
substantially the form attached hereto as Exhibit A and that includes the
---------
information and schedule called for by footnotes 1, 3 and 4 thereof and
2
which is deposited with the Depositary or its custodian and registered in the
name of the Depositary or its nominee.
"Holder" or "Securityholder" means the person in whose name a Security is
registered on the Primary Registrar's books.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all indebtedness, obligations and other liabilities (contingent or otherwise) of
such Person for borrowed money (including obligations of such Person in respect
of overdrafts, foreign exchange contracts, currency exchange agreements,
interest rate protection agreements, and any loans or advances from banks,
whether or not evidenced by notes or similar instruments) or evidenced by credit
or loan agreements, bonds, debentures, notes or similar instruments (whether or
not the recourse of the lender is to the whole of the assets of such Person or
to only a portion thereof) (other than any trade accounts payable or other
accrued current expense incurred in the ordinary course of business in
connection with the obtaining of materials or services), (b) all reimbursement
obligations and other liabilities (contingent or otherwise) of such Person with
respect to letters of credit, bank guarantees or bankers' acceptances, (c) all
obligations and liabilities (contingent or otherwise) of such Person (i) in
respect of leases of such Person required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease obligations on
the balance sheet of such Person, (ii) as lessee under other leases for
facilities equipment (and related assets leased together therewith), whether or
not capitalized, entered into or leased for financing purposes (as determined by
the Company) or (iii) under any lease or related document (including a purchase
agreement) in connection with the lease of real property which provides that
such Person is contractually obligated to purchase or cause a third party to
purchase the leased property and thereby guarantee a minimum residual value of
the leased property to the lessor and the obligations of such Person under such
lease or related document to purchase or to cause a third party to purchase such
leased property, (d) all obligations (contingent or otherwise) of such Person
with respect to any interest rate, currency or other swap, cap, floor or collar
agreement, hedge agreement, forward contract, or other similar instrument or
foreign currency hedge, exchange, purchase or similar instrument or agreement
(e) all direct or indirect guaranties, agreements to be jointly liable or
similar agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d), (f) any indebtedness or other obligations described in clauses
(a) through (d) secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by such Person, regardless of
whether the indebtedness or other obligation secured thereby shall have been
assumed by such Person and (g) any and all deferrals, renewals, extensions and
refundings of, or amendments, modifications or supplements to, any indebtedness,
obligation or liability of the kind described in clauses (a) through (f).
"Indenture" means this Indenture as amended or supplemented from time to
time pursuant to the terms of this Indenture.
"Officer" means the Chairman or any Co-Chairman of the Board, any Vice
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Secretary or any
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers;
provided, however, that for purposes of Sections 4.11 and 6.3, "Officers'
-----------------
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company and
by one other Officer.
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"Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.
"Person" or "person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Principal" or "principal" of a debt security, including the Securities,
means the principal of the security plus, when appropriate, the premium, if any,
on the security.
"Redemption Date" or "redemption date," when used with respect to any
Security to be redeemed, means the date fixed for such redemption pursuant to
this Indenture.
"Redemption Price" or "redemption price," when used with respect to any
Security to be redeemed, means the price fixed for such redemption pursuant to
this Indenture, as set forth in the form of Security annexed as Exhibit A
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hereto.
"Registration Rights Agreement" means the Registration Rights Agreement
dated, as of March 1, 2000, among the Company and Credit Suisse First Boston
Corporation, FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated and
▇▇ ▇▇▇▇▇▇▇▇▇ + Co., LLC, as initial purchasers.
"Representative" means the (a) indenture trustee or other trustee, agent or
representative for any Senior Indebtedness or (b) with respect to any Senior
Indebtedness that does not have any such trustee, agent or other representative,
(i) in the case of such Senior Indebtedness issued pursuant to an agreement
providing for voting arrangements as among the holders or owners of such Senior
Indebtedness, any holder or owner of such Senior Indebtedness acting with the
consent of the required persons necessary to bind such holders or owners of such
Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness,
the holder or owner of such Senior Indebtedness.
"Restricted Certificated Security" means a Certificated Security which is a
Transfer Restricted Security.
"Restricted Global Security" means a Global Security that is a Transfer
Restricted Security.
"Restricted Security" means a Restricted Certificated Security or a
Restricted Global Security.
"Rule 144" means Rule 144 under the Securities Act or any successor to such
Rule.
"Rule 144A" means Rule 144A under the Securities Act or any successor to
such Rule.
"SEC" means the Securities and Exchange Commission.
"Securities" means the 5% Convertible Subordinated Notes Due March 15, 2005
or any of them (each, a "Security"), as amended or supplemented from time to
time, that are issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as in effect from time to time.
4
"Securities Custodian" means the Trustee, as custodian with respect to the
Securities in global form, or any successor thereto.
"Senior Indebtedness" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
in connection with, and all fees, costs, expenses and other amounts accrued or
due on or in connection with, Indebtedness of the Company, whether outstanding
on the date of this Indenture or thereafter created, incurred, assumed,
guaranteed or in effect guaranteed by the Company (including all deferrals,
renewals, extensions or refundings of, or amendments, modifications or
supplements to, the foregoing), unless in the case of any particular
Indebtedness the instrument creating or evidencing the same or the assumption or
guarantee thereof expressly provides that such Indebtedness shall not be senior
in right of payment to the Securities or expressly provides that such
Indebtedness is "pari passu" or "junior" to the Securities. Notwithstanding the
foregoing, the term Senior Indebtedness shall not include any Indebtedness of
the Company to any Subsidiary of the Company. If any payment made to any holder
of any Senior Indebtedness or its Representative with respect to such Senior
Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Senior Indebtedness effective as of
the date of such rescission or return.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers, general partners or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i) such
Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii)
one or more Subsidiaries of such Person.
"TIA" means the Trust Indenture Act of 1939, as amended, as in effect on
the date of this Indenture, except as provided in Section 11.3, and except to
the extent any amendment to the Trust Indenture Act expressly provides for
application of the Trust Indenture Act as in effect on another date.
"Trading Day" means, with respect to any security, each Monday, Tuesday,
Wednesday, Thursday and Friday, other than any day on which securities are not
generally traded on the principal exchange or market in which such security is
traded.
"Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture, and thereafter
means the successor.
"Trust Officer" means, with respect to the Trustee, any officer assigned to
the Corporate Trust Office, and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Unrestricted Certificated Security" means a Certificated Security that is
not a Transfer Restricted Security.
"Unrestricted Global Security" means a Global Security that is not a
Transfer Restricted Security.
5
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
SECTION 1.2. OTHER DEFINITIONS.
Term Defined in Section
"Agent Members"............................................................... 2.1
"Bankruptcy Law".............................................................. 8.1
"Change in Control"........................................................... 3.8
"Change in Control Purchase Date"............................................. 3.8
"Change in Control Purchase Notice"........................................... 3.8
"Change in Control Purchase Price"............................................ 3.8
"closing price"............................................................... 4.6(e)
"Company Order"............................................................... 2.2
"Conversion Agent"............................................................ 2.3
"Conversion Date"............................................................. 4.2
"Conversion Price"............................................................ 4.6
"current market price"........................................................ 4.6(e)
"Custodian"................................................................... 8.1
"DTC"......................................................................... 2.1
"Depositary".................................................................. 2.1
"Determination Date".......................................................... 4.6(d)
"Event of Default"............................................................ 8.1
"Expiration Date"............................................................. 4.6(d)
"Expiration Time"............................................................. 4.6(d)
"Legal Holiday"............................................................... 12.7
"NNM"......................................................................... 4.6(e)
"Paying Agent"................................................................ 2.3
"Payment Blockage Notice"..................................................... 5.2
"Primary Registrar"........................................................... 2.3
"Purchase Agreement".......................................................... 2.1
"Purchased Shares"............................................................ 4.6(d)
"QIB"......................................................................... 2.1
"Registrar"................................................................... 2.3
"Transfer Certificate"........................................................ 2.12
"Transfer Restricted Security"................................................ 2.12
"Triggering Distribution"..................................................... 4.6(d)
SECTION 1.3. TRUST INDENTURE ACT PROVISIONS
Whenever this Indenture refers to a provision of the TIA, that provision is
incorporated by reference in and made a part of this Indenture. The Indenture
shall also include those provisions of the TIA required to be included herein by
the provisions of the Trust Indenture Reform Act of 1990. The following TIA
terms used in this Indenture have the following meanings:
6
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company or any other obligor on
the Securities.
All other terms used in this Indenture that are defined in the TIA, defined
by TIA reference to another statute or defined by any SEC rule and not otherwise
defined herein have the meanings assigned to them therein.
SECTION 1.4. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(A) a term has the meaning assigned to it;
(B) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(C) words in the singular include the plural, and words in the plural
include the singular;
(D) provisions apply to successive events and transactions;
(E) the term "merger" includes a statutory share exchange and the term
"merged" has a correlating meaning;
(F) the masculine gender includes the feminine and the neuter;
(G) references to agreements and other instruments include subsequent
amendments thereto; and
(H) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE 2
THE SECURITIES
SECTION 2.1. FORM AND DATING.
The Securities and the Trustee's certificate of authentication shall be
substantially in the respective forms set forth in Exhibit A, which Exhibit is
---------
incorporated in and made part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Security shall be dated the date of its authentication. The
Securities are being offered and sold by the Company pursuant to a Purchase
Agreement, dated March 1, 2000 (the "Purchase Agreement"), between the Company
and Credit Suisse First Boston Corporation, FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.,
▇▇▇▇ ▇▇▇▇▇▇▇▇
7
Incorporated and ▇▇ ▇▇▇▇▇▇▇▇▇ + Co., LLC, in transactions exempt from, or not
subject to, the registration requirements of the Securities Act.
(a) Restricted Global Securities. All of the Securities are initially being
----------------------------
offered and sold to qualified institutional buyers as defined in Rule 144A
(collectively, "QIBs" or individually, each a "QIB") in reliance on Rule
144A under the Securities Act and shall be issued initially in the form of
one or more Restricted Global Securities, which shall be deposited on
behalf of the purchasers of the Securities represented thereby with the
Trustee, at its Corporate Trust Office, as custodian for the depositary,
The Depository Trust Company ("DTC") (such depositary, or any successor
thereto, being hereinafter referred to as the "Depositary"), and registered
in the name of its nominee, Cede & Co., duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Restricted Global Security may from time to time be
increased or decreased by adjustments made on the records of the Securities
Custodian as hereinafter provided, subject in each case to compliance with
the Applicable Procedures.
(b) Global Securities In General. Each Global Security shall represent
----------------------------
such of the outstanding Securities as shall be specified therein and each shall
provide that it shall represent the aggregate amount of outstanding Securities
from time to time endorsed thereon and that the aggregate amount of outstanding
Securities represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges, redemptions, purchases or conversions of such
Securities. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented thereby
shall be made by the Securities Custodian in accordance with the standing
instructions and procedures existing between the Depositary and the Securities
Custodian.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or under the Global Security, and the Depositary
(including, for this purpose, its nominee) may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner and
Holder of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall (A) prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or (B)
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
(c) Certificated Securities. Certificated Securities shall be issued only
-----------------------
under the limited circumstances provided in Section 2.12(a)(1) hereof.
SECTION 2.2. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Securities for the Company by manual or facsimile
signature attested by the manual or facsimile signature of the Secretary or an
Assistant Secretary of the Company. Typographic and other minor errors or
defects in any such facsimile signature shall not affect the validity or
enforceability of any Security which has been authenticated and delivered by the
Trustee.
If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
8
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate and make available for delivery Securities
for original issue in the aggregate principal amount of up to $400 million upon
receipt of a written order or orders of the Company signed by two Officers of
the Company (a "Company Order"). The Company Order shall specify the amount of
Securities to be authenticated, shall provide that all such Securities will be
represented by a Restricted Global Security and the date on which each original
issue of Securities is to be authenticated. The aggregate principal amount of
Securities outstanding at any time may not exceed $400,000,000, except as
provided in Section 2.7.
The Trustee shall act as the initial authenticating agent. Thereafter, the
Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT.
The Company shall maintain one or more offices or agencies where Securities
may be presented for registration of transfer or for exchange (each, a
"Registrar"), one or more offices or agencies where Securities may be presented
for payment (each, a "Paying Agent"), one or more offices or agencies where
Securities may be presented for conversion (each, a "Conversion Agent") and one
or more offices or agencies where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will at
all times maintain a Paying Agent, Conversion Agent, Registrar and an office or
agency where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served in the Borough of Manhattan, the
City of New York. One of the Registrars (the "Primary Registrar") shall keep a
register of the Securities and of their transfer and exchange.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall notify the Trustee
of the name and address of any Agent not a party to this Indenture. If the
Company fails to maintain a Registrar, Paying Agent, Conversion Agent or agent
for service of notices and demands in any place required by this Indenture, or
fails to give the foregoing notice, the Trustee shall act as such. The Company
or any Affiliate of the Company may act as Paying Agent (except for the purposes
of Section 6.1 and Article 10).
The Company hereby initially designates the Trustee as Paying Agent,
Registrar, Custodian and Conversion Agent, and each of the Corporate Trust
Office of the Trustee and the office of the Trustee in the Borough of Manhattan,
the City of New York (which shall initially be State Street Bank and Trust
Company, N.A., an Affiliate of the Trustee, as agent of the Trustee located at
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: Corporate Trust
Administration (Efficient Networks, Inc. 5% Convertible Subordinated Notes due
March 15, 2005)), one such office or agency of the Company for each of the
aforesaid purposes.
9
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
Prior to 11:00 a.m., New York City time, on each due date of the principal
of or interest, if any, on any Securities, the Company shall deposit with a
Paying Agent a sum sufficient to pay such principal or interest, if any, so
becoming due. Subject to Section 5.7, a Paying Agent shall hold in trust for
the benefit of Securityholders or the Trustee all money held by the Paying Agent
for the payment of principal of or interest, if any, on the Securities, and
shall notify the Trustee of any default by the Company (or any other obligor on
the Securities) in making any such payment. If the Company or an Affiliate of
the Company acts as Paying Agent, it shall, before 11:00 a.m., New York City
time, on each due date of the principal of or interest on any Securities,
segregate the money and hold it as a separate trust fund. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee, and
the Trustee may at any time during the continuance of any default, upon written
request to a Paying Agent, require such Paying Agent to forthwith pay to the
Trustee all sums so held in trust by such Paying Agent. Upon doing so, the
Paying Agent (other than the Company) shall have no further liability for the
money.
SECTION 2.5. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Primary Registrar, the Company shall
furnish to the Trustee on or before each semiannual interest payment date and at
such other times as the Trustee may request in writing a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of Securityholders.
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) Subject to compliance with any applicable additional requirements
contained in Section 2.12, when a Security is presented to a Registrar with a
request to register a transfer thereof or to exchange such Security for an equal
principal amount of Securities of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested; provided,
--------
however, that every Security presented or surrendered for registration of
-------
transfer or exchange shall be duly endorsed or accompanied by an assignment form
and, if applicable, a transfer certificate each in the form included in Exhibit
-------
A, and in form satisfactory to the Registrar duly executed by the Holder thereof
--
or its attorney duly authorized in writing. To permit registration of transfers
and exchanges, upon surrender of any Security for registration of transfer or
exchange at an office or agency maintained pursuant to Section 2.3, the Company
shall execute and the Trustee shall authenticate Securities of a like aggregate
principal amount at the Registrar's request. Any exchange or transfer shall be
without charge, except that the Company or the Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto, and provided, that this sentence
---------
shall not apply to any exchange pursuant to Section 2.7, 2.10, 2.12(a)(1),
3.6, 3.11, 4.2 (last paragraph) or 11.5.
