EXHIBIT 10.7
Execution Copy
NEW CENTURY FINANCIAL CORPORATION, as Issuer,
and
▇▇▇▇▇ Fargo Bank, National Association, as Trustee
INDENTURE
Dated as of July 8, 2003
Up To $210,000,000
3.50% Convertible Senior Notes due 2008
TABLE OF CONTENTS
Page
Article One DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION..... 1
Section 101. Definitions.............................................. 1
"2003 Stock Split"................................................. 2
"Affiliate"........................................................ 2
"Applicable Procedures"............................................ 2
"Bankruptcy Law"................................................... 2
"Bid Solicitation Agent"........................................... 2
"Board of Directors"............................................... 2
"Board Resolution"................................................. 2
"Business Day"..................................................... 2
"Calendar Quarter"................................................. 2
"Capped Shares".................................................... 3
"Code" ............................................................ 3
"Commission"....................................................... 3
"Common Stock"..................................................... 3
"Company".......................................................... 3
"Company Request".................................................. 3
"Conversion Agent"................................................. 3
"Conversion Price"................................................. 3
"Conversion Rate".................................................. 3
"Conversion Value"................................................. 3
"Corporate Trust Office"........................................... 3
"Default".......................................................... 4
"Depositary"....................................................... 4
"Disqualified Equity Interests".................................... 4
"Equity Interest".................................................. 4
"Event of Default"................................................. 4
"Exchange Act"..................................................... 4
"Ex-Dividend Time"................................................. 4
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TABLE OF CONTENTS
(continued)
Page
"Fair Market Value"................................................ 4
"Fundamental Change"............................................... 4
"Generally Accepted Accounting Principles" or "GAAP"............... 6
"Global Security".................................................. 6
"Holder" .......................................................... 6
"Indebtedness"..................................................... 6
"Indenture"........................................................ 6
"Indenture Obligations"............................................ 6
"Initial Purchasers"............................................... 6
"Interest Payment Date"............................................ 7
"Issue Date"....................................................... 7
"Lien" .......................................................... 7
"Maturity"......................................................... 7
"Moody's".......................................................... 7
"Officers' Certificate"............................................ 7
"Opinion of Counsel"............................................... 7
"Opinion of Independent Counsel"................................... 7
"Outstanding"...................................................... 7
"Paying Agent"..................................................... 8
"Person" .......................................................... 8
"Predecessor Security"............................................. 8
"Preferred Equity Interest"........................................ 8
"Prospectus"....................................................... 8
"Registration Rights Agreement".................................... 9
"Registration Statement"........................................... 9
"Regular Record Date".............................................. 9
"Responsible Officer".............................................. 9
"Restricted Securities Legend"..................................... 9
"Restricted Securities Transfer Certificate"....................... 9
"Restricted Security".............................................. 9
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TABLE OF CONTENTS
(continued)
Page
"Rule 144A"....................................................... 9
"Rule 144A Global Securities"..................................... 9
"Rule 144A Information"........................................... 9
"Sale Price"...................................................... 9
"S&P"............................................................. 10
"Securities"...................................................... 10
"Securities Act".................................................. 10
"Security Price".................................................. 10
"Security Register" and "Security Registrar"...................... 10
"Shelf Registration Statement".................................... 10
"Special Record Date"............................................. 11
"Stated Maturity"................................................. 11
"Stockholder Approval"............................................ 11
"Subsidiary"...................................................... 11
"Successor Security".............................................. 11
"Temporary Cash Investments"...................................... 11
"Trading Day"..................................................... 12
"Trust Indenture Act"............................................. 12
"Trustee"......................................................... 12
"Undisrupted Trading Day"......................................... 12
"Unrestricted Securities Transfer Certificate".................... 12
"Volume Weighted Average Price"................................... 12
"Voting Stock".................................................... 12
"Wholly-Owned Subsidiary"......................................... 12
Section 102. Other Definitions....................................... 13
"Act"............................................................. 13
"Additional Amounts".............................................. 13
"Additional Interest"............................................. 13
"Agent Members"................................................... 13
"Cash Amount"..................................................... 13
-iii-
TABLE OF CONTENTS
(continued)
Page
"Cash Settlement Averaging Period"................................ 13
"Cash Settlement Notice Period"................................... 13
"Conversion Date"................................................. 13
"Conversion Obligation"........................................... 13
"Conversion Retraction Period".................................... 13
"Conversion Trigger Price"........................................ 13
"current market price per share".................................. 13
"Defaulted Interest".............................................. 13
"Determination Date".............................................. 13
"Expiration Date"................................................. 13
"Expiration Time"................................................. 13
"Final Notice".................................................... 13
"Fundamental Change Repurchase Date".............................. 13
"Fundamental Change Repurchase Notice"............................ 13
"Fundamental Change Repurchase Price"............................. 13
"Physical Securities"............................................. 13
"Purchased Shares"................................................ 13
"Quarterly Minimum Dividend"...................................... 13
"Required Filing Dates"........................................... 13
"Rights" ......................................................... 13
"Rights Agreement"................................................ 13
"Second Stockholder Approval Deadline"............................ 13
"Stockholder Approval Deadline"................................... 13
"Stockholder Approval Default".................................... 13
"Surviving Entity"................................................ 13
"tender offer".................................................... 13
"tendered shares"................................................. 13
"Triggering Distribution"......................................... 13
"Trigger Event"................................................... 13
Section 103. Compliance Certificates and Opinions.................... 13
-iv-
TABLE OF CONTENTS
(continued)
Page
Section 104. Form of Documents Delivered to Trustee.................. 14
Section 105. Acts of Holders......................................... 15
Section 106. Notices, etc., to Trustee and the Company............... 16
Section 107. Notice to Holders; Waiver............................... 16
Section 108. Conflict with Trust Indenture Act....................... 17
Section 109. Effect of Headings and Table of Contents................ 17
Section 110. Successors and Assigns.................................. 17
Section 111. Separability Clause..................................... 17
Section 112. Benefits of Indenture................................... 17
Section 113. Governing Law........................................... 17
Section 114. Legal Holidays.......................................... 18
Section 115. Schedules and Exhibits.................................. 18
Section 116. Counterparts............................................ 18
Section 117. No Personal Liability of Directors,
Officers, Employees and Stockholders.................... 18
Article Two SECURITY FORMS ............................................ 18
Section 201. Forms Generally......................................... 18
Section 202. Form of Face of Security................................ 19
Section 203. Form of Reverse of Securities........................... 23
Section 204. Form of Trustee's Certificate of Authentication......... 30
Article Three THE SECURITIES ............................................ 31
Section 301. Title and Terms......................................... 31
Section 302. Denominations........................................... 32
Section 303. Execution, Authentication, Delivery and Dating.......... 32
Section 304. Temporary Securities.................................... 33
Section 305. Global Securities....................................... 33
Section 306. Registration, Registration of Transfer and Exchange..... 35
Section 307. Special Transfer Provisions............................. 37
Section 308. Mutilated, Destroyed, Lost and Stolen Securities........ 38
Section 309. Payment of Interest; Interest Rights Preserved.......... 38
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Table of Contents
(continued)
Page
Section 310. Persons Deemed Owners................................... 39
Section 311. Cancellation............................................ 40
Section 312. Computation of Interest................................. 40
Section 313. CUSIP Numbers........................................... 40
Article Four CONVERSION ................................................ 40
Section 401. Conversion Privilege.................................... 40
Section 402. Conversion Procedures................................... 44
Section 403. Settlement Procedures Upon Conversion
After the Stockholder Approval.......................... 46
Section 404. Settlement Procedures Upon Conversion Prior to
the Stockholder Approval................................ 49
Section 405. Fractional Shares....................................... 50
Section 406. Taxes on Conversion..................................... 50
Section 407. Company to Provide Stock................................ 50
Section 408. Adjustment of Conversion Rate........................... 51
Section 409. No Adjustment........................................... 57
Section 410. Adjustment for Tax Purposes............................. 57
Section 411. Notice of Adjustment.................................... 57
Section 412. Notice of Certain Transactions.......................... 57
Section 413. Effect of Reclassification, Consolidation, Merger
or Sale on Conversion Privilege......................... 58
Section 414. Trustee's Disclaimer.................................... 59