Neither the Company, any Registrar nor the Trustee shall be required to
exchange or register a transfer of (a) any Securities for a period of 15 days
next preceding any mailing of a notice of Securities to be redeemed, (b) any
Securities or portions thereof selected or called for redemption (except, in the
case of redemption of a Security in part, the portion not to be redeemed) or (c)
any Securities or portions thereof in respect of which a Change in Control
Purchase Notice has been delivered and not withdrawn by the Holder thereof
(except, in the case of the purchase of a Security in part, the portion not to
be purchased).
10
All Securities issued upon any transfer or exchange of Securities shall be
valid obligations of the Company, evidencing the same debt and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
(b) Any Registrar appointed pursuant to Section 2.3 hereof shall provide
to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Securities upon transfer or
exchange of Securities.
(c) Each Holder of a Security agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such ▇▇▇▇▇▇'s Security in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Agent Members or other
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 2.7. REPLACEMENT SECURITIES.
If any mutilated Security is surrendered to the Company, a Registrar or the
Trustee, or the Company, a Registrar and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Security, and there is
delivered to the Company, the applicable Registrar and the Trustee such Security
or indemnity as will be required by them to save each of them harmless, then, in
the absence of notice to the Company, such Registrar or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute,
and upon its written request the Trustee shall authenticate and deliver, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a new Security of like tenor and principal amount, bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be redeemed or purchased
by the Company pursuant to Article 3, the Company in its discretion may, instead
of issuing a new Security, pay, redeem or purchase such Security, as the case
may be.
Upon the issuance of any new Securities under this Section 2.7, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the reasonable fees and expenses of the Trustee
or the Registrar) in connection therewith.
Every new Security issued pursuant to this Section 2.7 in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
11
The provisions of this Section 2.7 are (to the extent lawful) exclusive and
shall preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.
SECTION 2.8. OUTSTANDING SECURITIES.
Securities outstanding at any time are all Securities authenticated by the
Trustee, except for those canceled by it, those delivered to it for cancellation
and those described in this Section 2.8 as not outstanding.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Company receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If a Paying Agent (other than the Company or an Affiliate of the Company)
holds on a redemption date, a Change in Control Purchase Date or the Final
Maturity Date money sufficient to pay the principal of (including premium, if
any) and accrued interest on Securities (or portions thereof) payable on that
date, then on and after that date such Securities (or portions thereof, as the
case may be) cease to be outstanding and interest on them ceases to accrue.
Subject to the restrictions contained in Section 2.9, a Security does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Security.
SECTION 2.9. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Company or any other obligor on the Securities or by any
Affiliate of the Company or of such other obligor shall be disregarded, except
that, for purposes of determining whether the Trustee shall be protected in
relying on any such notice, direction, waiver or consent, only Securities which
a Trust Officer of the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith shall
not be disregarded if the pledgee establishes to the satisfaction of the Trustee
the pledgee's right so to act with respect to the Securities and that the
pledgee is not the Company or any other obligor on the Securities or any
Affiliate of the Company or of such other obligor.
SECTION 2.10. TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the Company may prepare
and execute, and, upon receipt of a Company Order, the Trustee shall
authenticate and deliver, temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company with the consent of the Trustee considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate and deliver definitive Securities in exchange for
temporary Securities.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee or its agent any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee and no one else shall
cancel, in accordance with its standard procedures, all Securities surrendered
for transfer, exchange, redemption, payment, conversion or cancellation and
shall deliver the canceled Securities to the Company. All Securities which are
12
redeemed, purchased or otherwise acquired by the Company or any of its
Subsidiaries prior to the Final Maturity Date shall be delivered to the Trustee
for cancellation and the Company may not hold or resell such Securities or issue
any new Securities to replace any such Securities or any Securities that any
Holder has converted pursuant to Article 4. Without limitation to the
foregoing, any Securities acquired by any investment bankers or other purchasers
pursuant to Section 3.7 shall be surrendered for conversion and thereafter
cancelled, and may not be reoffered, sold or otherwise transferred.
SECTION 2.12. ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS.
(a) Transfer And Exchange Of Global Securities.
-------------------------------------------
(1) Certificated Securities shall be issued in exchange for interests
in the Global Securities only if (x) the Depositary notifies the Company that it
is unwilling or unable to continue as depositary for the Global Securities or if
it at any time ceases to be a "clearing agency" registered under the Exchange
Act, if so required by applicable law or regulation and a successor depositary
is not appointed by the Company within 90 days, or (y) an Event of Default has
occurred and is continuing. In either case, the Company shall execute, and the
Trustee shall, upon receipt of a Company Order (which the Company agrees to
delivery promptly), authenticate and deliver Certificated Securities in an
aggregate principal amount equal to the principal amount of such Global
Securities in exchange therefor. Only Restricted Certificated Securities shall
be issued in exchange for beneficial interests in Restricted Global Securities,
and only Unrestricted Certificated Securities shall be issued in exchange for
beneficial interests in Unrestricted Global Securities. Certificated Securities
issued in exchange for beneficial interests in Global Securities shall be
registered in such names and shall be 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 or cause to be
delivered such Certificated Securities to the persons in whose names such
Securities are so registered. Such exchange shall be effected in accordance with
the Applicable Procedures.
(2) Notwithstanding any other provisions of this Indenture other than
the provisions set forth in Section 2.12(a)(1), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(b) Transfer And Exchange Of Certificated Securities. In the event that
------------------------------------------------
Certificated Securities are issued in exchange for beneficial interests in
Global Securities in accordance with Section 2.12(a)(i) of this Indenture,
on or after such event when Certificated Securities are presented by a
Holder to a Registrar with a request:
(x) to register the transfer of the Certificated Securities to a
person who will take delivery thereof in the form of Certificated Securities
only; or
(y) to exchange such Certificated Securities for an equal principal
amount of Certificated Securities of other authorized denominations, such
Registrar shall register the transfer or make the exchange as requested;
provided, however, that the Certificated Securities presented or surrendered for
-----------------
register of transfer or exchange:
(1) shall be duly endorsed or accompanied by a written instrument of
transfer in accordance with the proviso to the first paragraph of Section 2.6;
and
13
(2) in the case of a Restricted Certificated Security, such request shall
be accompanied by the following additional information and documents, as
applicable:
(A) if such Restricted Certificated Security is being delivered to
the Registrar by a Holder for registration in the name of such Holder, without
transfer, or such Restricted Certificated Security is being transferred to the
Company or a Subsidiary of the Company, a certification to that effect from such
Holder (in substantially the form set forth in the Transfer Certificate);
(B) if such Restricted Certificated Security is being transferred to
a person the Holder reasonably believes is a QIB in accordance with Rule 144A or
pursuant to an effective registration statement under the Securities Act, a
certification to that effect from such Holder (in substantially the form set
forth in the Transfer Certificate); or
(C) if such Restricted Certificated Security is being transferred (i)
pursuant to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 or (ii) pursuant to an exemption from the
registration requirements of the Securities Act (other than pursuant to Rule
144A or Rule 144) and as a result of which, in the case of a Security
transferred pursuant to this clause (ii), such Security shall cease to be a
"restricted security" within the meaning of Rule 144, a certification to that
effect from the Holder (in substantially the form set forth in the Transfer
Certificate) and, if the Company or such Registrar so requests, a customary
opinion of counsel, certificates and other information reasonably acceptable to
the Company and such Registrar to the effect that such transfer is in compliance
with the Securities Act.
(c) Transfer of a Beneficial Interest in a Restricted Global Security for
---------------------------------------------------------------------
Beneficial Interest in an Unrestricted Global Security. Any person having
-------------------------------------------------------
a beneficial interest in a Restricted Global Security may upon request, subject
to the Applicable Procedures, transfer such beneficial interest to a person who
is required or permitted to take delivery thereof in the form of an Unrestricted
Global Security. Upon receipt by the Trustee of written instructions, or such
other form of instructions as is customary for the Depositary, from the
Depositary or its nominee on behalf of any person having a beneficial interest
in a Restricted Global Security and the following additional information and
documents in such form as is customary for the Depositary from the Depositary or
its nominee on behalf of the person having such beneficial interest in the
Restricted Global Security (all of which may be submitted by facsimile or
electronically):
(1) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certification to
that effect from the transferor (in substantially the form set forth in the
Transfer Certificate); or
(2) if such beneficial interest is being transferred (i) pursuant to
an exemption from the registration requirements of the Securities Act in
accordance with Rule 144 or (ii) pursuant to an exemption from the registration
requirements of the Securities Act (other than pursuant to Rule 144A or Rule
144) and as a result of which, in the case of a Security transferred pursuant to
this clause (ii), such Security shall cease to be a "restricted security" within
the meaning of Rule 144, a certification to that effect from the transferor (in
substantially the form set forth in the Transfer Certificate) and, if the
Company or the Trustee so requests, a customary opinion of counsel, certificates
and other information reasonably acceptable to the Company and the Trustee to
the effect that such transfer is in compliance with the Securities Act, the
Trustee, as a Registrar and Securities Custodian, shall reduce or cause to be
reduced the aggregate principal amount of the Restricted Global Security by the
appropriate principal amount and shall increase or cause to be increased the
aggregate principal amount of the Unrestricted Global Security by a like
principal amount. Such transfer shall
14
otherwise be effected in accordance with the Applicable Procedures. If no
Unrestricted Global Security is then outstanding, the Company shall execute and
the Trustee shall, upon receipt of a Company Order (which the Company agrees to
deliver promptly), authenticate and deliver an Unrestricted Global Security.
(d) Transfer of a Beneficial Interest in an Unrestricted Global Security
---------------------------------------------------------------------
for a Beneficial Interest In a Restricted Global Security. Any person having a
----------------------------------------------------------
beneficial interest in an Unrestricted Global Security may upon request, subject
to the Applicable Procedures, transfer such beneficial interest to a person who
is required or permitted to take delivery thereof in the form of a Restricted
Global Security (it being understood that only QIBs may own beneficial interests
in Restricted Global Securities). Upon receipt by the Trustee of written
instructions or such other form of instructions as is customary for the
Depositary, from the Depositary or its nominee, on behalf of any person having a
beneficial interest in an Unrestricted Global Security and, in such form as is
customary for the Depositary, from the Depositary or its nominee on behalf of
the person having such beneficial interest in the Unrestricted Global Security
(all of which may be submitted by facsimile or electronically) a certification
from the transferor (in substantially the form set forth in the Transfer
Certificate) to the effect that such beneficial interest is being transferred to
a person that the transferor reasonably believes is a QIB in accordance with
Rule 144A. The Trustee, as a Registrar and Securities Custodian, shall reduce or
cause to be reduced the aggregate principal amount of the Unrestricted Global
Security by the appropriate principal amount and shall increase or cause to be
increased the aggregate principal amount of the Restricted Global Security by a
like principal amount. Such transfer shall otherwise be effected in accordance
with the Applicable Procedures. If no Restricted Global Security is then
outstanding, the Company shall execute and the Trustee shall, upon receipt of a
Company Order (which the Company agrees to deliver promptly), authenticate and
deliver a Restricted Global Security.
(e) Transfers of Certificated Securities for Beneficial Interest in Global
----------------------------------------------------------------------
Securities. In the event that Certificated Securities are issued in exchange for
----------
beneficial interests in Global Securities and, thereafter, the events or
conditions specified in Section 2.12(a)(1) which required such exchange shall
cease to exist, the Company shall mail notice to the Trustee and to the Holders
stating that Holders may exchange Certificated Securities for interests in
Global Securities by complying with the procedures set forth in this Indenture
and briefly describing such procedures and the events or circumstances requiring
that such notice be given. Thereafter, if Certificated Securities are presented
by a Holder to a Registrar with a request:
(x) to register the transfer of such Certificated Securities to a
person who will take delivery thereof in the form of a beneficial interest in a
Global Security, which request shall specify whether such Global Security will
be a Restricted Global Security or an Unrestricted Global Security; or
(y) to exchange such Certificated Securities for an equal principal
amount of beneficial interests in a Global Security, which beneficial interests
will be owned by the Holder transferring such Certificated Securities (provided
that in the case of such an exchange, Restricted Certificated Securities may be
exchanged only for Restricted Global Securities and Unrestricted Certificated
Securities may be exchanged only for Unrestricted Global Securities), the
Registrar shall register the transfer or make the exchange as requested by
canceling such Certificated Security and causing, or directing the Securities
Custodian to cause, the aggregate principal amount of the applicable Global
Security to be increased accordingly and, if no such Global Security is then
outstanding, the Company shall issue and the Trustee shall authenticate and
deliver a new Global Security; provided, however, that the Certificated
-----------------
Securities presented or surrendered for registration of transfer or exchange:
(1) shall be duly endorsed or accompanied by a written instrument of
transfer in accordance with the proviso to Section 2.6;
15
(2) in the case of a Restricted Certificated Security to be
transferred for a beneficial interest in an Unrestricted Global Security, such
request shall be accompanied by the following additional information and
documents, as applicable:
(A) if such Restricted Certificated Security is being
transferred pursuant to an effective registration statement under the Securities
Act, a certification to that effect from such Holder (in substantially the form
set forth in the Transfer Certificate); or
(B) if such Restricted Certificated Security is being
transferred pursuant to (i) an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 or (ii) pursuant to an exemption
from the registration requirements of the Securities Act (other than pursuant to
Rule 144A or Rule 144) and as a result of which, in the case of a Security
transferred pursuant to this clause (ii), such Security shall cease to be a
"restricted security" within the meaning of Rule 144, a certification to that
effect from such Holder (in substantially the form set forth in the Transfer
Certificate), and, if the Company or the Registrar so requests, a customary
opinion of counsel, certificates and other information reasonably acceptable to
the Company and the Trustee to the effect that such transfer is in compliance
with the Securities Act;
(3) in the case of a Restricted Certificated Security to be
transferred or exchanged for a beneficial interest in a Restricted Global
Security, such request shall be accompanied by a certification from such Holder
(in substantially the form set forth in the Transfer Certificate) to the effect
that such Restricted Certificated Security is being transferred to a person the
Holder reasonably believes is a QIB (which, in the case of an exchange, shall be
such Holder) in accordance with Rule 144A;
(4) in the case of an Unrestricted Certificated Security to be
transferred or exchanged for a beneficial interest in an Unrestricted Global
Security, such request need not be accompanied by any additional information or
documents; and
(5) in the case of an Unrestricted Certificated Security to be
transferred or exchanged for a beneficial interest in a Restricted Global
Security, such request shall be accompanied by a certification from such Holder
(in substantially the form set forth in the Transfer Certificate) to the effect
that such Unrestricted Certificated Security is being transferred to a person
the Holder reasonably believes is a QIB (which, in the case of an exchange,
shall be such Holder) in accordance with Rule 144A.
(f) Legends.
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(1) Except as permitted by the following paragraphs (2) and (3), each
Global Security and Certificated Security (and all Securities issued in exchange
therefor or upon registration of transfer or replacement thereof) shall bear a
legend in substantially the form called for by footnote 2 to Exhibit A hereto
---------
(each a "Transfer Restricted Security" for so long as it is required by this
Indenture to bear such legend). Each Transfer Restricted Security shall have
attached thereto a certificate (a "Transfer Certificate") in substantially the
form called for by footnote 4 to Exhibit A hereto.
---------
(2) Upon any sale or transfer of a Transfer Restricted Security (w)
after the expiration of the holding period applicable to sales of the Securities
under Rule 144(k) of the Securities Act, (x) pursuant to Rule 144, (y) pursuant
to an effective registration statement under the Securities Act or (z) pursuant
to any other available exemption (other than Rule 144A) from the registration
requirements of the Securities Act and
16
as a result of which, in the case of a Security transferred pursuant to this
clause (z), such Security shall cease to be a "restricted security" within the
meaning of Rule 144:
(A) in the case of any Restricted Certificated Security, any
Registrar shall permit the Holder thereof to exchange such Restricted
Certificated Security for an Unrestricted Certificated Security, or (under the
circumstances described in Section 2.12(e)) to transfer such Restricted
Certificated Security to a transferee who shall take such Security in the form
of a beneficial interest in an Unrestricted Global Security, and in each case
shall rescind any restriction on the transfer of such Security; provided,
---------
however, that the Holder of such Restricted Certificated Security shall, in
-------
connection with such exchange or transfer, comply with the other applicable
provisions of this Section 2.12; and
(B) in the case of any beneficial interest in a Restricted Global
Security, the Trustee shall permit the beneficial owner thereof to transfer such
beneficial interest to a transferee who shall take such interest in the form of
a beneficial interest in an Unrestricted Global Security and shall rescind any
restriction on transfer of such beneficial interest; provided,
--------
that such Unrestricted Global Security shall continue to be subject to the
provisions of Section 2.12(a)(2); and provided, further, that the owner of
-----------------
such beneficial interest shall, in connection with such transfer, comply
with the other applicable provisions of this Section 2.12.
(3) Upon the exchange, registration of transfer or replacement of
Securities not bearing the legend described in paragraph (1) above, the Company
shall execute, and the Trustee shall authenticate and deliver Securities that do
not bear such legend and that do not have a Transfer Certificate attached
thereto.
(4) After the expiration of the holding period pursuant to Rule
144(k) of the Securities Act, the Company may with the consent of the Holder of
a Restricted Global Security or Restricted Certificated Security, remove any
restriction of transfer on such Security, and the Company shall execute, and the
Trustee shall authenticate and deliver Securities that do not bear such legend
and that do not have a Transfer Certificate attached thereto.
(g) Transfers to the Company. Nothing in this Indenture or in the
------------------------
Securities shall prohibit the sale or other transfer of any Securities
(including beneficial interests in Global Securities) to the Company or any of
its Subsidiaries, which Securities shall thereupon be cancelled in accordance
with the last sentence of Section 2.11.
SECTION 2.13. CUSIP NUMBERS.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption or purchase as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption or purchase and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption or
purchase shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee of any change in the "CUSIP"
numbers.
17
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.1. RIGHT TO REDEEM; NOTICE TO TRUSTEE.
The Securities may be redeemed at the election of the Company, as a whole
or from time to time in part, at any time on or after March 20, 2003, at the
redemption prices specified in paragraph 5 of the form of Security attached
hereto as Exhibit A, together with accrued interest up to but not including the
---------
Redemption Date; provided that if the Redemption Date is an interest payment
date, interest will be payable to the Holders in whose name the Securities are
registered at the close of business on the relevant record dates for payment of
such interest.
If the Company elects to redeem Securities pursuant to this Section 3.1 and
paragraph 5 of the Securities, it shall notify the Trustee at least 45 days
prior to the redemption date as fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee) of the redemption date and the principal
amount of Securities to be redeemed. If fewer than all of the Securities are to
be redeemed, the record date relating to such redemption shall be selected by
the Company and given to the Trustee, which record date shall not be less than
ten days after the date of notice to the Trustee.
SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed, the Trustee shall,
not more than 60 days prior to the redemption date, select the Securities to be
redeemed. The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption, by lot, or in its discretion, on a pro
rata basis. Securities in denominations of $1,000 may only be redeemed in
whole. The Trustee may select for redemption portions (equal to $1,000 or any
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
If any Security selected for partial redemption is converted in part before
termination of the conversion right with respect to the portion of the Security
so selected, the converted portion of such Security shall be deemed to be the
portion selected for redemption. Securities which have been converted during a
selection of Securities to be redeemed shall be treated by the Trustee as
outstanding for the purpose of such selection.
SECTION 3.3. NOTICE OF REDEMPTION.
At least 20 days but not more than 60 days before a redemption date, the
Company shall mail or cause to be mailed a notice of redemption to each Holder
of Securities to be redeemed at such ▇▇▇▇▇▇'s address as it appears on the
Primary Registrar's books.
The notice shall identify the Securities (including CUSIP numbers) to be
redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the then current Conversion Price;
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(4) the name and address of each Paying Agent and Conversion Agent;
(5) that Securities called for redemption must be presented and
surrendered to a Paying Agent to collect the redemption price;
(6) that Holders who wish to convert Securities must surrender such
Securities for conversion no later than the close of business on the Business
Day immediately preceding the redemption date and must satisfy the other
requirements in paragraph 8 of the Securities;
(7) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption shall cease accruing on
and after the redemption date and the only remaining right of the Holder shall
be to receive payment of the redemption price, plus accrued interest, if any
upon presentation and surrender to a Paying Agent of the Securities; and
(8) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the redemption
date, upon presentation and surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed portion thereof
will be issued.
If any of the Securities to be redeemed is in the form of a Global
Security, then the Company shall modify such notice to the extent necessary to
accord with the procedures of the Depositary applicable to redemptions. At the
Company's written request, which request shall (i) be irrevocable once given and
(ii) set forth all relevant information required by clauses (1) through (8) of
the preceding paragraph, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date and at the redemption price stated
in the notice, together with accrued interest, if any, except for Securities
that are converted in accordance with the provisions of Article 4. Upon
presentation and surrender to a Paying Agent, Securities called for redemption
shall be paid at the redemption price, plus accrued interest up to but not
including the redemption date; provided if the redemption date is an interest
payment date, interest will be payable to the Holders in whose names the
Securities are registered at the close of business on the relevant record dates
for payment of such interest.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.
Prior to 11:00 a.m. New York City time, on the redemption date, the Company
shall deposit with a Paying Agent (or, if the Company acts as Paying Agent,
shall segregate and hold in trust) money sufficient to pay the redemption price
of and accrued interest on all Securities to be redeemed on that date, other
than Securities or portions thereof called for redemption on that date which
have been delivered by the Company to the Trustee for cancellation or have been
converted. The Paying Agent shall return to the Company any money not required
for that purpose because of the conversion of Securities pursuant to Article 4
or, if such money is then held by the Company in trust and is not required for
such purpose, it shall be discharged from the trust.
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SECTION 3.6. SECURITIES REDEEMED IN PART.
Upon presentation and surrender of a Security that is redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder a new Security equal in principal amount to the unredeemed portion of the
Security surrendered.
SECTION 3.7. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of Securities, the Company may arrange
for the purchase and conversion of any Securities called for redemption by an
agreement with one or more investment bankers or other purchasers to purchase
such Securities by paying to a Paying Agent (other than the Company or any of
its Affiliates) in trust for the Holders, on or before 11:00 a.m. New York City
time on the Redemption Date, an amount that, together with any amounts deposited
with such Paying Agent by the Company for the redemption of such Securities, is
not less than the Redemption Price, together with interest accrued to, but not
including, the Redemption Date, of such Securities. Notwithstanding anything to
the contrary contained in this Article 3, the obligation of the Company to pay
the Redemption Price of such Securities, including all accrued interest, shall
be deemed to be satisfied and discharged to the extent such amount is so paid by
such purchasers; provided, however, that nothing in this Section 3.7 shall
-----------------
relieve the Company of its obligation to pay the Redemption Price, plus accrued
interest to but excluding the relevant redemption date, on Securities called for
redemption. If such an agreement with one or more investment banks or other
purchasers is entered into, any Securities called for redemption and not
surrendered for conversion by the Holders thereof prior to the relevant
redemption date may, at the option of the Company upon written notice to the
Trustee, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article 4) surrendered by such purchasers for conversion, all as of
11:00 a.m. New York City time on the Redemption Date, subject to payment of the
above amount as aforesaid. The Paying Agent shall hold and pay to the Holders
whose Securities are selected for redemption any such amount paid to it for
purchase in the same manner as it would money deposited with it by the Company
for the redemption of Securities. Without the Paying Agent's prior written
consent, no arrangement between the Company and such purchasers for the purchase
and conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Paying Agent as set forth
in this Indenture, and the Company agrees to indemnify the Paying Agent from,
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Paying Agent in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
SECTION 3.8. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE IN
CONTROL.
(a) If at any time that Securities remain outstanding there shall occur a
Change in Control, Securities shall be purchased by the Company at the option of
the Holders thereof as of the date that is 30 Business Days after the occurrence
of the Change in Control (the "Change in Control Purchase Date") at a purchase
price equal to the principal amount of the Securities, plus accrued and unpaid
interest to, but excluding, the Change in Control Purchase Date (the "Change in
Control Purchase Price"), subject to satisfaction by or on behalf of any Holder
of the requirements set forth in subsection (c) of this Section 3.8.
20
A "Change in Control" shall be deemed to have occurred if any of the
following occurs after the date hereof:
(1) any "person" or "group" (as such terms are defined below) is or
becomes the "beneficial owner" (as defined below), directly or indirectly, of
shares of Voting Stock of the Company representing 50% or more of the total
voting power of all outstanding classes of Voting Stock of the Company or has
the power, directly or indirectly, to elect a majority of the members of the
Board of Directors of the Company; or
(2) the Company consolidates with, or merges with or into, another
Person or the Company sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of the assets of the Company, or any Person
consolidates with, or merges with or into, the Company, in any such event other
than pursuant to a transaction in which the Persons that "beneficially owned"
(as defined below), directly or indirectly, shares of Voting Stock of the
Company immediately prior to such transaction "beneficially own" (as defined
below), directly or indirectly, shares of Voting Stock of the Company
representing at least a majority of the total voting power of all outstanding
classes of Voting Stock of the surviving or transferee Person; or
(3) there shall occur the liquidation or dissolution of the Company.
For the purpose of the definition of "Change in Control", (i) "person" and
"group" have the meanings given such terms under Section 13(d) and 14(d) of the
Exchange Act or any successor provision to either of the foregoing, and the term
"group" includes any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act (or any successor provision thereto), (ii) a "beneficial owner"
shall be determined in accordance with Rule 13d-3 under the Exchange Act, as in
effect on the date of this Indenture, except that the number of shares of Voting
Stock of the Company shall be deemed to include, in addition to all outstanding
shares of Voting Stock of the Company and Unissued Shares deemed to be held by
the "person" or "group" (as such terms are defined above) or other Person with
respect to which the Change in Control determination is being made, all Unissued
Shares deemed to be held by all other Persons, and (iii) the terms "beneficially
owned" and "beneficially own" shall have meanings correlative to that of
"beneficial owner". The term "Unissued Shares" means shares of Voting Stock not
outstanding that are subject to options, warrants, rights to purchase or
conversion privileges exercisable within 60 days of the date of determination of
a Change in Control.
Notwithstanding anything to the contrary set forth in this Section
3.8, a Change in Control will not be deemed to have occurred if either:
(1) the closing price (determined in accordance with Section 4.6(e)
of this Indenture) of the Common Stock for any five Trading Days during the ten
Trading Days immediately preceding the Change in Control is at least equal to
105% of the Conversion Price in effect on such Trading Day; or
(2) in the case of a merger or consolidation, all of the
consideration excluding cash payments for fractional shares in the merger or
consolidation constituting the Change in Control consists of common stock traded
on a United States national securities exchange or quoted on the Nasdaq National
Market (or which will be so traded or quoted when issued or exchanged in
connection with such Change In Control) and as a result of such transaction or
transactions the Securities become convertible solely into such common stock.
21
(b) Within 10 Business Days after the occurrence of a Change in Control,
the Company shall mail a written notice of the Change in Control to the Trustee
and to each Holder (and to beneficial owners as required by applicable law). The
notice shall include the form of a Change in Control Purchase Notice to be
completed by the Holder and shall state:
(1) the date of such Change in Control and, briefly, the events
causing such Change in Control;
(2) the date by which the Change in Control Purchase Notice pursuant
to this Section 3.8 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) briefly, the conversion rights of the Securities;
(6) the name and address of each Paying Agent and Conversion Agent;
(7) the Conversion Price and any adjustments thereto;
(8) that Securities as to which a Change in Control Purchase Notice
has been given may be converted into Common Stock pursuant to Article 4 of this
Indenture only to the extent that the Change in Control Purchase Notice has been
withdrawn in accordance with the terms of this Indenture;
(9) the procedures that the Holder must follow to exercise rights
under this Section 3.8;
(10) the procedures for withdrawing a Change in Control Purchase
Notice, including a form of notice of withdrawal; and
(11) that the Holder must satisfy the requirements set forth in the
Securities in order to convert the Securities.
If any of the Securities is in the form of a Global Security, then the
Company shall modify such notice to the extent necessary to accord with the
procedures of the Depositary applicable to the repurchase of Global Securities.
(c) A Holder may exercise its rights specified in subsection (a) of this
Section 3.8 upon delivery of a written notice (which shall be in
substantially the form included in Exhibit A hereto and which may be
---------
delivered by letter, overnight courier, hand delivery, facsimile
transmission or in any other written form and, in the case of Global
Securities, may be delivered electronically or by other means in accordance
with the Depositary's customary procedures) of the exercise of such rights
(a "Change in Control Purchase Notice") to any Paying Agent at any time
prior to the close of business on the Business Day next preceding the
Change in Control Purchase Date.
The delivery of such Security to any Paying Agent (together with all
necessary endorsements) at the office of such Paying Agent shall be a condition
to the receipt by the Holder of the Change in Control Purchase Price therefor.
22
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of the Indenture that
apply to the purchase of all of a Security pursuant to Sections 3.8 through 3.13
also apply to the purchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder delivering to a
Paying Agent the Change in Control Purchase Notice contemplated by this
subsection (c) shall have the right to withdraw such Change in Control Purchase
Notice in whole or in a portion thereof that is a principal amount of $1,000 or
in an integral multiple thereof at any time prior to the close of business on
the Business Day next preceding the Change in Control Purchase Date by delivery
of a written notice of withdrawal to the Paying Agent in accordance with Section
3.9.
A Paying Agent shall promptly notify the Company of the receipt by it of
any Change in Control Purchase Notice or written withdrawal thereof.
Anything herein to the contrary notwithstanding, in the case of Global
Securities, any Change in Control Purchase Notice may be delivered or withdrawn
and such Securities may be surrendered or delivered for purchase in accordance
with the Applicable Procedures as in effect from time to time.
SECTION 3.9. EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE.
Upon receipt by any Paying Agent of the Change in Control Purchase Notice
specified in Section 3.8(c), the Holder of the Security in respect of which such
Change in Control Purchase Notice was given shall (unless such Change in Control
Purchase Notice is withdrawn as specified below) thereafter be entitled to
receive the Change in Control Purchase Price with respect to such Security.
Such Change in Control Purchase Price shall be paid to such Holder promptly
following the later of (a) the Change in Control Purchase Date with respect to
such Security (provided the conditions in Section 3.8(c) have been satisfied)
and (b) the time of delivery of such Security to a Paying Agent by the Holder
thereof in the manner required by Section 3.8(c). Securities in respect of
which a Change in Control Purchase Notice has been given by the Holder thereof
may not be converted into shares of Common Stock on or after the date of the
delivery of such Change in Control Purchase Notice unless such Change in Control
Purchase Notice has first been validly withdrawn.
A Change in Control Purchase Notice may be withdrawn by means of a written
notice (which may be delivered by letter, overnight courier, hand delivery,
facsimile transmission or in any other written form and, in the case of Global
Securities, may be delivered electronically or by other means in accordance with
the Depositary's customary procedures) of withdrawal delivered by the Holder to
a Paying Agent at any time prior to the close of business on the Business Day
immediately preceding the Change in Control Purchase Date, specifying the
principal amount of the Security or portion thereof (which must be a principal
amount of $1,000 or an integral multiple of $1,000 in excess thereof) with
respect to which such notice of withdrawal is being submitted.