Section 415. Voluntary Increase...................................... 59
Section 416. Rights Issued in Respect of Common Stock Issued Upon
Conversion.............................................. 59
Article Five REMEDIES .................................................. 60
Section 501. Events of Default....................................... 60
Section 502. Acceleration of Maturity; Rescission and Annulment...... 62
Section 503. Collection of Indebtedness and Suits for Enforcement
by Trustee.............................................. 63
Section 504. Trustee May File Proofs of Claim........................ 64
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TABLE OF CONTENTS
(continued)
Page
Section 505. Trustee May Enforce Claims without Possession of
Securities................................................ 64
Section 506. Application of Money Collected............................ 65
Section 507. Limitation on Suits....................................... 65
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest...................................... 66
Section 509. Restoration of Rights and Remedies........................ 66
Section 510. Rights and Remedies Cumulative............................ 66
Section 511. Delay or Omission Not Waiver.............................. 66
Section 512. Control by Holders........................................ 67
Section 513. Waiver of Past Defaults................................... 67
Section 514. Undertaking for Costs..................................... 68
Section 515. Waiver of Stay, Extension or Usury Laws................... 68
Article Six THE TRUSTEE ................................................. 68
Section 601. Notice of Defaults........................................ 68
Section 602. Certain Rights of Trustee................................. 68
Section 603. Trustee Not Responsible for Recitals, Dispositions
of Securities or Application of Proceeds Thereof.......... 70
Section 604. Trustee and Agents May Hold Securities; Collections; etc.. 70
Section 605. Money Held in Trust....................................... 70
Section 606. Compensation and Indemnification of Trustee,
Conversion Agent and Bid Solicitation
Agent and the Trustee's Prior Claim....................... 71
Section 607. Conflicting Interests..................................... 72
Section 608. Corporate Trustee Required; Eligibility................... 72
Section 609. Resignation and Removal; Appointment of Successor Trustee. 73
Section 610. Acceptance of Appointment by Successor.................... 74
Section 611. Merger, Conversion, Consolidation or Succession to
Business.................................................. 75
Section 612. Preferential Collection of Claims Against Company......... 75
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TABLE OF CONTENTS
(continued)
Page
Article Seven HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY ........... 75
Section 701. Company to Furnish Trustee Names and Addresses
of Holders................................................ 75
Section 702. Disclosure of Names and Addresses of Holders.............. 76
Section 703. Reports by Trustee........................................ 76
Section 704. Reports by Company........................................ 76
Article Eight CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE......... 77
Section 801. Company May Consolidate, etc., Only on Certain Terms...... 77
Section 802. Successor Substituted..................................... 78
Article Nine SUPPLEMENTAL INDENTURES...................................... 78
Section 901. Supplemental Indentures and Agreements without
Consent of Holders........................................ 78
Section 902. Supplemental Indentures and Agreements with
Consent of Holders........................................ 79
Section 903. Execution of Supplemental Indentures and Agreements....... 80
Section 904. Effect of Supplemental Indentures......................... 81
Section 905. Conformity with Trust Indenture Act....................... 81
Section 906. Reference in Securities to Supplemental Indentures........ 81
Article Ten COVENANTS.................................................... 81
Section 1001. Payment of Principal, Premium and Interest................ 81
Section 1002. Maintenance of Office or Agency........................... 81
Section 1003. Money for Security Payments to Be Held in Trust........... 82
Section 1004. Corporate Existence....................................... 83
Section 1005. Payment of Taxes and Other Claims......................... 83
Section 1006. Maintenance of Properties................................. 84
Section 1007. Insurance................................................. 84
Section 1008. Provision of Financial Statements......................... 84
Section 1009. Statement by Officers as to Default....................... 85
Section 1010. Waiver of Certain Covenants............................... 85
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TABLE OF CONTENTS
(continued)
Page
Article Eleven NO REDEMPTION OF SECURITIES.................................. 85
Section 1101. No Rights of Redemption................................... 85
Article Twelve RANKING...................................................... 86
Section 1201. Ranking................................................... 86
Article Thirteen SATISFACTION AND DISCHARGE................................... 86
Section 1301. Satisfaction and Discharge of Indenture................... 86
Section 1302. Reinstatement............................................. 87
Section 1303. Officers' Certificate; Opinion of Counsel................ 87
Article Fourteen REPURCHASE OF SECURITIES AT THE OPTION
OF HOLDERS UPON A FUNDAMENTAL CHANGE......................... 88
Section 1401. Fundamental Change Put.................................... 88
Section 1402. Effect of Fundamental Change Repurchase Notice............ 90
Section 1403. Deposit of Fundamental Change Repurchase Price............ 91
Section 1404. Securities Purchased in Part.............................. 92
Section 1405. Compliance with Securities Laws Upon Purchase of
Securities.... ........................................... 92
Section 1406. Repayment to the Company.................................. 92
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SIGNATURES AND SEALS
ACKNOWLEDGMENTS
EXHIBIT A Form of Restricted Securities Transfer Certificate
EXHIBIT B Form of Unrestricted Securities Transfer Certificate
i
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of May 20, 2003
Trust Indenture Indenture
Act Section Section
----------------------------- ---------------
Section 310(a) .............................. 610,611
(a)(1) .............................. 608
(a)(2) .............................. 608
(b) .............................. 607,609
Section 311(a) .............................. 612
Section 312(a) .............................. 701
(b) .............................. 702
(c) .............................. 702
Section 313(a) .............................. 703
(c) .............................. 703, 704
Section 314(a) .............................. 704
(a)(4) .............................. 1021
(c)(1) .............................. 103
(c)(2) .............................. 103
(e) 103
Section 315(a) .............................. 602,903
(b) 601,602,903
(c) 602,903
(d) 602,903
(e) .............................. 514
Section 316(a)(last sentence) .............................. 101
(a)(1)(A) .............................. ("Outstanding")
(a)(1)(B) .............................. 502,512
(b) .............................. 513
(c) .............................. 508
105
Section 317(a)(1) .............................. 503
(a)(2) .............................. 504
(b) .............................. 1003
Section 318(a) .............................. 108
-------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
-ii-
INDENTURE, dated as of July 8, 2003, between New Century Financial
Corporation, a Delaware corporation, and ▇▇▇▇▇ Fargo Bank, NATIONAL ASSOCIATION,
as trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of the 3.50%
Convertible Senior Notes due 2008 (the "Securities" each one in principal amount
of $1,000 a "Security") of substantially the tenor and amount hereinafter set
forth, and to provide therefor the Company has duly authorized the execution and
delivery of this Indenture and the Securities.
This Indenture is subject to, and shall be governed by, the provisions
of the Trust Indenture Act that are required to be part of and to govern
indentures qualified under the Trust Indenture Act.
All acts and things necessary have been done to make (i) the
Securities, when executed by the Company and authenticated and delivered
hereunder and duly issued by the Company, the valid obligations of the Company,
and (ii) this Indenture a valid agreement of the Company in accordance with the
terms of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
-----------
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 101. Definitions.
------------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this ARTICLE ONE have the meanings assigned to
them in this ARTICLE ONE, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(e) all references to $, US$, dollars or United States dollars shall refer
to the lawful currency of the United States of America.
"2003 Stock Split" the Company's three for two stock split, structured
to be paid as a dividend on July 11, 2003.
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) any other Person that
owns, directly or indirectly, 10% or more of the voting Equity Interests of such
Specified Person, (iii) any officer or director of the specified Person, (iv)
any other Person 10% or more of the voting Equity Interests of which are
beneficially owned or held directly or indirectly by such specified Person, (v)
a partnership in which the specified Person is a general partner, and (v) if the
specified Person is an individual, any entity of which the specified Person is
an officer, director or general partner. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person directly or indirectly,
whether through ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interests therein, the
rules and procedures of the Depositary for such Security in each case to the
extent applicable to such transaction and as in effect at the time of such
transfer or transaction.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Bid Solicitation Agent" means the bid solicitation agent selected by
the Company (which may be the Trustee if the Trustee consents to accept such
position) or any replacement designated by the Company.
"Board of Directors" means the board of directors of the Company or
any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors of such entity and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York
is located are authorized or obligated by law or executive order to close.
"Calendar Quarter" means a three month period ending on March 31, June
30, September 30 or December 31.
2
"Capped Shares" has the meaning set forth in Section 407.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" means the common stock of the Company, $.001 par value
per share, as it exists on the date of this Indenture and any shares of any
class or classes of Equity Interests of the Company resulting from any
reclassification or reclassifications thereof.
"Company" means New Century Financial Corporation a corporation
incorporated under the laws of Delaware, until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any one of its Chairman of the Board, its
Vice Chairman, its President or a Vice President (regardless of vice
presidential designation), and by any one of its Chief Financial Officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Conversion Agent" means ▇▇▇▇▇ Fargo Bank, National Association, or
any alternative or additional conversion agent designated by the Company or any
replacement designated by the Company.
"Conversion Price" means $1,000 divided by the Conversion Rate.
"Conversion Rate" means the number of shares of Common Stock into
which each $1,000 of principal amount of Securities is convertible, which is
initially 19.1577 shares, subject to adjustments as set forth in this Indenture.
Assuming the 2003 Stock Split occurs, the Conversion Rate will be 28.7366 shares
immediately after the 2003 Stock Split, assuming no other adjustments have been
made since the Issue Date.
"Conversion Value" means the product of the Sale Price of a share of
Common Stock on a given day multiplied by the then current Conversion Rate.