SECTION 3.10. DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE.
On or before 11:00 a.m. New York City time on the Change in Control
Purchase Date, the Company shall deposit with the Trustee or with a Paying Agent
(other than the Company or an Affiliate of the Company) an amount of money (in
immediately available funds if deposited on such Business Day) sufficient to pay
the aggregate Change in Control Purchase Price of all the Securities or portions
thereof that are to be
23
purchased as of such Change in Control Purchase Date. The manner in which the
deposit required by this Section 3.10 is made by the Company shall be at the
option of the Company, provided that such deposit shall be made in a manner such
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that the Trustee or a Paying Agent shall have immediately available funds on the
Change in Control Purchase Date.
If a Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Change in Control Purchase Price of any Security for which
a Change in Control Purchase Notice has been tendered and not withdrawn in
accordance with this Indenture then, on the Change in Control Purchase Date,
such Security will cease to be outstanding and the rights of the Holder in
respect thereof shall terminate (other than the right to receive the Change in
Control Purchase Price as aforesaid). The Company shall publicly announce the
principal amount of Securities purchased as a result of such Change in Control
on or as soon as practicable after the Change in Control Purchase Date.
SECTION 3.11. SECURITIES PURCHASED IN PART.
Any Security that is to be purchased only in part shall be surrendered at
the office of a Paying Agent and promptly after the Change in Control Purchase
Date the Company shall execute and the Trustee shall authenticate and deliver to
the Holder of such Security, without service charge, a new Security or
Securities, of such authorized denomination or denominations as may be requested
by such Holder, in aggregate principal amount equal to, and in exchange for, the
portion of the principal amount of the Security so surrendered that is not
purchased.
SECTION 3.12. COMPLIANCE WITH SECURITIES LAWS UPON PURCHASE OF
SECURITIES.
In connection with any offer to purchase or purchase of Securities under
Section 3.8, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1 (or any
successor to either such Rule), if applicable, under the Exchange Act, (b) file
the related Schedule TO (or any successor or similar schedule, form or report)
if required under the Exchange Act, and (c) otherwise comply with all federal
and state securities laws in connection with such offer to purchase or purchase
of Securities, all so as to permit the rights of the Holders and obligations of
the Company under Sections 3.8 through 3.11 to be exercised in the time and in
the manner specified therein.
SECTION 3.13. REPAYMENT TO THE COMPANY.
(1) To the extent that the aggregate amount of cash deposited by the
Company pursuant to Section 3.10 exceeds the aggregate Change in Control
Purchase Price together with interest, if any, thereon of the Securities or
portions thereof that the Company is obligated to purchase, then promptly after
the Change in Control Purchase Date the Trustee or a Paying Agent, as the case
may be, shall return any such excess cash to the Company.
ARTICLE 4
CONVERSION
SECTION 4.1. CONVERSION PRIVILEGE.
Subject to the further provisions of this Section 4.1, a Holder of a
Security may convert the principal amount of such Security (or any portion
thereof equal to $1,000 or any integral multiple of $1,000 in excess
24
thereof) into Common Stock at any time prior to the close of business on the
Final Maturity Date, at the Conversion Price then in effect; provided, however,
-----------------
that, if such Security is called for redemption or submitted for presented for
purchase pursuant to Article 3, such conversion right shall terminate at the
close of business on the Business Day immediately preceding the redemption date
or Change in Control Purchase Date, as the case may be, for such Security or
such earlier date as the Holder presents such Security for redemption or for
purchase (unless the Company shall default in making the redemption payment or
Change in Control Purchase Price payment when due, in which case the conversion
right shall terminate at the close of business on the date such default is cured
and such Security is redeemed or purchased, as the case may be). The number of
shares of Common Stock issuable upon conversion of a Security shall be
determined by dividing the principal amount of the Security or portion thereof
surrendered for conversion by the Conversion Price in effect on the Conversion
Date. The initial Conversion Price is set forth in paragraph 8 of the Securities
and is subject to adjustment as provided in this Article 4.
Provisions of this Indenture that apply to conversion of all of a Security
also apply to conversion of a portion of a Security.
A Security in respect of which a Holder has delivered a Change in Control
Purchase Notice pursuant to Section 3.8(c) exercising the option of such Holder
to require the Company to purchase such Security may be converted only if such
Change in Control Purchase Notice is withdrawn by a written notice of withdrawal
delivered to a Paying Agent prior to the close of business on the Business Day
immediately preceding the Change in Control Purchase Date in accordance with
Section 3.9.
A Holder of Securities is not entitled to any rights of a holder of Common
Stock until such Holder has converted its Securities to Common Stock, and only
to the extent such Securities are deemed to have been converted into Common
Stock pursuant to this Article 4.
SECTION 4.2. CONVERSION PROCEDURE.
To convert a Security, a Holder must (a) complete and manually sign the
conversion notice on the back of the Security and deliver such notice to a
Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish
appropriate endorsements and transfer documents if required by a Registrar or a
Conversion Agent, and (d) pay any transfer or similar tax, if required. The
date on which the Holder satisfies all of those requirements is the "Conversion
Date." As soon as practicable after the Conversion Date, the Company shall
deliver to the Holder through a Conversion Agent a certificate for the number of
whole shares of Common Stock issuable upon the conversion and cash in lieu of
any fractional shares pursuant to Section 4.3. Anything herein to the contrary
notwithstanding, in the case of Global Securities, conversion notices may be
delivered and such Securities may be surrendered for conversion in accordance
with the Applicable Procedures as in effect from time to time.
The person in whose name the Common Stock certificate is registered shall
be deemed to be a stockholder of record on the Conversion Date; provided,
---------
however, that no surrender of a Security on any date when the stock transfer
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books of the Company shall be closed shall be effective to constitute the person
or persons entitled to receive the shares of Common Stock upon such conversion
as the record holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the person or persons entitled
to receive such shares of Common Stock as the record holder or holders thereof
for all purposes at the close of business on the next succeeding day on which
such stock transfer books are open; provided, further, that such conversion
-------- -------
shall be at the Conversion Price in effect on the Conversion Date as if the
stock transfer books of the Company had not been closed. Upon conversion of a
Security, such person
25
shall no longer be a Holder of such Security. No payment or adjustment will be
made for dividends or distributions on shares of Common Stock issued upon
conversion of a Security.
Securities so surrendered for conversion (in whole or in part) during the
period from the close of business on any regular record date to the opening of
business on the next succeeding interest payment date (excluding Securities or
portions thereof called for redemption or presented for purchase upon a Change
in Control on a Redemption Date or Change in Control Purchase Date, as the case
may be, during the period beginning at the close of business on a regular record
date and ending at the opening of business on the first Business Day after the
next succeeding interest payment date, or if such interest payment date is not a
Business Day, the second such Business Day) shall also be accompanied by payment
in funds acceptable to the Company of an amount equal to the interest payable on
such interest payment date on the principal amount of such Security then being
converted, and such interest shall be payable to such registered Holder
notwithstanding the conversion of such Security, subject to the provisions of
this Indenture relating to the payment of defaulted interest by the Company.
Except as otherwise provided in this Section 4.2, no payment or adjustment will
be made for accrued interest on a converted Security. If the Company defaults
in the payment of interest payable on such interest payment date, the Company
shall promptly repay such funds to such Holder.
Nothing in this Section shall affect the right of a Holder in whose name
any Security is registered at the close of business on a record date to receive
the interest payable on such Security on the related interest payment date in
accordance with the terms of this Indenture and the Securities. If a Holder
converts more than one Security at the same time, the number of shares of Common
Stock issuable upon the conversion shall be based on the aggregate principal
amount of Securities converted.
Upon surrender of a Security that is converted in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder, a new
Security equal in principal amount to the unconverted portion of the Security
surrendered.
SECTION 4.3. FRACTIONAL SHARES.
The Company will not issue fractional shares of Common Stock upon
conversion of Securities. In lieu thereof, the Company will pay an amount in
cash based upon the current market price (determined as set forth in Section
4.6(e)) of the Common Stock on the Trading Day immediately prior to the
Conversion Date.
SECTION 4.4. TAXES ON CONVERSION.
If a Holder converts a Security, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon such conversion. However, the Holder shall pay any such tax which is
due because the Holder requests the shares to be issued in a name other than the
Holder's name. The Conversion Agent may refuse to deliver the certificate
representing the Common Stock being issued in a name other than the Holder's
name until the Conversion Agent receives a sum sufficient to pay any tax which
will be due because the shares are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any tax withholding required by
law or regulation.
26
SECTION 4.5. COMPANY TO PROVIDE STOCK.
The Company shall, prior to issuance of any Securities hereunder, and from
time to time as may be necessary, reserve, out of its authorized but unissued
Common Stock, a sufficient number of shares of Common Stock to permit the
conversion of all outstanding Securities into shares of Common Stock.
All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares, shall be duly authorized, validly issued, fully
paid and nonassessable and shall be free from preemptive rights and free of any
lien or adverse claim.
The Company will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of Securities, if any, and will list or cause to have quoted such
shares of Common Stock on each national securities exchange or on the Nasdaq
National Market or other over-the-counter market or such other market on which
the Common Stock is then listed or quoted; provided, however, that if rules of
-------- -------
such automated quotation system or exchange permit the Company to defer the
listing of such Common Stock until the first conversion of the Notes into Common
Stock in accordance with the provisions of this Indenture, the Company covenants
to list such Common Stock issuable upon conversion of the Notes in accordance
with the requirements of such automated quotation system or exchange at such
time.
SECTION 4.6. ADJUSTMENT OF CONVERSION PRICE.
The conversion price as stated in paragraph 8 of the Securities (the
"Conversion Price") shall be adjusted from time to time by the Company as
follows:
(a) In case the Company shall (i) pay a dividend on its Common Stock in
shares of Common Stock, (ii) make a distribution on its Common Stock in shares
of Common Stock, (iii) subdivide its outstanding Common Stock into a greater
number of shares, or (iv) combine its outstanding Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior thereto shall
be adjusted so that the Holder of any Security thereafter surrendered for
conversion shall be entitled to receive that number of shares of Common Stock
which it would have owned had such Security been converted immediately prior to
the happening of such event. An adjustment made pursuant to this subsection (a)
shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of subdivision or combination.
(b) In case the Company shall issue rights or warrants to all or
substantially all holders of its Common Stock entitling them (for a period
commencing no earlier than the record date described below and expiring not more
than 60 days after such record date) to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price per share
(or having a conversion price per share) less than the current market price per
share of Common Stock (as determined in accordance with subsection (e) of this
Section 4.6) on the record date for the determination of stockholders entitled
to receive such rights or warrants, the Conversion Price in effect immediately
prior thereto shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
which the aggregate offering price of the total number of shares of Common Stock
so offered (or the aggregate conversion price of the convertible securities so
offered, which shall be determined by multiplying the number of shares of Common
Stock issuable upon conversion of such convertible securities by the conversion
price per share of Common Stock pursuant to the terms of such
27
convertible securities) would purchase at the current market price per share (as
defined in subsection (e) of this Section 4.6) of Common Stock on such record
date, and of which the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock offered (or into which the convertible securities so offered are
convertible). Such adjustment shall be made successively whenever any such
rights or warrants are issued, and shall become effective immediately after such
record date. If at the end of the period during which such rights or warrants
are exercisable not all rights or warrants shall have been exercised, the
adjusted Conversion Price shall be immediately readjusted to what it would have
been based upon the number of additional shares of Common Stock actually issued
(or the number of shares of Common Stock issuable upon conversion of convertible
securities actually issued).
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock any shares of capital stock of the Company (other
than Common Stock), evidences of indebtedness or other non-cash assets
(including securities of any person other than the Company but excluding (1)
dividends on distributions paid exclusively in cash or (2) dividends or
distributions referred to in subsection (a) of this Section 4.6, or shall
distribute to all or substantially all holders of its Common Stock rights or
warrants to subscribe for or purchase any of its securities (excluding those
rights and warrants referred to in subsection (b) of this Section 4.6 and also
excluding the distribution of rights to all holders of Common Stock pursuant to
the adoption of a stockholders rights plan or the detachment of such rights
under the terms of such stockholder rights plan), then in each such case the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the current Conversion Price by a fraction of which
the numerator shall be the current market price per share (as defined in
subsection (e) of this Section 4.6) of the Common Stock on the record date
mentioned below less the fair market value on such record date (as determined by
the Board of Directors, whose determination shall be conclusive evidence of such
fair market value and which shall be evidenced by an Officers' Certificate
delivered to the Trustee) of the portion of the capital stock, evidences of
indebtedness or other non-cash assets so distributed or of such rights or
warrants applicable to one share of Common Stock (determined on the basis of the
number of shares of Common Stock outstanding on the record date), and of which
the denominator shall be the current market price per share (as defined in
subsection (e) of this Section 4.6) of the Common Stock on such record date.
Such adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such distribution.
(1) In case the Company shall, by dividend or otherwise, at any time
distribute (a "Triggering Distribution") to all or substantially all holders of
its Common Stock cash in an aggregate amount that, together with the aggregate
amount of (A) any cash and the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive evidence thereof and which
shall be evidenced by an Officers' Certificate delivered to the Trustee) of any
other consideration payable in respect of any tender offer by the Company or a
Subsidiary of the Company for Common Stock consummated within the 12 months
preceding the date of payment of the Triggering Distribution and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been made
and (B) all other cash distributions to all or substantially all holders of its
Common Stock made within the 12 months preceding the date of payment of the
Triggering Distribution and in respect of which no Conversion Price adjustment
pursuant to this Section 4.6 has been made, exceeds an amount equal to 10.0% of
the product of the current market price per share of Common Stock (as determined
in accordance with subsection (e) of this Section 4.6) on the Business Day (the
"Determination Date") immediately preceding the day on which such Triggering
Distribution is declared by the Company multiplied by the number of shares of
Common Stock outstanding on the Determination Date (excluding shares held in the
treasury of the Company), the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying such Conversion Price in effect
immediately prior to the Determination Date by a fraction of which the numerator
shall be the current market
28
price per share of the Common Stock (as determined in accordance with subsection
(e) of this Section 4.6) on the Determination Date less the sum of the aggregate
amount of cash and the aggregate fair market value (determined as aforesaid in
this Section 4.6(d)(1)) of any such other consideration so distributed, paid or
payable within such 12 months (including, without limitation, the Triggering
Distribution) applicable to one share of Common Stock (determined on the basis
of the number of shares of Common Stock outstanding on the Determination Date)
and the denominator shall be such current market price per share of the Common
Stock (as determined in accordance with subsection (e) of this Section 4.6) on
the Determination Date, such reduction to become effective immediately prior to
the opening of business on the day following the date on which the Triggering
Distribution is paid.
(2) In case any tender offer made by the Company or any of its
Subsidiaries for Common Stock shall expire and such tender offer (as amended
upon the expiration thereof) shall involve the payment of aggregate
consideration in an amount (determined as the sum of the aggregate amount of
cash consideration and the aggregate fair market value (as determined by the
Board of Directors, whose determination shall be conclusive evidence thereof and
which shall be evidenced by an Officers' Certificate delivered to the Trustee
thereof) of any other consideration) that, together with the aggregate amount of
(A) any cash and the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive evidence thereof and which shall be
evidenced by an Officers' Certificate delivered to the Trustee) of any other
consideration payable in respect of any other tender offers by the Company or
any Subsidiary of the Company for Common Stock consummated within the 12 months
preceding the date of the Expiration Date (as defined below) and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been made
and (B) all cash distributions to all or substantially all holders of its Common
Stock made within the 12 months preceding the Expiration Date and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been made,
exceeds an amount equal to 10.0% of the product of the current market price per
share of Common Stock (as determined in accordance with subsection (e) of this
Section 4.6) as of the last date (the "Expiration Date") tenders could have been
made pursuant to such tender offer (as it may be amended) (the last time at
which such tenders could have been made on the Expiration Date is hereinafter
sometimes called the "Expiration Time") multiplied by the number of shares of
Common Stock outstanding (including tendered shares but excluding any shares
held in the treasury of the Company) at the Expiration Time, then, immediately
prior to the opening of business on the day after the Expiration Date, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
close of business on the Expiration Date by a fraction of which the numerator
shall be the product of the number of shares of Common Stock outstanding
(including tendered shares but excluding any shares held in the treasury of the
Company) at the Expiration Time multiplied by the current market price per share
of the Common Stock (as determined in accordance with subsection (e) of this
Section 4.6) on the Trading Day next succeeding the Expiration Date and the
denominator shall be the sum of (x) the aggregate consideration (determined as
aforesaid) payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of all shares validly tendered and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares and excluding any shares held in the treasury of the Company) at the
Expiration Time and the current market price per share of Common Stock (as
determined in accordance with subsection (e) of this Section 4.6) on the Trading
Day next succeeding the Expiration Date, such reduction to become effective
immediately prior to the opening of business on the day following the Expiration
Date. In the event that the Company is obligated to purchase shares pursuant to
any such tender offer, but the Company is permanently prevented by applicable
law from effecting any or all such purchases or any or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price which would have been in effect based upon the number of shares actually
purchased. If the application
29
of this Section 4.6(d)(2) to any tender offer would result in an increase in the
Conversion Price, no adjustment shall be made for such tender offer under this
Section 4.6(d)(2).
(3) For purposes of this Section 4.6(d), the term "tender offer"
shall mean and include both tender offers and exchange offers, all references to
"purchases" of shares in tender offers (and all similar references) shall mean
and include both the purchase of shares in tender offers and the acquisition of
shares pursuant to exchange offers, and all references to "tendered shares" (and
all similar references) shall mean and include shares tendered in both tender
offers and exchange offers.
(d) For the purpose of any computation under subsections (b), (c) and (d)
of this Section 4.6, the current market price per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices for the 30
consecutive Trading Days commencing 45 Trading Days before (i) the Determination
Date or the Expiration Date, as the case may be, with respect to distributions
or tender offers under subsection (d) of this Section 4.6 or (ii) the record
date with respect to distributions, issuances or other events requiring such
computation under subsection (b) or (c) of this Section 4.6. The closing price
for each day shall be the last reported sales price or, in case no such reported
sale takes place on such date, the average of the reported closing bid and asked
prices in either case on the Nasdaq National Market (the "NNM") or, if the
Common Stock is not listed or admitted to trading on the NNM, on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on the NNM or any national
securities exchange, the last reported sales price of the Common Stock as quoted
on NASDAQ or, in case no reported sales takes place, the average of the closing
bid and asked prices as quoted on NASDAQ or any comparable system or, if the
Common Stock is not quoted on NASDAQ or any comparable system, the closing sales
price or, in case no reported sale takes place, the average of the closing bid
and asked prices, as furnished by any two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose. If no such prices are available, the current market price per share
shall be the fair value of a share of Common Stock as determined by the Board of
Directors (which shall be evidenced by an Officers' Certificate delivered to the
Trustee).
(e) In any case in which this Section 4.6 shall require that an
adjustment be made following a record date or a Determination Date or Expiration
Date, as the case may be, established for purposes of this Section 4.6, the
Company may elect to defer (but only until five Business Days following the
filing by the Company with the Trustee of the certificate described in Section
4.9) issuing to the Holder of any Security converted after such record date or
Determination Date or Expiration Date the shares of Common Stock and other
capital stock of the Company issuable upon such conversion over and above the
shares of Common Stock and other capital stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to adjustment; and,
in lieu of the shares the issuance of which is so deferred, the Company shall
issue or cause its transfer agents to issue due bills or other appropriate
evidence prepared by the Company of the right to receive such shares. If any
distribution in respect of which an adjustment to the Conversion Price is
required to be made as of the record date or Determination Date or Expiration
Date therefor is not thereafter made or paid by the Company for any reason, the
Conversion Price shall be readjusted to the Conversion Price which would then be
in effect if such record date had not been fixed or such effective date or
Determination Date or Expiration Date had not occurred.
SECTION 4.7. NO ADJUSTMENT.
No adjustment in the Conversion Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Price as last adjusted; provided, however, that any adjustments which
-----------------
by reason of this Section 4.7 are not required to be made shall be carried
forward and
30
taken into account in any subsequent adjustment. All calculations under this
Article 4 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
No adjustment need be made for issuances of Common Stock pursuant to a
Company plan for reinvestment of dividends or interest or for a change in the
par value or a change to no par value of the Common Stock.
To the extent that the Securities become convertible into the right to
receive cash, no adjustment need be made thereafter as to the cash. Interest
will not accrue on the cash.
SECTION 4.8. ADJUSTMENT FOR TAX PURPOSES.
The Company shall be entitled to make such reductions in the Conversion
Price, in addition to those required by Section 4.6, as it in its discretion
shall determine to be advisable in order that any stock dividends, subdivisions
of shares, distributions of rights to purchase stock or securities or
distributions of securities convertible into or exchangeable for stock hereafter
made by the Company to its stockholders shall not be taxable.
SECTION 4.9. NOTICE OF ADJUSTMENT.
Whenever the Conversion Price or conversion privilege is adjusted, the
Company shall promptly mail to Securityholders a notice of the adjustment and
file with the Trustee an Officers' Certificate briefly stating the facts
requiring the adjustment and the manner of computing it. Unless and until the
Trustee shall receive an Officers' Certificate setting forth an adjustment of
the Conversion Price, the Trustee may assume without inquiry that the Conversion
Price has not been adjusted and that the last Conversion Price of which it has
knowledge remains in effect.
SECTION 4.10. NOTICE OF CERTAIN TRANSACTIONS.
In the event that:
(1) the Company takes any action which would require an adjustment
in the Conversion Price;
(2) the Company consolidates or merges with, or transfers all or
substantially all of its property and assets to, another corporation and
shareholders of the Company must approve the transaction; or
(3) there is a dissolution or liquidation of the Company, the
Company shall mail to Holders and file with the Trustee a notice stating the
proposed record or effective date, as the case may be. The Company shall mail
the notice at least ten days before such date. Failure to mail such notice or
any defect therein shall not affect the validity of any transaction referred to
in clause (1), (2) or (3) of this Section 4.10.
SECTION 4.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON
CONVERSION PRIVILEGE.
If any of the following shall occur, namely: (a) any reclassification or
change of shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination, or any
other change
31
for which an adjustment is provided in Section 4.6); (b) any consolidation or
merger or combination to which the Company is a party other than a merger in
which the Company is the continuing corporation and which does not result in any
reclassification of, or change (other than in par value, or from par value to no
par value, or from no par value to par value, or as a result of a subdivision or
combination) in, outstanding shares of Common Stock; or (c) any sale or
conveyance as an entirety or substantially as an entirety of the property and
assets of the Company, directly or indirectly, to any person, then the Company,
or such successor, purchasing or transferee corporation, as the case may be,
shall, as a condition precedent to such reclassification, change, combination,
consolidation, merger, sale or conveyance, execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right to convert such Security into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, combination, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
deliverable upon conversion of such Security immediately prior to such
reclassification, change, combination, consolidation, merger, sale or
conveyance. Such supplemental indenture shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article 4. If, in
the case of any such consolidation, merger, combination, sale or conveyance, the
stock or other securities and property (including cash) receivable thereupon by
a holder of Common Stock include shares of stock or other securities and
property of a person other than the successor, purchasing or transferee
corporation, as the case may be, in such consolidation, merger, combination,
sale or conveyance, then such supplemental indenture shall also be executed by
such other person and shall contain such additional provisions to protect the
interests of the Holders of the Securities as the Board of Directors shall
reasonably consider necessary by reason of the foregoing. The provisions of this
Section 4.11 shall similarly apply to successive reclassifications, changes,
combinations, consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental indenture pursuant to
this Section 4.11, the Company shall promptly file with the Trustee (x) an
Officers' Certificate briefly stating the reasons therefor, the kind or amount
of shares of stock or other securities or property (including cash) receivable
by Holders of the Securities upon the conversion of their Securities after any
such reclassification, change, combination, consolidation, merger, sale or
conveyance, any adjustment to be made with respect thereto and that all
conditions precedent have been complied with and (y) an Opinion of Counsel that
all conditions precedent have been complied with, and shall promptly mail notice
thereof to all Holders.
SECTION 4.12. TRUSTEE'S DISCLAIMER.
The Trustee shall have no duty to determine when an adjustment under this
Article 4 should be made, how it should be made or what such adjustment should
be, but may accept as conclusive evidence of that fact or the correctness of any
such adjustment, and shall be protected in relying upon, an Officers'
Certificate including the Officers' Certificate with respect thereto which the
Company is obligated to file with the Trustee pursuant to Section 4.9. The
Trustee makes no representation as to the validity or value of any securities or
assets issued upon conversion of Securities, and the Trustee shall not be
responsible for the Company's failure to comply with any provisions of this
Article 4.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.11, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 4.11.
32
SECTION 4.13. VOLUNTARY REDUCTION.
The Company from time to time may reduce the Conversion Price by any amount
for any period of time if the period is at least 20 days and if the reduction is
irrevocable during the period if our Board of Directors determines that such
reduction would be in the best interest of the Company and the Company provides
15 days prior notice of any reduction in the Conversion Price; provided,
---------
however, that in no event may the Company reduce the Conversion Price to be less
-------
than the par value of a share of Common Stock.
ARTICLE 5
SUBORDINATION
SECTION 5.1. AGREEMENT OF SUBORDINATION.
The Company covenants and agrees, and each Holder of Securities issued
hereunder by its acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article 5; and each
Person holding any Security, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees to be bound by such
provisions.
The payment of the principal of, premium, if any, and interest (including
Additional Interest, if any) on all Securities (including, but not limited to,
the redemption price with respect to the Securities called for redemption or the
Change in Control Purchase Price with respect to the Securities subject to
purchase in accordance with Article 3 as provided in this Indenture) issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and subject in right of payment to the prior payment in full in
cash or payment satisfactory to the holders of Senior Indebtedness of all Senior
Indebtedness, whether outstanding at the date of this Indenture or thereafter
incurred.
No provision of this Article 5 shall prevent the occurrence of any default
or Event of Default hereunder.
SECTION 5.2. PAYMENTS TO HOLDERS.
No payment shall be made with respect to the principal of, or premium, if
any, or interest (including Additional Interest, if any) on the Securities
(including, but not limited to, the redemption price with respect to the
Securities to be called for redemption or the Change in Control Purchase Price
with respect to the Securities subject to purchase in accordance with Article 3
as provided in this Indenture), except payments and distributions made by the
Trustee as permitted by the first or second paragraph of Section 5.5, if:
(i) a default in the payment of principal, premium, interest, rent or other
obligations due on any Designated Senior Indebtedness occurs and is continuing
(or, in the case of Designated Senior Indebtedness for which there is a period
of grace, in the event of such a default that continues beyond the period of
grace, if any, specified in the instrument or lease evidencing such Designated
Senior Indebtedness), unless and until such default shall have been cured or
waived or shall have ceased to exist; or
(ii) a default, other than a payment default, on a Designated Senior
Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a
Representative or holder of Designated Senior Indebtedness or the Company.
33
Subject to the provisions of Section 5.5, if the Trustee receives any
Payment Blockage Notice pursuant to clause (ii) above, no subsequent Payment
Blockage Notice shall be effective for purposes of this Section unless and until
at least 365 days shall have elapsed since the initial effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee (unless such default was waived, cured or otherwise ceased to exist and
thereafter subsequently reoccurred) shall be, or be made, the basis for a
subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in respect
of the Securities upon the earlier of:
(a) the date upon which the default is cured or waived or ceases to
exist, or
(b) in the case of a default referred to in clause (ii) above, 179 days
pass after a Payment Blockage Notice is received, unless this Article 5
otherwise prohibits the payment or distribution at the time of such payment or
distribution.
Upon any payment by the Company, or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company (whether voluntary or involuntary) or in bankruptcy, insolvency,
receivership or similar proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash, or other payments
satisfactory to the holders of Senior Indebtedness before any payment is made on
account of the principal of, premium, if any, or interest (including Additional
Interest, if any) on the Securities (except payments made pursuant to Article 10
from monies deposited with the Trustee pursuant thereto prior to commencement of
proceedings for such dissolution, winding-up, liquidation or reorganization);
and upon any such dissolution or winding-up or liquidation or reorganization of
the Company or bankruptcy, insolvency, receivership or other proceeding, any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders of the
Securities or the Trustee would be entitled, except for the provision of this
Article 5, shall (except as aforesaid) be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Holders of the Securities or by
the Trustee under this Indenture if received by them or it, directly to the
holders of Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, or as otherwise
required by law or a court order) or their representative or representatives, or
to the trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full in cash, or other payment satisfactory to the holders of Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness, before any payment or distribution is
made to the Holders of the Securities or to the Trustee.
For purposes of this Article 5, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article 5 with respect to
the Securities to the payment of all Senior Indebtedness which may at the time
be outstanding; provided that (i) the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any reorganization or readjustment, and (ii)
the rights of the holders of Senior Indebtedness (other than leases which are
not assumed by the Company or the new corporation, as the case may be) are not,
without the consent of such Holders, altered by such reorganization
34
or readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article 7 shall not be deemed a dissolution, winding-
up, liquidation or reorganization for the purposes of this Section 5.2 if such
other corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article 7.
In the event of the acceleration of the Securities because of an Event of
Default, no payment or distribution shall be made to the Trustee or any Holder
of Securities in respect of the principal of, premium, if any, or interest
(including Additional Interest, if any) on the Securities (including, but not
limited to, the redemption price with respect to the Securities called for
redemption or the Change in Control Purchase Price with respect to the
Securities subject to purchase in accordance with Article 3 as provided in this
Indenture), except payments and distributions made by the Trustee as permitted
by the first or second paragraph of Section 5.5, until all Senior Indebtedness
has been paid in full in cash or other payment satisfactory to the holders of
Senior Indebtedness or such acceleration is rescinded in accordance with the
terms of this Indenture. If payment of the Securities is accelerated because of
an Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of such acceleration.
In the event that, notwithstanding the foregoing provisions, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing, shall be received by the Trustee or the
Holders of the Securities before all Senior Indebtedness is paid in full, in
cash or other payment satisfactory to the holders of Senior Indebtedness, or
provision is made for such payment thereof in accordance with its terms in cash
or other payment satisfactory to the holders of Senior Indebtedness, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full, in cash
or other payment satisfactory to the holders of Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the holders of
such Senior Indebtedness.
Nothing in this Section 5.2 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 9.7. This Section 5.2 shall be subject to
the further provisions of Section 5.5.
SECTION 5.3. SUBROGATION OF SECURITIES.