"Corporate Trust Office" means the office of the Trustee or an
Affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of this Indenture shall be principally administered,
which office at the date of execution of this Indenture is located at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Trust Department, with an office in New York located at ▇▇ ▇▇▇▇▇▇▇▇
▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
3
"Default" means any event which is, or after notice or passage of any
time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities issued in the form
of Global Securities, if any, The Depository Trust Company, a New York limited
purpose corporation, its nominees and successors, or any other Person designated
as the Depositary by the Company pursuant to Section 305(b), in each case
registered as a "clearing agency" under the Exchange Act and maintaining a
book-entry system that qualifies for treatment as "registered form" under
Section 163(f) of the Code.
"Disqualified Equity Interests" means any Equity Interests that,
either by their terms or by the terms of any security into which they are
convertible or exchangeable or otherwise, are, or upon the happening of an event
or passage of time would be, required to be redeemed prior to any Stated
Maturity of the principal of the Securities or are redeemable at the option of
the holder thereof at any time prior to any such Stated Maturity (other than
upon a Fundamental Change or sale of assets by the Company in circumstances
where the holders of the Securities would have similar rights), or are
convertible into or exchangeable for debt securities at any time prior to any
such Stated Maturity at the option of the holder thereof.
"Equity Interest" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, of
such Person, including any Preferred Equity Interests.
"Event of Default" has the meaning specified in ARTICLE FIVE.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Ex-Dividend Time" means, with respect to any issuance or distribution
on shares of Common Stock, the first date on which the shares of Common Stock
trade regular way on the principal securities market on which the shares of
Common Stock are then traded without the right to receive such issuance or
distribution.
"Fair Market Value" means, with respect to any asset or property, the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"Fundamental Change" means the occurrence of any of the following
events: (i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have beneficial ownership of all shares that such Person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the total
outstanding Voting Stock of the Company, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new directors whose
election to such Board or whose nomination for election by the shareholders
4
of the Company, was approved by a vote of at least 66-2/3% of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of such Board of Directors tghen in office;
(iii) the Company consolidates with or merges with or into any Person or
conveys, transfers or leases all or substantially all of its assets to any
Person, or any corporation consolidates with or merges into or with the Company,
in any such event pursuant to a transaction in which the outstanding Voting
Stock of the Company is changed into or exchanged for cash, securities or other
property, other than any such transaction where the outstanding Voting Stock of
the Company is not changed or exchanged at all (except to the extent necessary
to reflect a change in the jurisdiction of incorporation of the Company) or
where (A) the outstanding Voting Stock of the Company is changed into or
exchanged for (x) Voting Stock of the surviving corporation which is not
Disqualified Equity Interests or (y) cash, securities and other property (other
than Equity Interests of the surviving corporation) and (B) no "person" or
"group" owns immediately after such transaction, directly or indirectly, more
than 50% of the total outstanding Voting Stock of the surviving corporation,
(iv) the Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution other than in a transaction which complies with the provisions
described under ARTICLE EIGHT; or (v) the Company's Common Stock ceases to be
listed on a national securities exchange or quoted on the Nasdaq National Market
or another established automated over-the-counter trading market in the United
States.
A Fundamental Change will not be deemed to have occurred if either:
(1) the last Sale Price of the Common Stock for any five Trading Days
within:
(i) the period of the 10 consecutive Trading Days immediately
after the later of the Fundamental Change or the public announcement
of the Fundamental Change, in the case of a Fundamental Change
resulting solely from a Fundamental Change in clause (i) of the
definition of Fundamental Change; or
(ii) the period of the 10 consecutive Trading Days immediately
preceding the Fundamental Change, in the case of a Fundamental Change
resulting from a Fundamental Change in clauses (ii), (iii) or (iv) of
the definition of Fundamental Change,
is at least equal to 105% of the quotient where the numerator is $1,000 and the
denominator is the Conversion Rate in effect on such Trading Day; or
(2) in the case of a merger or consolidation, at least 95% of the
consideration, excluding cash payments for fractional shares in the merger
or consolidation constituting the Fundamental Change, 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 Fundamental Change) and as a
result of such transaction or transactions the Securities become
convertible solely into such common stock.
5
For purposes of clarification, a "Fundamental Change" will not be
deemed to occur solely as a result of the transfer of all or substantially all
of the Company's assets to a Wholly-Owned Subsidiary of the Company where that
Subsidiary assumes all or substantially all of the Indebtedness of the Company
(other than the Securities).
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
are in effect on the date of this Indenture.
"Global Security" means a Security in book-entry form in the form
prescribed in Sections 202 through 204 evidencing all or part of the
Securities, issued to the Depositary or its nominee and registered in the name
of the Depositary or such nominee.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" means, with respect to any Person, without duplication,
(i) all obligations for borrowed money, (ii) all obligations evidenced by notes
or other similar instruments, (iii) all obligations in respect of letters of
credit or bankers acceptances or similar instruments (or reimbursement
obligations with respect thereto) (iv) all obligations to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business, (v) all obligations as lessee which are
capitalized in accordance with GAAP, and (vi) all Indebtedness of others
guaranteed by the Company or any of its Subsidiaries or for which the Company or
any of its Subsidiaries is legally responsible or liable (whether by agreement
to purchase indebtedness of, or to supply funds or to invest in, others). The
amount of Indebtedness of any Person at any date shall be, without duplication,
the principal amount that would be shown on a balance sheet of such Person
prepared as of such date in accordance with GAAP and the maximum determinable
liability of any Indebtedness guaranteed by such Person at such date.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Indenture Obligations" means the obligations of the Company and any
other obligor under this Indenture or under the Securities, to pay principal and
interest (including Additional Interest and Additional Amounts, if any) when due
and payable, and all other amounts due or to become due under or in connection
with this Indenture, the Securities and the performance of all other obligations
to the Trustee and the Holders under this Indenture and the Securities,
according to the terms hereof and thereof.
"Initial Purchasers" means Bear, ▇▇▇▇▇▇▇ & Co. Inc and ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated as initial purchasers of the Securities.
6
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Issue Date" means July 8, 2003.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind (including any conditional sale
or other title retention agreement, any leases in the nature thereof, and any
agreement to give any security interest), real or personal, movable or
immovable, now owned or hereafter acquired.
"Maturity" when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein provided
or as provided in this Indenture, whether at Stated Maturity and whether by
declaration of acceleration, Fundamental Change or otherwise.
"Moody's" means ▇▇▇▇▇'▇ Investors Service or any successor rating
agency.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, Vice Chairman, the President or a Vice President (regardless of vice
presidential designation), and by the Chief Financial Officer, Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or the Trustee, unless an Opinion of Independent Counsel
is required pursuant to the terms of this Indenture, and who shall be reasonably
acceptable to the Trustee.
"Opinion of Independent Counsel" means a written opinion of counsel
issued by someone who is not an employee of the Company and who shall be
reasonably acceptable to the Trustee.
"Outstanding" when used with respect to Securities means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(a) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company or any Affiliate thereof) in trust or set aside
and segregated in trust by the Company or such Affiliate (if the Company or such
Affiliate shall act as the Paying Agent) for the Holders; and
(c) Securities in exchange for, or in lieu of which, other Securities have
been authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the Trustee
proof reasonably satisfactory to it that such Securities are held by a bona fide
purchaser or protected purchaser in whose hands the Securities are valid
obligations of the Company; provided, however, that in determining whether
7
the Holders of the requisite principal amount of Outstanding Securities have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the reasonable satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the Company
or any other obligor upon the Securities or any Affiliate of the Company or such
other obligor. If the Paying Agent holds cash sufficient to pay the Fundamental
Change Repurchase Price or amounts owed upon Stated Maturity, in accordance with
this Indenture, on the Business Day following the Fundamental Change Repurchase
Date or Stated Maturity, as the case may be, such Securities shall cease to be
Outstanding and any cash interest (including Additional Interest and Additional
Amounts, if any) on such Securities shall cease to accrue. If a Security is
converted in accordance with the Indenture, then from and after the time of
conversion on the Conversion Date, such Security shall cease to be Outstanding
and cash interest (including Additional Interest and Additional Amounts, if any)
shall cease to accrue on such Security; provided, however, that Additional
Amounts may continue to accrue on the Common Stock into which each Security is
converted in accordance with the Registration Rights Agreement.
"Paying Agent" means any Person authorized by the Company to pay the
principal of, premium, if any, or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 308 in exchange for a mutilated
Security or in lieu of a lost, destroyed or stolen Security shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Security.
"Preferred Equity Interest" as applied to the Equity Interest of any
Person, means an Equity Interest of any class or classes (however designated)
which is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such person, over Equity Interests of any other class of such
Person.
"Prospectus" means the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Securities covered by a Shelf Registration Statement, and by all other
amendments and supplements to such prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
8
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of July 8, 2003, between the Company and the Initial
Purchasers, as amended from time to time.