Subject to the payment in full, in cash or other payment satisfactory to
the holders of Senior Indebtedness, of all Senior Indebtedness, the rights of
the Holders of the Securities shall be subrogated to the extent of the payments
or distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article 5 (equally and ratably with the holders of all
indebtedness of the Company which by its express terms is subordinated to other
indebtedness of the Company to substantially the same extent as the Securities
are subordinated and is entitled to like rights of subrogation) to the rights of
the holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Indebtedness
until the principal, premium, if any, and interest (including Additional
Interest, if any) on the Securities shall be paid in full in cash or other
payment satisfactory to the holders of Senior Indebtedness; and, for the
purposes of such subrogation, no payments or distributions to the holders of the
Senior Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee
35
would be entitled except for the provisions of this Article 5, and no payment
over pursuant to the provisions of this Article 5, to or for the benefit of the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness; and no payments or
distributions of cash, property or securities to or for the benefit of the
Holders of the Securities pursuant to the subrogation provisions of this Article
5, which would otherwise have been paid to the holders of Senior Indebtedness
shall be deemed to be a payment by the Company to or for the account of the
Securities. It is understood that the provisions of this Article 5 are and are
intended solely for the purposes of defining the relative rights of the Holders
of the Securities, on the one hand, and the holders of the Senior Indebtedness,
on the other hand.
Nothing contained in this Article 5 or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of (and premium, if any)
and interest on the Securities as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of the Senior Indebtedness, nor shall anything herein or therein
prevent the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article 5 of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article 5, the Trustee, subject to the provisions of Section 9.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article 5.
SECTION 5.4. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Security by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 5 and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
5.3 hereof at least 30 days before the expiration of the time to file such
claim, the holders of any Senior Indebtedness or their representatives are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Securities.
SECTION 5.5. NOTICE TO TRUSTEE.
The Company shall give prompt written notice in the form of an Officers'
Certificate to a Trust Officer of the Trustee and to any Paying Agent of any
fact known to the Company which would prohibit the making of any payment of
monies to or by the Trustee or any Paying Agent in respect of the Securities
pursuant to the provisions of this Article 5. Notwithstanding the provisions of
this Article 5 or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts
36
which would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article 5, unless
and until a Trust Officer of the Trustee shall have received written notice
thereof at the Corporate Trust Office from the Company (in the form of an
Officers' Certificate) or a Representative or a Holder or Holders of Senior
Indebtedness or from any trustee thereof; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 9.1, shall be
entitled in all respects to assume that no such facts exist; provided that if on
a date not fewer than one Business Day prior to the date upon which by the terms
hereof any such monies may become payable for any purpose (including, without
limitation, the payment of the principal of, or premium, if any, or interest on
any Security) the Trustee shall not have received, with respect to such monies,
the notice provided for in this Section 5.5, then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority to
receive such monies and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such prior date. Notwithstanding anything in this
Article 5 to the contrary, nothing shall prevent any payment by the Trustee to
the Holders of monies deposited with it pursuant to Article 10, and any such
payment shall not be subject to the provisions of Article 5.
The Trustee, subject to the provisions of Section 9.1, shall be entitled to
rely on the delivery to it of a written notice by a Representative or a person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a
Representative or a holder of Senior Indebtedness or a trustee on behalf of any
such holder or holders. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article 5, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article 5, and if such
evidence is not furnished the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 5.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article 5 in respect of any Senior Indebtedness at any time
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in Section 9.11 or elsewhere in this Indenture shall deprive the Trustee
of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 5, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 9.1, the Trustee shall not be liable to any holder of
Senior Indebtedness if it shall pay over or deliver to Holders of Securities,
the Company or any other person money or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article 5 or otherwise.
SECTION 5.7. NO IMPAIRMENT OF SUBORDINATION.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
37
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.
SECTION 5.8. CERTAIN CONVERSIONS DEEMED PAYMENT.
For the purposes of this Article 5 only, (1) the issuance and delivery of
junior securities upon conversion of Securities in accordance with Article 4
shall not be deemed to constitute a payment or distribution on account of the
principal of (or premium, if any) or interest on Securities or on account of the
purchase or other acquisition of Securities, and (2) the payment, issuance or
delivery of cash (except in satisfaction of fractional shares pursuant to
Section 4.3), property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment on account of the
principal of such Security. For the purposes of this Section 5.8, the term
"junior securities" means (a) shares of any stock of any class of the Company,
or (b) securities of the Company which are subordinated in right of payment to
all Senior Indebtedness which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a greater
extent than, the Securities are so subordinated as provided in this Article.
Nothing contained in this Article 5 or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders, the right, which is
absolute and unconditional, of the Holder of any Security to convert such
Security in accordance with Article 4.
SECTION 5.9. ARTICLE APPLICABLE TO PAYING AGENTS.
If at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that the first
-------- -------
paragraph of Section 5.5 shall not apply to the Company or any Affiliate of the
Company if it or such Affiliate acts as Paying Agent.
SECTION 5.10. SENIOR INDEBTEDNESS ENTITLED TO RELY.
The holders of Senior Indebtedness (including, without limitation,
Designated Senior Indebtedness) shall have the right to rely upon this Article
5, and no amendment or modification of the provisions contained herein shall
diminish the rights of such holders unless such holders shall have agreed in
writing thereto.
ARTICLE 6
COVENANTS
SECTION 6.1. PAYMENT OF SECURITIES.
The Company shall promptly make all payments in respect of the Securities
on the dates and in the manner provided in the Securities and this Indenture.
An installment of principal or interest or Additional Interest, if any, shall be
considered paid on the date it is due if the Paying Agent (other than the
Company) holds by 11:00 a.m., New York City time, on that date money, deposited
by the Company or an Affiliate thereof, sufficient to pay the installment. The
Company shall, to the fullest extent permitted by law, pay interest on overdue
principal (including premium, if any) and overdue installments of interest at
the rate borne by the Securities per annum.
38
Payment of the principal of (and premium, if any) and any interest on the
Securities shall be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York (which shall
initially be State Street Bank and Trust Company, N.A., an Affiliate of the
Trustee, as agent of the Trustee) or at the Corporate Trust Office of the
Trustee in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
--------
however, that at the option of the Company payment of interest may be made by
-------
check mailed to the address of the Person entitled thereto as such address
appears in the Register; provided further that a Holder with an aggregate
-------- -------
principal amount in excess of $2,000,000 will be paid by wire transfer in
immediately available funds at the election of such Holder.
SECTION 6.2. SEC REPORTS.
The Company shall file all reports and other information and documents
which it is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act, and within 15 days after it files them with the SEC, the Company
shall file copies of all such reports, information and other documents with the
Trustee.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 6.3. COMPLIANCE CERTIFICATES.
The Company shall deliver to the Trustee, within 90 days after the end of
each fiscal year of the Company (beginning with the fiscal year ending June 30,
2000), an Officers' Certificate as to the signer's knowledge of the Company's
compliance with all conditions and covenants on its part contained in this
Indenture and stating whether or not the signer knows of any default or Event of
Default. If such signer knows of such a default or Event of Default, the
Officers' Certificate shall describe the default or Event of Default and the
efforts to remedy the same. For the purposes of this Section 6.3, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
SECTION 6.4. FURTHER INSTRUMENTS AND ACTS.
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.
SECTION 6.5. MAINTENANCE OF CORPORATE EXISTENCE.
Subject to Article 7, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence.
SECTION 6.6. RULE 144A INFORMATION REQUIREMENT.
Within the period prior to the expiration of the holding period applicable
to sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), the Company covenants and agrees that it shall, during any period in
which it is not subject to Section 13 or 15(d) under the Exchange Act, make
available to any Holder or beneficial holder of Securities or any Common Stock
issued upon conversion
39
thereof which continue to be Restricted Securities in connection with any sale
thereof and any prospective purchaser of Securities or such Common Stock
designated by such Holder or beneficial holder, the information required
pursuant to Rule 144A(d)(4) under the Securities Act upon the request of any
Holder or beneficial holder of the Securities or such Common Stock and it will
take such further action as any Holder or beneficial holder of such Securities
or such Common Stock may reasonably request, all to the extent required from
time to time to enable such Holder or beneficial holder to sell its Securities
or Common Stock without registration under the Securities Act within the
limitation of the exemption provided by Rule 144A, as such Rule may be amended
from time to time. Upon the request of any Holder or any beneficial holder of
the Securities or such Common Stock, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
SECTION 6.7. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law or other law
which would prohibit or forgive the Company from paying all or any portion of
the principal of, premium, if any, or interest (including Additional Interest,
if any) on the Securities as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Indenture and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.
SECTION 6.8. PAYMENT OF ADDITIONAL INTEREST.
If Additional Interest is payable by the Company pursuant to the
Registration Rights Agreement, the Company shall deliver to the Trustee a
certificate to that effect stating (i) the amount of such Additional Interest
that is payable and (ii) the date on which such Additional Interest is payable.
Unless and until a Trust Officer of the Trustee receives such a certificate, the
Trustee may assume without inquiry that no such Additional Interest is payable.
If the Company has paid Additional Interest directly to the Persons entitled to
it, the Company shall deliver to the Trustee a certificate setting forth at the
particulars of such payment.
ARTICLE 7
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. COMPANY MAY CONSOLIDATE, ETC, ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person (in a
transaction in which the Company is not the surviving corporation) or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, unless:
(1) in case the Company shall consolidate with or merge into another
Person (in a transaction in which the Company is not the surviving corporation)
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, limited liability company, partnership or
trust, shall be organized and validly existing under the laws of the United
States of
40
America, any State thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment of
the principal of and any premium and interest on all the Securities and the
performance or observance of every covenant of this Indenture on the part of the
Company to be performed or observed and the conversion rights shall be provided
for in accordance with Article 4, by supplemental indenture satisfactory in form
to the Trustee, executed and delivered to the Trustee, by the Person (if other
than the Company) formed by such consolidation or into which the Company shall
have been merged or by the Person which shall have acquired the Company's
assets;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.
SECTION 7.2. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
7.1, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.
ARTICLE 8
DEFAULT AND REMEDIES
SECTION 8.1. EVENTS OF DEFAULT.
An "Event of Default" shall occur if:
(1) the Company defaults in the payment of any interest or
Additional Interest, if any, payable to all holders of Registrable Securities
(as defined in the Registration Rights Agreement) on any Security when the same
becomes due and payable and the default continues for a period of 30 days,
whether or not such payment shall be prohibited by the provisions of Article 5
hereof;
(2) the Company defaults in the payment of any principal of
(including, without limitation, any premium, if any, on) any Security when the
same becomes due and payable (whether at maturity, upon redemption, on a Change
of Control Purchase Date or otherwise), whether or not such payment shall be
prohibited by the provisions of Article 5 hereof;
(3) the Company fails to comply with any of its other agreements
contained in the Securities or this Indenture and the default continues for the
period and after the notice specified below;
41
(4) the Company pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief against it in
an involuntary case or proceeding;
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property; or
(D) makes a general assignment for the benefit of its
creditors; or
(5) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case or
proceeding;
(B) appoints a Custodian of the Company or for all or
substantially all of the property of the Company; or
(C) orders the liquidation of the Company;
and in each case the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11 of the United States Code (or any
successor thereto) or any similar federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.
A default under clause (3) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the Securities then outstanding notify the Company and the
Trustee, of the default, and the Company does not cure the default within 60
days after receipt of such notice. The notice given pursuant to this Section
8.1 must specify the default, demand that it be remedied and state that the
notice is a "Notice of Default." When any default under this Section 8.1 is
cured, it ceases.
The Trustee shall not be charged with knowledge of any Event of Default
unless written notice thereof shall have been given to a Trust Officer at the
Corporate Trust Office of the Trustee by the Company, a Paying Agent, any Holder
or any agent of any Holder.
SECTION 8.2. ACCELERATION.
If an Event of Default (other than an Event of Default specified in clause
(4) or (5) of Section 8.1) occurs and is continuing, the Trustee may, by notice
to the Company, or the Holders of at least 25% in aggregate principal amount of
the Securities then outstanding may, by notice to the Company and the Trustee,
declare all unpaid principal to the date of acceleration on the Securities then
outstanding (if not then due and payable) to be due and payable upon any such
declaration, and the same shall become and be immediately due and payable. If
an Event of Default specified in clause (4) or (5) of Section 8.1 occurs, all
unpaid principal of the Securities then outstanding shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder. The Holders of a majority in aggregate
42
principal amount of the Securities then outstanding by notice to the Trustee may
rescind an acceleration and its consequences if (a) all existing Events of
Default, other than the nonpayment of the principal of the Securities which has
become due solely by such declaration of acceleration, have been cured or
waived; (b) to the extent the payment of such interest is lawful, interest
(calculated at the rate per annum borne by the Securities) on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid; (c) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction; and (d) all payments due to the Trustee and any predecessor
Trustee under Section 9.7 have been made. No such rescission shall affect any
subsequent default or impair any right consequent thereto.
SECTION 8.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may, but shall
not be obligated to, pursue any available remedy by proceeding at law or in
equity to collect the payment of the principal of or interest on the Securities
or to enforce the performance of any provision of the Securities or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT.
Subject to Sections 8.7 and 11.2, the Holders of a majority in principal
amount of the Securities then outstanding by notice to the Trustee may waive an
existing default or Event of Default and its consequence, except a default or
Event of Default in the payment of the principal of or interest on any Security,
a failure by the Company to convert any Securities into Common Stock or any
default or Event of Default in respect of any provision of this Indenture or the
Securities which, under Section 11.2, cannot be modified or amended without the
consent of the Holder of each Security affected. When a default or Event of
Default is waived, it is cured and ceases.
SECTION 8.5. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the Securities then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of another Holder or the Trustee, or that may involve
the Trustee in personal liability unless the Trustee is offered indemnity
satisfactory to it; provided, however, that the Trustee may take any other
-----------------
action deemed proper by the Trustee which is not inconsistent with such
direction.
SECTION 8.6. LIMITATIONS ON SUITS.
A Holder may not pursue any remedy with respect to this Indenture or the
Securities (except actions for payment of overdue principal or interest or for
the conversion of the Securities pursuant to Article 4) unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
43
(2) the Holders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable indemnity
to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Securities then outstanding.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of the principal of and interest on the
Security, on or after the respective due dates expressed in the Security and
this Indenture, to convert such Security in accordance with Article 4 and to
bring suit for the enforcement of any such payment on or after such respective
dates or the right to convert, is absolute and unconditional and shall not be
impaired or affected without the consent of the Holder.
SECTION 8.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in the payment of principal or interest specified in
clause (1) or (2) of Section 8.1 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or another obligor on the Securities for the whole amount of principal
and accrued interest remaining unpaid, together with, to the extent that payment
of such interest is lawful, interest on overdue principal and on overdue
installments of interest, in each case at the rate per annum borne by the
Securities and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders allowed in
any judicial proceedings relative to the Company (or any other obligor on the
Securities), its creditors or its property and shall be entitled and empowered
to collect and receive any money or other property payable or deliverable on any
such claims and to distribute the same, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 9.7, and to the extent that such payment of the reasonable compensation,
expenses, disbursements and advances in any such proceedings shall be denied for
any reason, payment of the same shall be secured by a lien on, and shall be paid
out of, any and all distributions, dividends, money, securities and other
property which the Holders may be entitled to receive in
44
such proceedings, whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to, or, on behalf of any Holder, to
authorize, accept or adopt any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 8.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 8, it shall pay
out the money in the following order:
First, to the Trustee for amounts due under Section 9.7;
Second, to the holders of Senior Indebtedness to the extent required by
Article 5;
Third, to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and
Fourth, to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 8.10.
SECTION 8.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in the suit, having due regard to the
merits and good faith of the claims or defenses made by the party litigant.
This Section 8.11 does not apply to a suit made by the Trustee, a suit by a
Holder pursuant to Section 8.7, or a suit by Holders of more than 10% in
principal amount of the Securities then outstanding.