"Registration Statement" means any registration statement of the
Company which covers any of the Securities pursuant to the provisions of the
Registration Rights Agreement, and all amendments and supplements to any such
Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the 15th day (whether or not a Business Day) next preceding such
Interest Payment Date.
"Responsible Officer" when used with respect to the Trustee means any
officer assigned to the Corporate Trust Office or the agent of the Trustee
appointed hereunder, including any vice president, assistant vice president,
assistant secretary, or any other officer or assistant officer of the Trustee or
the agent of the Trustee appointed hereunder to whom any corporate trust matter
is referred because of his or her knowledge of and familiarity with the
particular subject.
"Restricted Securities Legend" means a legend substantially in the
form of the legend required in the form of Security set forth in Section 202 to
be placed upon a Restricted Security.
"Restricted Securities Transfer Certificate" means a certificate
substantially in the form set forth in Exhibit A.
"Restricted Security" means each Security required pursuant to Section
306 to bear a Restricted Securities Legend.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Global Securities" means one or more permanent Global
Securities in registered form representing the aggregate principal amount of
Securities sold in reliance on Rule 144A under the Securities Act.
"Rule 144A Information" shall be such information with respect to the
Company as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or
any successor provision thereto).
"Sale Price" of the shares of Common Stock on any date means:
(1) if the shares of Common Stock are listed on a United States
national or regional securities exchange, the closing per share sale price
of Common Stock (or, if no closing sale price is reported, the average of
the bid and ask prices or, if more than one in either case, the average of
the average bid and average ask prices) on such date as
9
reported in the composite transactions for the principal United States
securities exchange on which the shares of Common Stock are traded, or
(2) if the shares of Common Stock are reported by the Nasdaq National
Market, as reported by the National Association of Securities Dealers
Automated Quotation System or its successors.
If the Common Stock is not listed for trading on a United States
national or regional security exchange and not reported by the Nasdaq National
Market on the relevant date, the "Sale Price" will be the last quoted bid price
for the Common Stock in the over-the-counter market on the relevant date as
reported by the National Quotation Bureau or similar organization. If the Common
Stock is not so quoted, the "Sale Price" will be the average of the mid-point of
the last bid and ask prices for the Common Stock on the relevant date from each
of at least three nationally recognized independent investment banking firms
selected by the Company for this purpose. If no Sale Price is available as
described above, the Sale Price will be the value of a share of Common Stock as
determined by the Board of Directors (which shall be evidenced by an Officer's
Certificate delivered to the Initial Purchasers at closing).
"S&P" means Standard & Poor's Ratings Services, or any successor
rating agency.
"Securities" has the meaning specified in the Recitals.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Price" on any date of determination means the average of the
secondary market bid quotations per Security obtained by the Company or the Bid
Solicitation Agent for $5,000,000 principal amount at Maturity of the Securities
at approximately 4:00 p.m., New York City time, on such determination date from
three independent nationally recognized securities dealers selected by the
Company, provided that if at least three such bids cannot reasonably be obtained
by the Company, but two such bids are obtained, then the average of the two bids
shall be used, and if only one such bid can reasonably be obtained by the
Company, such bid shall be used. If the Company cannot reasonably obtain at
least one bid for $5,000,000 principal amount at Maturity of the Securities from
a nationally recognized securities dealer or if, in the Company's reasonable
judgment, the bid quotations are not indicative of the secondary market value of
the Securities, then the Security Price will equal (a) the then-applicable
Conversion Rate of the Securities multiplied by (b) the Sale Price of the Common
Stock on such determination date. Bids used to determine the Security Price will
be solicited by the Bid Solicitation Agent from securities dealers that the
Company believes are willing to bid for the Securities.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 306.
"Shelf Registration Statement" means a "shelf" registration statement
of the Company pursuant to the Registration Rights Agreement, which covers all
or a portion of the Registrable Securities (as defined in the Registration
Rights Agreement) on an appropriate form
10
under Rule 415 under the Securities Act, or any similar rule that may be adopted
by the Commission, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 309.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest (including Additional Interest and Additional Amounts)
is due and payable.
"Stockholder Approval" means (i) the authorization and approval by the
Company's stockholders in accordance with the Company's bylaws and applicable
law of the amendment to the Company's Amended and Restated Certificate of
Incorporation to increase the authorized number of shares of Common Stock to at
least 50,000,000 shares and (ii) the authorization and reservation of an
additional 1,340,000 shares of Common Stock by the Board of Directors of the
Company free from any preemptive rights to be made available for issuance by the
Company upon conversion of the Securities.
"Subsidiary" means any Person a majority of the Voting Stock of which
is at the time owned, directly or indirectly, by the Company or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security. For the purposes of this definition, any Security
authenticated and delivered under Section 308 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof and guaranteed
fully as to principal, premium, if any, and interest by the United States of
America, (ii) any certificate of deposit, maturing not more than one year after
the date of acquisition, issued by, or time deposit of, a commercial banking
institution (including the Trustee) that is a member of the Federal Reserve
System and that has combined capital and surplus and undivided profits of not
less than $500,000,000, whose debt has a rating, at the time as of which any
investment therein is made, of "P-1" (or higher) according to ▇▇▇▇▇'▇ or "A-1"
(or higher) according to S&P, (iii) commercial paper, maturing not more than one
year after the date of acquisition, issued by a corporation (other than an
Affiliate or Subsidiary of the Company) (including the Trustee) organized and
existing under the laws of the United States of America with a rating, at the
time as of which any investment therein is made, of "P-1" (or higher) according
to ▇▇▇▇▇'▇ or "A-1" (or higher) according to S&P and (iv) any money market
deposit accounts issued or offered by a domestic commercial bank (including the
Trustee) having capital and surplus in excess of $500,000,000.
11
"Trading Day" means a day on which the primary exchange on which the
Common Stock is traded and applicable options exchanges are scheduled to be
open.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Undisrupted Trading Day" means a Trading Day on which the Common
Stock does not experience the following during the entire regular Trading Day:
(a) any suspension of or limitation imposed on trading of the Common Stock
on any national or regional securities exchange or association or
over-the-counter market,
(b) any event (other than an event listed in the (c) below) that disrupts
or impairs the ability of market participants in general (i) to effect
transactions in or obtain market values for the Common Stock on any relevant
national or regional securities exchange or association or over-the-counter
market, or (ii) effect transactions in or obtain market values for, futures or
options contracts relating to the Common Stock on any relevant national or
regional securities exchange or association or over-the-counter market, or
(c) any relevant national or regional securities exchange or association
or over-the-counter market on which the Common Stock trades closes on any
exchange business day prior to its scheduled closing time unless such earlier
closing time is announced by the exchange at least one hour prior to the earlier
of (i) the actual closing time for the regular trading session on such exchange
and (ii) the submission deadline for orders to be entered into the exchange for
execution on such business day.
"Unrestricted Securities Transfer Certificate" means a certificate
substantially in the form set forth in Exhibit B.
"Volume Weighted Average Price" per share on any trading day will be
the volume weighted average price as displayed on Bloomberg (Bloomberg
key-strokes:NCEN UQ(equity)AQR)on the NASDAQ from 9:30 AM to 4:00 PM (New York
City time) on that Trading Day (or if such volume weighted average price is not
available, the market value of one share on such Trading Day as the Company
determines in good faith using a volume weighted method).
"Voting Stock" means stock of the class or classes pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
a corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Wholly-Owned Subsidiary" means a Subsidiary all the Equity Interests
of which are owned by the Company or another Wholly-Owned Subsidiary.
12
Section 102. Other Definitions.
------------------
Defined in
Term Section
--------------------------------------------------------- -----------
"Act" 105
"Additional Amounts" 202
"Additional Interest" 407
"Agent Members" 305(a)
"Cash Amount" ▇▇▇
"▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Period" 403
"Cash Settlement Notice Period" 402
"Conversion Date" 402
"Conversion Obligation" 402
"Conversion Retraction Period" 403
"Conversion Trigger Price" 401(a)
"current market price per share" 408(g)
"Defaulted Interest" 309
"Determination Date" 408(d)
"Expiration Date" 408(e)
"Expiration Time" 408(e)
"Final Notice" 403
"Fundamental Change Repurchase Date" 1401(a)
"Fundamental Change Repurchase Notice" 1401(c)
"Fundamental Change Repurchase Price" 1401(a)
"Physical Securities" 305
"Purchased Shares" 408(e)
"Quarterly Minimum Dividend" 408
"Required Filing Dates" 1008
"Rights" 416
"Rights Agreement" 416
"Second Stockholder Approval Deadline" 407
"Stockholder Approval Deadline" 407
"Stockholder Approval Default" 407
"Surviving Entity" 801(a)
"tender offer" 408(f)
"tendered shares" 408(f)
"Triggering Distribution" 408(d)
"Trigger Event" 408(c)
Section 103. Compliance Certificates and Opinions.
-------------------------------------
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company and any other
obligor on the Securities shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in this Indenture
(including any covenants compliance with which constitutes a condition
precedent) relating to the proposed action have been complied with and an
Opinion of
13
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that, in the case of any such
application or request as to which the furnishing of such documents,
certificates and/or opinions is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every Officers' Certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(a) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 104. Form of Documents Delivered to Trustee.
---------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or other
obligor of the Securities may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
officer knows that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or opinion may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company or other obligor of the Securities stating that the
information with respect to such factual matters is in the possession of the
Company or other obligor of the Securities, unless such counsel knows that the
certificate or opinion or representations with respect to such matters are
erroneous. Opinions of Counsel required to be delivered to the Trustee may have
qualifications customary for opinions of the type required and counsel
delivering such Opinions of Counsel may rely on certificates of the Company or
government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact, including that various
financial covenants have been complied with.
14
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 105. Acts of Holders.
----------------
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments (which may take the form
of an electronic writing or messaging or otherwise be in accordance with
customary procedures of the Depositary or the Trustee) of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing
(which may be in electronic form); and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture, if made in the manner provided in this Section 105.
The fact and date of the execution by any person of any such instrument or
writing or the authority of the person executing the same, may also be proved in
any other manner which the Trustee deems sufficient in accordance with such
reasonable rules as the Trustee may determine.
(b) The ownership of Securities shall be proved by the Security Register.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind every future Holder of
the same Security or the Holder of every Security issued upon the transfer
thereof or in exchange therefor or in lieu thereof, in respect of anything done,
suffered or omitted to be done by the Trustee, any Paying Agent or the Company
in reliance thereon, whether or not notation of such action is made upon such
Security.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding Trust Indenture Act
Section 316(c), any such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not more than 30 days
prior to the first solicitation of Holders generally in connection therewith and
no later than the date such solicitation is completed.
In the absence of any such record date fixed by the Company,
regardless as to whether a solicitation of the Holders is occurring on behalf of
the Company or any Holder, the Trustee may, at its option, fix in advance a
record date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Trustee shall have no obligation to do so. Any such record date shall be a date
not more than 30 days prior to the first solicitation of Holders generally in
connection therewith and no later than a date such solicitation is completed.
15
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for purposes of determining
whether Holders of the requisite proportion of Securities then Outstanding have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for this purpose the
Securities then Outstanding shall be computed as of such record date; provided
that no such request, demand, authorization, direction, notice, consent, waiver
or other Act by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
Section 106. Notices, etc., to Trustee and the Company.
------------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any other obligor of
the Securities shall be sufficient for every purpose hereunder if in writing and
mailed, first-class postage prepaid, or delivered by recognized overnight
courier, to or with the Trustee at the Corporate Trust Office, Attention:
Corporate Trust Division, or at any other address previously furnished in
writing to the Holders, the Company, any other obligor of the Securities, by the
Trustee; or
(b) the Company shall be sufficient for every purpose (except as provided
in Section 501(c)) hereunder if in writing and mailed, first-class postage
prepaid, or delivered by recognized overnight courier, to the Company addressed
to it at New Century Financial Corporation, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President, or at any other address previously
furnished in writing to the Trustee by the Company. A courtesy copy of any
notice to the Company shall be (but is not required to be) mailed to O'Melveny &
▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Section 107. Notice to Holders; Waiver.
--------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, or delivered by
recognized overnight courier, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice when mailed to a Holder in the aforesaid manner shall
be conclusively deemed to have been received by such Holder whether or not
actually received by such Holder. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be
16
filed with the Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this Indenture, then any method of giving such
notice as shall be reasonably satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice.
Section 108. Conflict with Trust Indenture Act.
----------------------------------
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
-----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 110. Successors and Assigns.
-----------------------
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 111. Separability Clause.
--------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 112. Benefits of Indenture.
----------------------
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person (other than the parties hereto and their successors
hereunder, any Paying Agent and the Holders) any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 113. 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 GIVING EFFECT TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
17
Section 114. Legal Holidays.
---------------
In any case where any Interest Payment Date or Stated Maturity or
other payment date of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal or premium, if any, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, or at the Stated Maturity or
other payment date, and no interest shall accrue with respect to such payment
for the period from and after such Interest Payment Date, Stated Maturity, or
other payment date to the next succeeding Business Day.
Section 115. Schedules and Exhibits.
-----------------------
All schedules and exhibits attached hereto are by this reference made
a part hereof with the same effect as if herein set forth in full.
Section 116. Counterparts.
-------------
This Indenture may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.
Section 117. No Personal Liability of Directors, Officers, Employees and
-----------------------------------------------------------
Stockholders.
-------------
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, will have any liability for any
obligations of the Company under the Securities, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder, by accepting the Securities, waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Securities. The waiver may not be effective to waive liabilities under the
federal securities laws.
ARTICLE TWO
-----------
SECURITY FORMS
Section 201. Forms Generally.
----------------
The Securities and the Trustee's certificate of authentication shall
be in substantially the forms set forth in this ARTICLE TWO, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange, any
organizational document or governing instrument or applicable law or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
18
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Securities
may be listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Securities offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more Rule 144A Global Securities, substantially
in the form set forth in Section 202, deposited upon issuance with the Trustee,
as custodian for the Depositary, registered in the name of the Depositary or its
nominee, in each case for credit to an account of a direct or indirect
participant of the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the Rule
144A Global Securities may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depositary
or its nominee, as hereinafter provided.
The terms and provisions contained in the form of Securities set forth
in Sections 202 through 204 shall constitute, and are expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Section 202. Form of Face of Security.
-------------------------
(a) The form of the face of any Security authenticated and delivered
hereunder shall be substantially as follows.
All Securities which are Global Securities must contain the Global
Securities legend provided below. Unless and until a Security is sold under an
effective Registration Statement pursuant to the Registration Rights Agreement,
then each Security shall bear the legend for Restricted Securities provided
below on the face thereof.
NEW CENTURY FINANCIAL CORPORATION.
3.50% CONVERTIBLE SENIOR NOTE DUE 2008
[If the Security is a Global Security, insert the following legend] -- THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY. 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 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, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
19
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND
ANY SUCH CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[If this Security is a Restricted Security insert the following legend (the
"Restricted Securities Legend")] -- THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT OF 1933;
(2) AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR
TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE
OR OTHER TRANSFER IS (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, IN
COMPLIANCE WITH RULE 144A TO A PERSON THE HOLDER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, OR (C) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT
TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (C) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT AND CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH
20
TRANSFER, AND IN EACH OF THE FOREGOING CASES, SUBJECT TO A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS SECURITY BEING COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE; AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN
INTEREST THEREIN IS TRANFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
2(D) ABOVE), A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS SECURITY
AFTER THE RESALE RESTRICTION TERMINATION DATE.
NEW CENTURY FINANCIAL CORPORATION
3.50% CONVERTIBLE SENIOR NOTE DUE 2008
Cusip No.:____________
No: _______________ $___________
NEW CENTURY FINANCIAL CORPORATION, a corporation duly existing and
qualified under the laws of the State of Delaware (herein called the "Company,"
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of _________________ DOLLARS ($__________)
[(or such lesser amount as shall be the outstanding principal amount of this
Note listed on Schedule A hereto)] semi-annually in arrears on January 3 and
July 3 in each year commencing on January 3, 2004 (each, "an Interest Payment
Date") at the rate of 3.50% per annum, until the principal hereof is paid or
made available for payment.
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months. Each payment of cash interest on this Security will
include interest accrued through the day before the applicable Interest Payment
Date (or Fundamental Change Repurchase Date or, in certain circumstances,
Conversion Date, as the case may be).
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
payment, which shall be the June 17 or December 18 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid, or duly provided for, and interest on such
Defaulted Interest at the interest rate borne by the Securities, to the extent
lawful, shall forthwith cease to be payable to the Holder on such Regular Record
Date, and may either be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or may
21
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture.
Subject to the terms of the Indenture, Additional Interest (as defined
under the Indenture) will accrue on the Securities in the event the Company does
not obtain stockholder approval to increase its authorized common stock within
120 days of the date hereof (the "Stockholder Approval"). Additional Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months and will be paid on Interest Payment Dates to the Person whose name the
Security is registered at the close of business on the Regular Record Date.
The Holder of this Security is entitled to the benefits of the Registration
Rights Agreement, dated as of July 8, 2003, between the Company and the Initial
Purchasers, including the provisions contained therein regarding the payment of
Additional Amounts (as defined therein). Any Additional Amounts due pursuant to
the Registration Rights Agreement will be payable in cash on the Interest
Payment Dates related to the Securities. The Additional Amounts will be
determined by multiplying the applicable Additional Amounts rate by the
principal of the Securities, multiplied by a fraction the numerator of which is
the number of days such Additional Amounts rate was applicable during the
period, and the denominator of which is 360.