ARTICLE 9
TRUSTEE
SECTION 9.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties as are specifically
set forth in this Indenture and no others; and
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(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. The Trustee,
however, shall examine any certificates and opinions which by any provision
hereof are specifically required to be delivered to the Trustee to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) this paragraph does not limit the effect of subsection (b) of
this Section 9.1;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 8.5.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or powers
unless the Trustee shall have received adequate indemnity in its opinion against
potential costs and liabilities incurred by it relating thereto.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to subsections (a), (b), (c) and (d) of this Section 9.1.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 9.2. RIGHTS OF TRUSTEE.
Subject to Section 9.1:
(a) The Trustee may rely conclusively on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, which shall conform to Section
12.4(b). The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Certificate or Opinion.
(c) The Trustee may act through its agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee may consult with counsel of its selection, and the advice
or opinion of such counsel as to matters of law shall be full and complete
authorization and protection in respect of any such
46
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney at the sole cost of the
Company and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation.
(h) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office, and such notice
references the Securities and this Indenture.
(i) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
SECTION 9.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or an Affiliate of
the Company with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 9.10 and 9.11.
SECTION 9.4. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities, it shall not be accountable for the Company's use
of the proceeds from the Securities, and it shall not be responsible for any
statement in the Securities other than its certificate of authentication.
SECTION 9.5. NOTICE OF DEFAULT OR EVENTS OF DEFAULT.
If a default or an Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each Securityholder notice of
the default or Event of Default within 90 days after it occurs. However, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding notice is in the interests of
Securityholders, except in the case of a default or an Event of Default in
payment of the principal of or interest on any Security.
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SECTION 9.6. REPORTS BY TRUSTEE TO HOLDERS.
If such report is required by TIA Section 313, within 60 days after each
May 15, beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to each Securityholder a brief report dated as of such May 15
that complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b)(2) and (c).
A copy of each report at the time of its mailing to Securityholders shall
be mailed to the Company and filed with the SEC and each stock exchange, if any,
on which the Securities are listed. The Company shall notify the Trustee
whenever the Securities become listed on any stock exchange or listed or
admitted to trading on any quotation system and any changes in the stock
exchanges or quotation systems on which the Securities are listed or admitted to
trading and of any delisting thereof.
SECTION 9.7. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such compensation
(as agreed to from time to time by the Company and the Trustee in writing) for
its services (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust). The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses may include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee or any predecessor Trustee (which
for purposes of this Section 9.7 shall include its officers, directors,
employees and agents) for, and hold it harmless against, any and all loss,
liability or expense including taxes (other than taxes based upon, measured by
or determined by the income of the Trustee), (including reasonable legal fees
and expenses) incurred by it in connection with the acceptance or administration
of its duties under this Indenture or any action or failure to act as authorized
or within the discretion or rights or powers conferred upon the Trustee
hereunder including the reasonable costs and expenses of the Trustee and its
counsel in defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company need not pay for any
settlement without its written consent, which shall not be unreasonably
withheld.
The Company need not reimburse the Trustee for any expense or indemnify it
against any loss or liability incurred by it resulting from its gross negligence
or bad faith.
To secure the Company's payment obligations in this Section 9.7, the
Trustee shall have a senior claim to which the Securities are hereby made
subordinate on all money or property held or collected by the Trustee, except
such money or property held in trust to pay the principal of and interest on the
Securities. The obligations of the Company under this Section 9.7 shall survive
the satisfaction and discharge of this Indenture or the resignation or removal
of the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (4) or (5) of Section 8.1 occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law. The provisions of this Section shall
survive the termination of this Indenture.
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SECTION 9.8. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities then outstanding may remove the
Trustee by so notifying the Trustee and may, with the Company's written consent,
appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 9.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. The resignation or removal of a Trustee shall not be effective until a
successor Trustee shall have delivered the written acceptance of its appointment
as described below.
If a successor ▇▇▇▇▇▇▇ does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of 10% in principal amount of the Securities then outstanding may
petition any court of competent jurisdiction for the appointment of a successor
Trustee at the expense of the Company.
If the Trustee fails to comply with Section 9.10, any Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee and be released from its obligations (exclusive of any
liabilities that the retiring Trustee may have incurred while acting as Trustee)
hereunder, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
A retiring Trustee shall not be liable for the acts or omissions of any
successor Trustee after its succession.
Notwithstanding replacement of the Trustee pursuant to this Section 9.8,
the Company's obligations under Section 9.7 shall continue for the benefit of
the retiring Trustee.
SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust assets (including the administration
of this Indenture) to, another corporation, the resulting, surviving or
transferee corporation, without any further act, shall be the successor Trustee,
provided such transferee corporation shall qualify and be eligible under Section
9.10. Such successor Trustee shall promptly mail notice of its succession to
the Company and each Holder.
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SECTION 9.10. ELIGIBILITY; DISQUALIFICATION.
The Trustee shall always satisfy the requirements of paragraphs (1), (2)
and (5) of TIA Section 310(a). The Trustee (or its parent holding company)
shall have a combined capital and surplus of at least $50,000,000. If at any
time the Trustee shall cease to satisfy any such requirements, it shall resign
immediately in the manner and with the effect specified in this Article 9. The
Trustee shall be subject to the provisions of TIA Section 310(b). Nothing
herein shall prevent the Trustee from filing with the SEC the application
referred to in the penultimate paragraph of TIA Section 310(b).
SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 10
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 10.1. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for and except as further provided below),
and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.7 and (ii) Securities for
whose payment money has theretofore been deposited in trust and thereafter
repaid to the Company as provided in Section 10.3) have been delivered to the
Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the Final Maturity
Date within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of clause (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Trustee or a Paying
Agent (other than the Company or any of its Affiliates) as trust funds in trust
for the purpose cash in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee for
cancellation, for principal and interest to the
50
date of such deposit (in the case of Securities which have become due and
payable) or to the Final Maturity Date or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 9.7 shall survive and,
if money shall have been deposited with the Trustee pursuant to subclause (B) of
clause (1) of this Section, the provisions of Sections 2.3, 2.4, 2.5, 2.6, 2.7,
2.12, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13 and 12.5, Article 4, the last paragraph
of Section 6.2 and this Article 10, shall survive until the Securities have been
paid in full.
SECTION 10.2. APPLICATION OF TRUST MONEY.
Subject to the provisions of Section 10.3, the Trustee or a Paying Agent
shall hold in trust, for the benefit of the Holders, all money deposited with it
pursuant to Section 10.1 and shall apply the deposited money in accordance with
this Indenture and the Securities to the payment of the principal of and
interest on the Securities. Money so held in trust shall not be subject to the
subordination provisions of Article 5.
SECTION 10.3. REPAYMENT TO COMPANY.
The Trustee and each Paying Agent shall promptly pay to the Company upon
request any excess money (i) deposited with them pursuant to Section 10.1 and
(ii) held by them at any time.
The Trustee and each Paying Agent shall pay to the Company upon request any
money held by them for the payment of principal or interest that remains
unclaimed for two years after a right to such money has matured; provided,
---------
however, that the Trustee or such Paying Agent, before being required to make
-------
any such payment, may at the expense of the Company cause to be mailed to each
Holder entitled to such money notice that such money remains unclaimed and that
after a date specified therein, which shall be at least 30 days from the date of
such mailing, any unclaimed balance of such money then remaining will be repaid
to the Company. After payment to the Company, Holders entitled to money must
look to the Company for payment as general creditors.
SECTION 10.4. REINSTATEMENT.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 10.2 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 10.1 until such
time as the Trustee or such Paying Agent is permitted to apply all such money in
accordance with Section 10.2; provided, however, that if the Company has made
-----------------
any payment of the principal of or interest on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive any such payment from the money
held by the Trustee or such Paying Agent.
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ARTICLE 11
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 11.1. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this Indenture or the
Securities without notice to or consent of any Securityholder:
(a) to comply with Sections 4.11 and 7.1;
(b) to cure any ambiguity, defect or inconsistency;
(c) to make any other change that does not adversely effect the rights of
any Securityholder;
(d) to comply with the provisions of the TIA; or
(e) to appoint a successor Trustee.
SECTION 11.1. WITH CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this Indenture or the
Securities with the written consent of the Holders of at least a majority in
aggregate principal amount of the Securities then outstanding. The Holders of
at least a majority in aggregate principal amount of the Securities then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities without notice to any
Securityholder. However, notwithstanding the foregoing but subject to Section
11.4, without the written consent of each Securityholder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 8.4, may not:
(a) change the stated maturity of the principal of, or interest on, any
Security;
(b) reduce the principal amount of, or any premium or interest on, any
Security;
(c) reduce the amount of principal payable upon acceleration of the
maturity of any Security;
(d) change the place or currency of payment of principal of, or any
premium or interest on, any Security;
(e) impair the right to institute suit for the enforcement of any
payment on, or with respect to, any Security;
(f) modify the subordination provisions of Article 5 in a manner
materially adverse to the Holders of Securities;
(g) adversely affect the right of Holders to convert Securities other
than as provided in or under Section 4 of this Indenture;
(h) reduce the percentage of the aggregate principal amount of the
outstanding Securities whose Holders must consent to a modification or
amendment;
52
(i) reduce the percentage of the aggregate principal amount of the
outstanding Securities necessary for the waiver of compliance with certain
provisions of this Indenture or the waiver of certain defaults under this
Indenture; and
(j) modify any of the provisions of this Section or Section 8.4, except to
increase any such percentage or to provide that certain provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under this Section
11.2 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 11.2 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
An amendment or supplement under this Section 11.2 or under Section 11.1 may not
make any change that adversely affects the rights under Article 5 of any holder
of an issue of Senior Indebtedness unless the holders of that issue, pursuant to
its terms, consent to the change.
SECTION 11.1. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as in effect at the date of such amendment or supplement.
SECTION 11.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent
as to its Security or portion of a Security if the Trustee receives the notice
of revocation before the date the amendment, supplement or waiver becomes
effective.
After an amendment, supplement or waiver becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (a)
through (j) of Section 11.2. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting ▇▇▇▇▇▇'s Security.
SECTION 11.5. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
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SECTION 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article 11 if the amendment or supplemental indenture does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, in its sole discretion, but need not sign it. In
signing or refusing to sign such amendment or supplemental indenture, the
Trustee shall be entitled to receive and, subject to Section 9.1, shall be fully
protected in relying upon, an Opinion of Counsel stating that such amendment or
supplemental indenture is authorized or permitted by this Indenture. The
Company may not sign an amendment or supplement indenture until the Board of
Directors approves it.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the TIA through
operation of Section 318(c) thereof, such imposed duties shall control.
SECTION 12.2. NOTICES.
Any notice, request or communication shall be given in writing and
delivered in person or mailed by first-class mail, postage prepaid, addressed as
follows: If to the Company:
Efficient Networks, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to the Trustee:
State Street Bank and Trust Company of California, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: Corporate Trust Department (Efficient Networks, Inc. -- 5%
Convertible Subordinated Notes due March 15, 2005)
Such notices or communications shall be effective when received.
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed by
first-class mail to it at its address shown on the register kept by the Primary
Registrar.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication to a Securityholder is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it.
54
SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other person shall
have the protection of TIA Section 312(c).
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
(a) Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee at the
request of the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent (including any covenants, compliance with
which constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent (including any covenants, compliance with
which constitutes a condition precedent) have been complied with.
(b) Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or she has
made such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with; provided, however, that with
-------- -------
respect to matters of fact an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
SECTION 12.5. RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS.
The Company (or, in the event deposits have been made pursuant to Section
10.1, the Trustee) may set a record date for purposes of determining the
identity of Holders entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture, which record date shall not be
more than thirty (30) days prior to the date of the commencement of solicitation
of such action. Notwithstanding the provisions of Section 11.4, if a record
date is fixed, those persons who were Holders of Securities at the close of
business on such record date (or their duly designated proxies), and only those
persons, shall be entitled to take such action by vote or consent or to revoke
any vote or consent previously given, whether or not such persons continue to be
Holders after such record date.
55
SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION
AGENT.
The Trustee may make reasonable rules (not inconsistent with the terms of
this Indenture) for action by or at a meeting of Holders. Any Registrar, Paying
Agent or Conversion Agent may make reasonable rules for its functions.
SECTION 12.7. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, Sunday or a day on which state or
federally chartered banking institutions in New York, New York and the state in
which the Corporate Trust Office is located are not required to be open. If a
payment date is a Legal Holiday, payment shall be made on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If a regular record date is a Legal Holiday, the record
shall not be affected.
SECTION 12.8. GOVERNING LAW.
This Indenture and the Securities shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary of the Company. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. NO RECOURSE AGAINST OTHERS.
All liability described in paragraph 18 of the Securities of any director,
officer, employee or shareholder, as such, of the Company is waived and
released.
SECTION 12.11. SUCCESSORS.
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
SECTION 12.12. MULTIPLE COUNTERPARTS.
The parties may sign multiple counterparts of this Indenture. Each signed
counterpart shall be deemed an original, but all of them together represent the
same agreement.
SECTION 12.13. SEPARABILITY.
In case any provisions in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
56
SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC.
The table of contents, cross-reference sheet and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
SIGNATURE PAGE FOLLOWS
57
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of
the date and year first above written.
EFFICIENT NETWORKS, INC.
By: _____________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
EXHIBIT A
[FORM OF FACE OF SECURITY]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY
IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.]/1/
[THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.]/2/
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF
MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED
STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
--------------------
1 These paragraphs should be included only if the Security is a global Security.
2 These paragraphs to be included only if the Security is a Transfer Restricted
Security.
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THEREUNDER (IF AVAILABLE) OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.]/2/
[THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION
RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO
COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.]/2/
-------------------
2 These paragraphs to be included only if the Security is a Transfer Restricted
Security.
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EFFICIENT NETWORKS, INC.
CUSIP: R-______
5% CONVERTIBLE SUBORDINATED NOTES DUE MARCH 15, 2005
Efficient Networks, Inc., a Delaware corporation (the "Company"), which
terms shall include any successor corporation under the Indenture referred to on
the reverse hereof), promises to pay to ____________________________, or
registered assigns, the principal sum of _____________________________ Dollars
($__________) on March 15, 2005 [or such greater or lesser amount as is
indicated on the Schedule of Exchanges of Notes on the other side of this
Note]./3/
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
This Note is convertible as specified on the other side of this Note.
Additional provisions of this Note are set forth on the other side of this Note.
SIGNATURE PAGE FOLLOWS
-------------------
3 This phrase should be included only if the Security is a global Security.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
EFFICIENT NETWORKS, INC.
By: _____________________________
Name:
Title:
Attest:
_____________________________
Name:
Title:
Dated:
Trustee's Certificate of Authentication: This is one of the
Securities referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
_____________________________
Authorized Signatory
By:
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[FORM OF REVERSE SIDE OF SECURITY]
EFFICIENT NETWORKS, INC.
5% CONVERTIBLE SUBORDINATED NOTES DUE MARCH 15, 2005
1. INTEREST
Efficient Networks, Inc., a Delaware corporation (the "Company", which
terms shall include any successor corporation under the Indenture hereinafter
referred to), promises to pay interest on the principal amount of this Note at
the rate of 5% per annum. The Company shall pay interest semiannually on March
15 and September 15 of each year, commencing September 15, 2000. Interest on
the Notes shall accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from March 7, 2000; provided, however, that if
-----------------
there is not an existing default in the payment of interest and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding interest payment date, interest shall accrue from such interest
payment date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. Any reference herein to interest accrued or payable as of
any date shall include any Additional Interest accrued or payable on such date
as provided in the Registration Rights Agreement.