Payment of the principal of and interest on this Security will be made at
the office or agency of the Company maintained for that purpose, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Security Register. If any of the Securities are held by the Depositary, payments
of interest (including Additional Interest and Additional Amounts) to the
Depositary may be made by wire transfer to the Depositary.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
All references in this Security or in the Indenture to "interest" or
"accrued and unpaid interest" shall be deemed to include, to the extent
applicable, a reference to Additional Interest and Additional Amounts.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof or by the authenticating agent
appointed as provided in the Indenture by manual signature, this Security shall
not be entitled to any benefit under the Indenture, or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signature of its authorized officers.
22
Dated: [______, 2003] NEW CENTURY
FINANCIAL CORPORATION
By:
---------------------------------
Attest:
--------------------
Secretary
Section 203. Form of Reverse of Securities.
------------------------------
The form of the reverse of the Securities shall be substantially as
follows:
NEW CENTURY FINANCIAL CORPORATION
3.50% CONVERTIBLE SENIOR NOTE DUE 2008
1. Indenture.
This Security is one of a duly authorized issue of Securities of the
Company designated as its 3.50% Convertible Senior Notes due 2008 (herein called
the "Securities"), limited in principal amount up to $210,000,000, which may be
issued under an indenture (herein called the "Indenture"), dated as of July 8,
2003, between the Company and ▇▇▇▇▇ Fargo Bank, NATIONAL ASSOCIATION, as trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. The Indenture does
not limit other Indebtedness of the Company or its Subsidiaries, secured or
unsecured.
2. Ranking.
This Security constitutes a senior unsecured general obligation of the
Company, ranking equally with other existing and future senior unsecured
Indebtedness the Company has incurred or may incur, ranking senior in right of
payment to any future Indebtedness that is expressly made subordinate to the
Securities and ranking subordinate to secured Indebtedness the Company has
incurred.
3. No Redemption.
No sinking fund is provided for the Securities. The Securities will not be
subject to redemption before maturity.
23
4. Repurchase Upon a Fundamental Change.
If there is a Fundamental Change (as defined in the Indenture), the Company
must offer to purchase all Outstanding Securities on the Fundamental Change
Repurchase Date at a purchase price equal to 100% of the principal amount plus
any accrued and unpaid interest to the Fundamental Change Repurchase Date.
Holders of Securities that are subject to an offer to purchase will receive a
written notice from the Company within 20 days after the occurrence of a
Fundamental Change and may elect to have such Securities or portions thereof in
authorized denominations purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below. Holders have the right to withdraw
their election by delivering a written notice of withdrawal to the Paying Agent
at any time prior to one Business Day immediately before the Fundamental Change
Repurchase Date.
5. Conversion.
Under the circumstances provided for in, and subject to compliance with the
provisions of, the Indenture, a Holder of a Security may, at such Holder's
option, convert such Security (or any portion thereof equal to denominations of
$1,000 or multiples of $1,000) into shares of Common Stock at the Conversion
Rate in effect at the time of conversion; provided, however, that the conversion
rights are subject to the following: (A) prior to the Stockholder Approval, the
Company's obligation to pay cash in lieu of Common Stock as described further in
the Indenture and (B) after the Stockholder Approval, the Company's right to pay
Common Stock, cash or a combination of cash and Common Stock.
Notwithstanding the foregoing, if the Security is submitted or presented
for repurchase pursuant to ARTICLE FOURTEEN of the Indenture, the conversion
right will terminate at the close of business on the second Business Day
immediately preceding the Fundamental Change Repurchase Date, as the case may
be, for such Security or such earlier date as the Holder presents such Security
for repurchase (unless the Company shall default in paying the Fundamental
Change Repurchase Price 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 Company will notify Holders of any event triggering the right to
convert the Security as specified above in accordance with the Indenture.
A Security in respect of which a Holder has delivered a Fundamental Change
Repurchase Notice exercising the option of such Holder to require the Company to
repurchase such Security may be converted only if such notice is withdrawn in
accordance with the terms of the Indenture.
The initial Conversion Rate is 19.1577 shares of Common Stock per $1,000
principal amount, subject to adjustment under certain circumstances. Assuming
the 2003 Stock Split occurs, the Conversion Rate will be 28.7366 shares
immediately after giving pro forma effect to the 2003 Stock Split, assuming no
other adjustments have been made since the Issue Date. No fractional shares will
be issued upon conversion; in lieu thereof, an amount will be paid in cash.
24
To convert a Security, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Security to the Conversion Agent, (c) furnish
appropriate endorsements and transfer documents if required by the Registrar or
the Conversion Agent, and (d) pay any transfer or similar tax, if required. The
Conversion Agent may assume that any Holder that delivers a conversion notice is
entitled to convert this Security without independent verification.
A Holder may convert a portion of the Securities of this series only in
denominations of $1,000 or multiples of $1,000. No payment or adjustment shall
be made for dividends on the Common Stock except as provided in the Indenture.
On conversion of Securities of this series, that portion of accrued and unpaid
interest, including Additional Interest, if any, on such Securities attributable
to the period from the most recent Interest Payment Date (or, if no Interest
Payment Date has occurred, from the original issue date) through the Conversion
Date with respect to such converted Securities shall not be cancelled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
Holder thereof through delivery of the Common Stock, or in lieu of Common Stock,
the cash value of such Common Stock or a combination of Common Stock and the
cash value of such Common Stock into which the Security is convertible (together
with any cash payment in lieu of fractional shares) in exchange for such
Securities being converted pursuant to the provisions hereof, and the fair
market value of such shares of Common Stock or in lieu of Common Stock, the cash
value of such Common Stock or a combination of Common Stock and the cash value
of such Common Stock into which the Security is convertible (together with any
such cash payment in lieu of fractional shares) shall be treated as issued, to
the extent thereof, first in exchange for accrued and unpaid interest (including
Additional Interest, if any), accrued through the Conversion Date and the
balance, if any, of such fair market value of such Common Stock (and any such
cash payment), shall be treated as issued in exchange for the principal amount
of such Securities being converted pursuant to the provisions hereof.
6. Calculations.
The Company will be responsible for making all calculations called for
under this Security. These calculations include, but are not limited to,
determinations of accrued interest, including Additional Interest, Additional
Amounts, the Conversion Price, the Fundamental Change Repurchase Price, the Sale
Price of the Company's Common Stock and other calculations related to a Holder's
conversion rights. The Company will make these calculations in good faith and,
absent manifest error, the calculations will be final and binding on any Holder
of this Security. The Company will provide a schedule of its calculations to
each of the Trustee and the Conversion Agent, and each of the Trustee and the
Conversion Agent is entitled to rely upon the accuracy of such calculations with
independent verification. The Trustee may forward the Company's calculations to
any Holder of this Security upon request.
7. Events of Default.
If an Event of Default shall occur and be continuing, the principal amount
of all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
25
8. Transfer; Exchange; Registration.
If this Security is in certificated form, then as provided in the Indenture
and subject to certain limitations therein set forth, the transfer of this
Security is registrable on the Security Register of the Company, upon surrender
of this Security for registration of transfer at the office or agency of the
Company maintained for such purpose, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same principal amount, will be issued to the
designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 of the principal amount and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, the Securities are exchangeable for a like aggregate principal amount
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to and at the time of due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes (subject to provisions with respect to record
dates for the payment of interest), whether or not this Security is overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
If this Security is a Global Security, except as described below, it is not
exchangeable for a Security or Securities in certificated form. The Securities
will be delivered in certificated form if (i) the Depositary ceases to be
registered as a clearing agency under the Exchange Act or is no longer willing
or able to provide securities depository services with respect to the
Securities, (ii) the Company so determines or (iii) there shall have occurred an
Event of Default or an event which, with the giving of notice or lapse of time
or both, would constitute an Event of Default with respect to the Securities
represented by such Global Security and such Event of Default or event continues
for a period of 90 days. Upon any such issuance, the Trustee is required to
register such certificated Security in the name of, and cause the same to be
delivered to, such Person or Persons (or the nominee of any thereof).
At any time when the Company is not subject to Sections 13 or 15(d) of the
Exchange Act, upon the written request of a Holder of a Security, the Company
will promptly furnish or cause to be furnished Rule 144A Information to such
Holder or to a prospective purchaser of such Security who such Holder informs
the Company is reasonably believed to be a Qualified Institutional Buyer, as the
case may be, in order to permit compliance by such Holder with Rule 144A under
the Securities Act.
26
9. Amendment.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a specified
percentage of the principal amount of the Securities at the time Outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages of the principal amount of the Securities at the time Outstanding,
on behalf of the Holders of all the Securities, to waive compliance by the
Company with certain provisions of the Indenture and certain past Defaults under
the Indenture and their consequences. Any such consent or waiver by or on behalf
of the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Security.
10. No Impairment of Obligations.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company or any
other obligor upon the Securities (in the event such other obligor is obligated
to make payments in respect of the Securities), which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Security at the times, place, and rate, and in the coin or currency, herein
prescribed.
11. Governing Law.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF).
12. No Recourse Against Others.
A director, officer, employee, incorporator or stockholder, of the Company,
as such, will not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting the
Securities waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
13. Authentication.
This Security shall be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication duly executed by the Trustee by manual or
facsimile signature of an authorized officer.
27
14. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and the Trustee may use CUSIP numbers in notices 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 and that reliance may be placed
only on the other identification numbers printed on the Securities.
15. Defined Terms.
All terms used in this Security which are defined in the Indenture and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
New Century Financial Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
28
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to
ARTICLE FOURTEEN (Fundamental Change Notice) of the Indenture, check the Box:
[_].
If you wish to have a portion of this Security purchased by the
Company pursuant to ARTICLE FOURTEEN, of the Indenture, state the amount:
$ ______________.
If certificated, the certificate numbers of the Securities to be
delivered for repurchase are _______________.
Date: Your Signature:
----------------- -------------------------
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee:
-------------------------------------------------
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
29
CONVERSION NOTICE
To convert this Security into Common Stock of the Company, check the box: [_]
To convert only part of this Security, state the principal amount to be
converted (which must be $1,000 or an integral multiple of $1,000):
________________
If you want the stock certificate made out in another person's name, fill in the
form below:
-------------------------------------------------------------------
(insert other person's name)
-------------------------------------------------------------------
(insert other person's social security or tax identification number)
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
(insert other person's address and zip code)
Date:
--------------------------
Signature:
---------------------
Section 204. Form of Trustee's Certificate of Authentication.
------------------------------------------------
The Trustee's certificate of authentication shall be included on the
Securities and shall be substantially in the form as follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture.
▇▇▇▇▇ Fargo Bank, N.A.,
As Trustee
By:
----------------------------------
Authorized Signatory
30
ARTICLE THREE
-------------
THE SECURITIES
Section 301. Title and Terms.
----------------
The initial amount of Securities which will be authenticated and
delivered under this Indenture is $175,000,000 in principal amount of Securities
(which may be increased up to $210,000,000 if the sole book-running manager
exercises its overallotment option in full), except for Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Section 303, 304, 305, 306, 307, 308, 906 or
ARTICLE FOURTEEN.
The Securities shall be known and designated as the "3.50% Convertible
Senior Notes due 2008" of the Company. The Stated Maturity of the Securities
shall be July 3, 2008. On the Stated Maturity the Company shall pay to the
Holder of the Securities the principal amount of the Securities held by such
Holder plus accrued and unpaid interest (including Additional Interest and
Additional Amounts), if any. The Securities shall bear cash interest at an
annual rate of 3.50% of the principal amount from July 8, 2003 or the most
recent Interest Payment Date to which interest has been paid or provided for.
Cash interest on the Securities is payable semi-annually in arrears on January 3
and July 3 of each year, with the first Interest Payment Date being January 3,
2004, and will be computed on a semi-annual basis of a 360-day year comprised of
twelve 30-day months. Each payment of cash interest on this Security will
include interest accrued through the day before the applicable Interest Payment
Date (or Fundamental Change Repurchase Date or, in certain circumstances,
Conversion Date, as the case may be).
Any Additional Amounts payable pursuant to the Registration Rights
Agreement, will be deemed to be interest for purposes of this Indenture.
The principal and interest on the Securities shall be payable at the
office or agency of the Company maintained for such purpose; provided, however,
that at the option of the Company interest may be paid (i) by check mailed to
addresses of the Persons entitled thereto as such addresses shall appear on the
Security Register or (ii) by wire transfer in immediately available funds to an
account specified (not later than one Business Day prior to the applicable
Interest Payment Date) by the Holder thereof. If any of the Securities are held
by the Depositary, payments of interest may be made by wire transfer to the
Depositary. The Trustee is hereby initially designated as the Paying Agent under
this Indenture.
The Securities shall be convertible into Common Stock of the Company
subject to the terms of and to the extent described in ARTICLE FOUR.
The Securities shall not be redeemable.
The Securities shall be repurchased, at the option of the Holder, upon
a Fundamental Change as provided in ARTICLE FOURTEEN of this Indenture.
31
Section 302. Denominations.
-----------------------------
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 of the principal amount and any
integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
-----------------------------------------------
The Securities shall be executed on behalf of the Company by one of
its Chairman of the Board, its President or one of its Vice Presidents attested
by its Secretary or one of its Assistant Secretaries. The signature of any
officer on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices on the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as
provided in this Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual or facsimile signature of an authorized
officer, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder.
In case the Company, pursuant to ARTICLE EIGHT, shall be consolidated,
merged with or into any other Person or shall sell, assign, convey, transfer or
lease substantially all of its properties and assets to any Person, and the
successor Person resulting from such consolidation, or surviving such merger, or
into which the Company shall have been merged, or the Person which shall have
received a sale, assignment, conveyance, transfer or lease as aforesaid, shall
have executed an indenture supplemental hereto with the Trustee pursuant to
ARTICLE NINE, any of the Securities authenticated or delivered prior to such
consolidation, merger, sale, assignment, conveyance, transfer or lease may, from
time to time, at the request of the successor Person, be exchanged for other
Securities executed in the name of the successor Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of like
tenor as the Securities surrendered for such exchange and of like principal
amount; and the Trustee, upon Company Request of the successor Person, shall
authenticate and deliver Securities as specified in such request for the purpose
of such exchange. If Securities shall at any time be authenticated and delivered
in any new name of a successor Person pursuant to this Section 303 in exchange
or substitution for or upon registration of transfer of any
32
Securities, such successor Person, at the option of the Holders but without
expense to them, shall provide for the exchange of all Securities at the time
Outstanding for Securities authenticated and delivered in such new name.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities on behalf of the Trustee. Unless limited by
the terms of such appointment, 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 has the same rights as any Security Registrar or Paying
Agent to deal with the Company and its Affiliates.
Section 304. Temporary Securities.
---------------------
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order, the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as conclusively evidenced by their
execution of such Securities.
After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of the
temporary Securities at the office or agency of the Company designated for such
purpose pursuant to Section 1002, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Securities of authorized denominations.
Until so exchanged the temporary Securities shall in all respects be entitled to
the same benefits under this Indenture as definitive Securities.
Section 305. Global Securities.
------------------
(a) Each Global Security initially shall (i) be registered in the name of
the Depositary for such Global Security or the nominee of such Depositary, (ii)
be deposited with, or on behalf of, the Depositary or with the Trustee as
custodian for such Depositary and (iii) bear a legend as set forth in Section
202(a); provided, however, the Securities are eligible to be in the form of a
Global Security.
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 the Trustee as its custodian, or under the
Global Security, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or shall 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.
33
(b) Transfers of the Global Security shall be limited to transfers of such
Global Security in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in a Global Security
may be transferred in accordance with the rules and procedures of the Depositary
and the provisions of Section 307. Under the circumstances described in this
Section 305, beneficial owners shall obtain physical securities in the form set
forth in Sections 202, 203 and 204 ("Physical Securities") in exchange for their
beneficial interests in a Global Security in accordance with the Depositary's
and the Securities Registrar's procedures. In connection with the execution,
authentication and delivery of such Physical Securities, the Security Registrar
shall reflect on its books and records a decrease in the principal amount of the
Global Security equal to the principal amount of such Physical Securities and
the Company shall execute and the Trustee shall authenticate and deliver one or
more Physical Securities having an equal aggregate principal amount. The
Securities will be delivered in certificated form if (i) the Depositary ceases
to be registered as a clearing agency under the Exchange Act or is not willing
or no longer willing or able to provide securities depository services with
respect to the Securities and a successor depositary is not appointed by the
Company within 90 days, (ii) the Company, in its sole discretion, so determines
or (iii) there shall have occurred an Event of Default or an event which, with
the giving of notice or lapse of time or both, would constitute an Event of
Default with respect to the Securities represented by such Global Security and
such Event of Default or event continues for a period of 90 days.
(c) In connection with any transfer of a portion of the beneficial
interest in a Global Security pursuant to subsection (b) of this Section 305 to
beneficial owners who are required to hold Physical Securities, the Security
Registrar shall reflect on its books and records the date and a decrease in the
principal amount of a Global Security in an amount equal to the principal amount
of the beneficial interest in the Global Security to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver, one or
more Physical Securities of like tenor and amount.
(d) In connection with the transfer of the entire Global Security to
beneficial owners pursuant to subsection (b) of this Section 305, a Global
Security shall be deemed to be surrendered to the Trustee for cancellation, and
the Company shall execute, and the Trustee shall authenticate and deliver, to
each beneficial owner identified by the Depositary in exchange for its
beneficial interest in a Global Security, an equal aggregate principal amount of
Physical Securities of authorized denominations.