2. METHOD OF PAYMENT
The Company shall pay interest on this Note (except defaulted interest) to
the person who is the Holder of this Note at the close of business on March 1 or
September 1, as the case may be, next preceding the related interest payment
date. The Holder must surrender this Note to a Paying Agent to collect payment
of principal. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. The Company may, however, pay principal and interest in
respect of any Certificated Security by check or wire payable in such money;
provided, however, that a Holder with an aggregate principal amount in excess of
-------- -------
$2,000,000 will be paid by wire transfer in immediately available funds at the
election of such Holder. The Company may mail an interest check to the Holder's
registered address. Notwithstanding the foregoing, so long as this Note is
registered in the name of a Depositary or its nominee, all payments hereon shall
be made by wire transfer of immediately available funds to the account of the
Depositary or its nominee.
3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT
Initially, State Street Bank and Trust Company of California, N.A. (the
"Trustee", which term shall include any successor trustee under the Indenture
hereinafter referred to) will act as Paying Agent, Registrar and Conversion
Agent. The Company may change any Paying Agent, Registrar or Conversion Agent
without notice to the Holder. The Company or any of its Subsidiaries may,
subject to certain limitations set forth in the Indenture, act as Paying Agent
or Registrar.
4. INDENTURE, LIMITATIONS
This Note is one of a duly authorized issue of Securities of the Company
designated as its 5% Convertible Subordinated Notes Due March 15, 2005 (the
"Notes"), issued under an Indenture dated as of March 1, 2000 (together with any
supplemental indentures thereto, the "Indenture"), between the Company and the
Trustee. The terms of this Note include those stated in the Indenture and those
required by or made part of the Indenture by reference to the Trust Indenture
Act of 1939, as amended, as in effect on the date of
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the Indenture. This Note is subject to all such terms, and the Holder of this
Note is referred to the Indenture and said Act for a statement of them.
The Notes are subordinated unsecured obligations of the Company limited to
$350,000,000 aggregate principal amount, subject to Section 2.2 of the
Indenture. The Indenture does not limit other debt of the Company, secured or
unsecured, including Senior Indebtedness.
5. OPTIONAL REDEMPTION
The Notes are subject to redemption, at any time on or after March 20,
2003, as a whole or from time to time in part, at the election of the Company.
The Redemption Prices (expressed as percentages of the principal amount) are as
follows for Notes redeemed during the periods set forth below:
Period Redemption Price
------------------------------------------------------------------------- ----------------
March 20, 2003 through March 14, 2004.................................... 101.25%
March 15, 2004 and thereafter............................................ 100.00
in each case together with accrued interest up to but not including the
Redemption Date; provided that if the redemption date is an interest payment
--------
date, interest will be payable to the Holders in whose names the Notes are
registered at the close of business on the relevant record dates.
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail at least 20 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at its registered address. Notes in denominations larger than
$1,000 may be redeemed in part, but only in whole multiples of $1,000. On and
after the Redemption Date, subject to the deposit with the Paying Agent of funds
sufficient to pay the Redemption Price plus accrued interest, if any, accrued
to, but excluding, the Redemption Date, interest shall cease to accrue on Notes
or portions of them called for redemption.
7. PURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL
At the option of the Holder and subject to the terms and conditions of the
Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral multiple of $1,000 in excess thereof) of the Notes held by such
Holder on the date that is 30 Business Days after the occurrence of a Change in
Control, at a purchase price equal to 100% of the principal amount thereof
together with accrued interest up to, but excluding, the Change in Control
Purchase Date. The Holder shall have the right to withdraw any Change in
Control Purchase Notice (in whole or in a portion thereof that is $1,000 or an
integral multiple of $1,000 in excess thereof) at any time prior to the close of
business on the Business Day next preceding the Change in Control Purchase Date
by delivering a written notice of withdrawal to the Paying Agent in accordance
with the terms of the Indenture.
8. CONVERSION
A Holder of a Note may convert the principal amount of such Note (or any
portion thereof equal to $1,000 or any integral multiple of $1,000 in excess
thereof) into shares of Common Stock at any time prior to the close of business
on March 15, 2005; provided, however, that if the Note is called for redemption
-----------------
or subject to purchase upon a Change in Control, the conversion right will
terminate at the close of business on
A-6
the Business Day immediately preceding the redemption date or the Change in
Control Purchase Date, as the case may be, for such Note or such earlier date as
the Holder presents such Note for redemption or purchase (unless the Company
shall default in making the redemption payment or Change in Control Purchase
Price, as the case may be, when due, in which case the conversion right shall
terminate at the close of business on the date such default is cured and such
Note is redeemed or purchased).
The initial Conversion Price is $181.00 per share, subject to adjustment
under certain circumstances. The number of shares of Common Stock issuable upon
conversion of a Note is determined by dividing the principal amount of the Note
or portion thereof converted by the Conversion Price in effect on the Conversion
Date. No fractional shares will be issued upon conversion; in lieu thereof, an
amount will be paid in cash based upon the closing price (as defined in the
Indenture) of the Common Stock on the Trading Day immediately prior to the
Conversion Date.
To convert a Note, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to a Conversion Agent,
(b) surrender the Note to a Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by a Registrar or a Conversion
Agent, and (d) pay any transfer or similar tax, if required. Notes so
surrendered for conversion (in whole or in part) during the period from the
close of business on any regular record date to the opening of business on the
next succeeding interest payment date (excluding Notes or portions thereof
called for redemption or subject to purchase upon a Change in Control on a
Redemption Date or Change in Control Purchase Date, as the case may be, during
the period beginning at the close of business on a regular record date and
ending at the opening of business on the first Business Day after the next
succeeding interest payment date, or if such interest payment date is not a
Business Day, the second such Business Day) shall also be accompanied by payment
in funds acceptable to the Company of an amount equal to the interest payable on
such interest payment date on the principal amount of such Note then being
converted, and such interest shall be payable to such registered Holder
notwithstanding the conversion of such Note, subject to the provisions of this
Indenture relating to the payment of defaulted interest by the Company. If the
Company defaults in the payment of interest payable on such interest payment
date, the Company shall promptly repay such funds to such Holder. A Holder may
convert a portion of a Note equal to $1,000 or any integral multiple thereof.
A Note in respect of which a Holder had delivered a Change in Control
Purchase Notice exercising the option of such Holder to require the Company to
purchase such Note may be converted only if the Change in Control Purchase
Notice is withdrawn in accordance with the terms of the Indenture.
9. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION
Any Notes called for redemption, unless surrendered for conversion before
the close of business on the Business Day immediately preceding the Redemption
Date, may be deemed to be purchased from the Holders of such Notes at an amount
not less than the Redemption Price, together with accrued interest, if any, to,
but not including, the Redemption Date, by one or more investment bankers or
other purchasers who may agree with the Company to purchase such Notes from the
Holders, to convert them into Common Stock of the Company and to make payment
for such Notes to the Paying Agent in trust for such Holders.
10. SUBORDINATION
The indebtedness evidenced by the Notes is, to the extent and in the manner
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness of the Company. Any Holder by
accepting this Note agrees to and shall be bound by such subordination
A-7
provisions and authorizes the Trustee to give them effect. In addition to all
other rights of Senior Indebtedness described in the Indenture, the Senior
Indebtedness shall continue to be Senior Indebtedness and entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any terms of any instrument relating to the Senior
Indebtedness or any extension or renewal of the Senior Indebtedness.
11. DENOMINATIONS, TRANSFER, EXCHANGE
The Notes are in registered form without coupons in denominations of $1,000
and integral multiples of $1,000. A Holder may register the transfer of or
exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes or other governmental charges that may be imposed
in relation thereto by law or permitted by the Indenture.
12. PERSONS DEEMED OWNERS
The Holder of a Note may be treated as the owner of it for all purposes.
13. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent will pay the money back to the Company at its
written request. After that, Holders entitled to money must look to the Company
for payment.
14. AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding, and an existing default or Event of
Default and its consequence or compliance with any provision of the Indenture or
the Notes may be waived in a particular instance with the consent of the Holders
of a majority in principal amount of the Notes then outstanding. Without the
consent of or notice to any Holder, the Company and the Trustee may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency or make any other change that does not
adversely affect the rights of any Holder.
15. SUCCESSOR CORPORATION
When a successor corporation assumes all the obligations of its predecessor
under the Notes and the Indenture in accordance with the terms and conditions of
the Indenture, the predecessor corporation will (except in certain circumstances
specified in the Indenture) be released from those obligations.
16. DEFAULTS AND REMEDIES
Under the Indenture, an Event of Default includes: (i) default for 30 days
in payment of any interest on any Notes; (ii) default in payment of any
principal (including, without limitation, any premium, if any) on the Notes when
due; (iii) failure by the Company for 60 days after notice to it to comply with
any of its other agreements contained in the Indenture or the Notes; and (iv)
certain events of bankruptcy, insolvency or reorganization of the Company. If
an Event of Default (other than as a result of certain events of bankruptcy,
insolvency or reorganization of the Company) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Notes then
outstanding may declare all unpaid principal to the date of
A-8
acceleration on the Notes then outstanding to be due and payable immediately,
all as and to the extent provided in the Indenture. If an Event of Default
occurs as a result of certain events of bankruptcy, insolvency or reorganization
of the Company, unpaid principal of the Notes then outstanding shall become due
and payable immediately without any declaration or other act on the part of the
Trustee or any Holder, all as and to the extent provided in the Indenture.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the Notes then outstanding may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company is required to file periodic reports with the Trustee as
to the absence of default.
17. TRUSTEE DEALINGS WITH THE COMPANY
State Street Bank and Trust Company of California, N.A., the Trustee under
the Indenture, in its individual or any other capacity, may make loans to,
accept deposits from and perform services for the Company or an Affiliate of the
Company, and may otherwise deal with the Company or an Affiliate of the Company,
as if it were not the Trustee.
18. NO RECOURSE AGAINST OTHERS
A director, officer, employee or shareholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Notes or the
Indenture nor for any claim based on, in respect of or by reason of such
obligations or their creation. The Holder of this Note by accepting this Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Note.
19. AUTHENTICATION
This Note shall not be valid until the Trustee or an authenticating agent
manually signs the certificate of authentication on the other side of this Note.
20. ABBREVIATIONS AND DEFINITIONS
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).
All terms defined in the Indenture and used in this Note but not
specifically defined herein are defined in the Indenture and are used herein as
so defined.
21. INDENTURE TO CONTROL; GOVERNING LAW
In the case of any conflict between the provisions of this Note and the
Indenture, the provisions of the Indenture shall control. This Note shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principals of conflicts of law.
A-9
The Company will furnish to any Holder, upon written request and without
charge, a copy of the Indenture. Requests may be made to: Efficient Networks,
Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel.
A-10
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
_______________________________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him or her.
Your Signature:
Date: _________________________ ____________________________________________
(Sign exactly as your name appears on the
other side of this Note)
*Signature guaranteed by:
By: ___________________________
* The signature must be guaranteed by an institution which is a member of
one of the following recognized signature guaranty programs: (i) the
Securities Transfer Agent Medallion Program (STAMP); (ii) the New York
Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange
Medallion Program (SEMP); or (iv) such other guaranty program acceptable
to the Trustee.
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CONVERSION NOTICE
To convert this Note into Common Stock of the Company, check the box:
To convert only part of this Note, state the principal amount to be
converted (must be $1,000 or a multiple of $1,000): $____________.
If you want the stock certificate made out in another person's name, fill
in the form below:
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
Your Signature:
Date: _________________________ ____________________________________________
(Sign exactly as your name appears on the
other side of this Note)
*Signature guaranteed by:
By: ___________________________
* The signature must be guaranteed by an institution which is a member of
one of the following recognized signature guaranty programs: (i) the
Securities Transfer Agent Medallion Program (STAMP); (ii) the New York
Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange
Medallion Program (SEMP); or (iv) such other guaranty program acceptable
to the Trustee.
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OPTION TO ELECT REPURCHASE
UPON A CHANGE OF CONTROL
To: Efficient Networks, Inc.
The undersigned registered owner of this Security hereby irrevocably
acknowledges receipt of a notice from Efficient Networks, Inc. (the "Company")
as to the occurrence of a Change in Control with respect to the Company and
requests and instructs the Company to redeem the entire principal amount of this
Security, or the portion thereof (which is $1,000 or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Security at the Change in Control Purchase Price, together
with accrued interest to, but excluding, such date, to the registered Holder
hereof.
Dated: ________________________ ________________________________________
________________________________________
Signature(s)
Signature(s) must be guaranteed by a
qualified guarantor institution with
membership in an approved signature
guarantee program pursuant to Rule 17Ad-
15 under the Securities Exchange Act of
1934.
________________________________________
Signature Guaranty
Principal amount to be redeemed
(in an integral multiple of $1,000, if less than all):
_______________________________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
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SCHEDULE OF EXCHANGES OF NOTES/4/
The following exchanges, redemptions, repurchases or conversions of a part
of this global Note have been made:
Principal Amount
of this Global Note Authorized Amount of
Following Such Signatory of Amount of Decrease in Increase in
Decrease Date Securities Principal Amount Principal Amount
of Exchange (or Increase) Custodian of this Global Note of this Global Note
-------------------------- ------------- ---------------------- -------------------
-------------------
4 This schedule should be included only if the Security is a global Security.
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CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF TRANSFER RESTRICTED SECURITIES/5/
Re: 5% Convertible Subordinated Notes Due March 15, 2005 (the "Notes") of
Efficient Networks, Inc.
This certificate relates to $_______ principal amount of Notes owned in
(check applicable box)
[_] book-entry or [_] definitive form by ___________________ (the
"Transferor").
The Transferor has requested a Registrar or the Trustee to exchange or
register the transfer of such Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Notes as provided in Section 2.12 of the Indenture
dated as of March 1, 2000 between Efficient Networks, Inc. and State Street Bank
and Trust Company of California, N.A. (the "Indenture"), and the transfer of
such Note is being made pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "Securities Act") (check applicable
box) or the transfer or exchange, as the case may be, of such Note does not
require registration under the Securities Act because (check applicable box):
[_] Such Note is being transferred pursuant to an effective registration
statement under the Securities Act.
[_] Such Note is being acquired for the Transferor's own account, without
transfer.
[_] Such Note is being transferred to the Company or a Subsidiary (as
defined in the Indenture) of the Company.
[_] Such Note is being transferred to a person the Transferor reasonably
believes is a "qualified institutional buyer" (as defined in Rule 144A
or any successor provision thereto ("Rule 144A") under the Securities
Act) that is purchasing for its own account or for the account of a
"qualified institutional buyer", in each case to whom notice has been
given that the transfer is being made in reliance on such Rule 144A,
and in each case in reliance on Rule 144A.
[_] Such Note is being transferred pursuant to and in compliance with an
exemption from the registration requirements under the Securities Act
in accordance with Rule 144 (or any successor thereto) ("Rule 144")
under the Securities Act.
Such Note is being transferred pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act (other than
an exemption referred to above) and as a result of which such
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5 This certificate should only be included if this Security is a Transfer
Restricted Security.
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Note will, upon such transfer, cease to be a "restricted security" within the
meaning of Rule 144 under the Securities Act.
The Transferor acknowledges and agrees that, if the transferee will hold
any such Notes in the form of beneficial interests in a global Note which is a
"restricted security" within the meaning of Rule 144 under the Securities Act,
then such transfer can only be made pursuant to Rule 144A under the Securities
Act and such transferee must be a "qualified institutional buyer" (as defined in
Rule 144A).
Date: _________________________ ___________________________________________
(Insert Name of Transferor)
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