(e) Any Physical Security delivered in exchange for an interest in Global
Securities pursuant to subsection (c) or subsection (d) of this Section 305
shall, except as otherwise provided in Section 307, bear the Restricted
Securities Legend.
(f) The registered holder of a Global Security may grant proxies and
otherwise authorize any person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
(g) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
this Indenture and the Securities, and
34
owners of beneficial interests in a Global Security shall hold such interests
pursuant to the Depositary's customary procedures. Accordingly, any such owner's
beneficial interest in a Global Security will be shown only on, and the transfer
of such interest shall be effected only through, records maintained by the
Depositary or its nominee or its Agent Members.
Section 306. Registration, Registration of Transfer and Exchange.
----------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee, or such other office as the Trustee may designate, a register (the
register maintained in such office and in any other office or agency designated
pursuant to Section 1002 being herein sometimes referred to as the "Security
Register") in which, subject to such reasonable regulations as the Security
Registrar may prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. The Trustee or an agent thereof or of
the Company shall initially be the "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated pursuant to Section 1002, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denomination or denominations, of a like aggregate principal amount.
Furthermore, any Holder of a Global Security shall, by acceptance of
such Global Security, agree that transfers of beneficial interest in such Global
Security may be effected only through a book-entry system maintained by the
Holder of such Global Security (or its agent), and that ownership of a
beneficial interest in the Securities shall be required to be reflected in a
book entry.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities of the same series which the Holder making the exchange is entitled
to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer,
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.
35
No service charge shall be made to a Holder for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to pay all documentary, stamp or similar issue or transfer taxes or
other governmental charges that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 303, 304, 305, 306, 307, 308, 906 or ARTICLE FOURTEEN not
involving any transfer.
The Company shall not be required (a) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of business
15 days before an Interest Payment Date and ending on the close of business on
the Interest Payment Date, or (b) to exchange or register a transfer of any
Securities surrendered for conversion or, if a portion of any Security is
surrendered for conversion, the portion thereof surrendered for conversion.
Every Restricted Security shall be subject to the restrictions on
transfer provided in the legend required to be set forth on the face of each
Restricted Security pursuant to Section 202(a), and the restrictions set forth
in this Section 306, and the Holder of each Restricted Security, by such
▇▇▇▇▇▇'s acceptance thereof (or interest therein), agrees to be bound by such
restrictions on transfer.
The restrictions imposed by this Section 306 upon the transferability
of any particular Restricted Security shall cease and terminate on (a) the later
of two years from their date of issuance or two years after the last date on
which the Company or any Affiliate of the Company was the owner of such
Restricted Security (or any predecessor of such Restricted Security) or (b) (if
earlier) if and when such Restricted Security has been sold pursuant to an
effective registration statement under the Securities Act or transferred
pursuant to Rule 144 or under the Securities Act (or any successor provision),
unless the Holder thereof is an affiliate of the Company within the meaning of
Rule 144 (or such successor provisions). Any Restricted Security as to which
such restrictions on transfer shall have expired in accordance with their terms
or shall have terminated may, upon surrender of such Restricted Security for
exchange to the Security Registrar in accordance with the provision of this
Section 306 (accompanied, in the event that such restrictions on transfer have
terminated pursuant to Rule 144 (or any successor provision), by an Opinion of
Counsel satisfactory to the Company and the Trustee, to the effect that the
transfer of such Restricted Security has been made in compliance with Rule 144
(or any such successor provision)), be exchanged for a new Security, of like
tenor and aggregate principal amount, which shall not bear the Restricted
Securities Legend. The Company shall inform the Trustee of the effective date of
any Registration Statement registering the Securities under the Securities Act
no later than two Business Days after such effective date.
Except as provided in the preceding paragraph, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any Global Security, whether pursuant to this Section 306,
Section 304, 308, 906 or otherwise, shall also be a Global Security and bear the
legend specified in Section 202(a).
36
Section 307. Special Transfer Provisions.
----------------------------
Unless and until a Security is sold under an effective Registration
Statement pursuant to the Registration Rights Agreement, the following
provisions shall apply (except to the extent inconsistent with the Applicable
Procedures):
(a) Restricted Securities Legend. Rule 144A Global Securities and their
successor securities shall bear a Restricted Securities Legend, subject to the
following:
(1) subject to the following clauses of this Section 307(a), a
Security or any portion thereof which is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Restricted Securities Legend borne by such Global Security while
represented thereby;
(2) subject to the following clauses of this Section 307(a), a new
Security which is not a Global Security and is issued in exchange for
another Security (including a Global Security) or any portion thereof, upon
transfer or otherwise, shall bear the Restricted Securities Legend borne by
such other Security;
(3) All Securities included on or sold or otherwise disposed of
pursuant to an effective registration statement under the Securities Act,
together with their respective successor securities, shall not bear a
Restricted Securities Legend (and in such event the Company shall exchange
a Global Security which bears the Restricted Securities Legend, in whole or
in part, for one or more Global Securities which do not have such legend);
(4) at any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject to
transfer restrictions pursuant to the Securities Act, a new Security which
does not bear a Restricted Securities Legend may be issued in exchange for
or in lieu of a Security (other than a Global Security) or any portion
thereof which bears such a legend if the Trustee has received an
Unrestricted Securities Transfer Certificate substantially in the form of
Exhibit B hereto, satisfactory to the Trustee and duly executed by the
Holder of such legended Security or his attorney duly authorized in
writing, and after such date and receipt of such certificate, the Trustee
shall authenticate and deliver such a new Security in exchange for or in
lieu of such other Security as provided in this ARTICLE THREE; and
(5) a new Security which does not bear a Restricted Securities Legend
may be issued in exchange for or in lieu of a Security (other than a Global
Security) or any portion thereof which bears such a legend if, in the
Company's judgment, placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the direction of the Company, shall
authenticate and deliver such a new Security as provided in this ARTICLE
THREE.
(b) General. By its acceptance of any Security bearing the Restricted
Securities Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set
37
forth in this Indenture and in the Restricted Securities Legend and agrees that
it will transfer such Security only as provided in this Indenture.
The Security Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 306 or this Section
307. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Security Registrar.
Section 308. Mutilated, Destroyed, Lost and Stolen Securities.
-------------------------------------------------
If (a) any mutilated Security is surrendered to the Trustee, or (b)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee, such security or indemnity, in each case, as may be
required by them to save each of them harmless, then, in the absence of notice
to the Company or the Trustee that such Security has been acquired by a bona
fide purchaser or protected 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 replacement 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, the Company in its discretion may,
instead of issuing a replacement Security, pay such Security.
Upon the issuance of any replacement Securities under this Section
308, the Company may require the payment of a sum sufficient to pay all
documentary, stamp or similar issue or transfer taxes or other governmental
charges that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this Section 308 in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section 308 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 309. Payment of Interest; Interest Rights Preserved.
-----------------------------------------------
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the then
38
applicable interest rate borne by the Securities, to the extent lawful (such
defaulted interest and interest thereon herein collectively called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the Regular
Record Date; and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities are registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each Security and the
date (not less than 30 days after such notice) of the proposed payment, and at
the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted Interest as
in this subsection provided. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company in writing of such
Special Record Date. In the name and at the expense of the Company, the Trustee
shall cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Security Register, not less than 10
days prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities are registered on such Special Record Date and shall no longer be
payable pursuant to the following subsection (b).
(b) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, if, after written notice given by the Company to the Trustee
of the proposed payment pursuant to this Subsection, such payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 309, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 310. Persons Deemed Owners.
----------------------
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Security is registered as the owner of
such Security for the purpose of receiving payment of principal of, premium, if
any, and (subject to Section 309) interest on such Security, for the purpose of
conversion and for all other purposes whatsoever, including payment of any
Fundamental Change Repurchase Price, whether or not such Security is overdue,
and neither the Company, the Trustee nor any agent of the Company or the Trustee
shall
39
be affected by notice to the contrary. No holder of any beneficial interest in
any Global Security held on its behalf by a Depositary shall have any rights
under this Indenture with respect to such Global Security, and such Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and such holders of beneficial interests,
the operation of customary practices governing the exercise of the rights of the
Depositary (or its nominee) as Holder of any Security.
Section 311. Cancellation.
-------------
All Securities surrendered for payment, purchase, conversion,
registration of transfer or exchange shall be delivered to the Trustee (even if
initially surrendered to a Person other than the Trustee) and, if not already
cancelled, shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section 311 or for any Securities that
any Holder has converted pursuant to this Indenture, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee shall
be destroyed and certification of their destruction delivered to the Company
unless by a Company Order the Company shall direct that the cancelled Securities
be returned to it. The Trustee shall provide the Company a list of all
Securities that have been cancelled from time to time as requested by the
Company.
Section 312. Computation of Interest.
------------------------
Interest on the Securities shall be computed on the semi-annual basis
of a 360-day year of twelve 30-day months.
Section 313. 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
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 and that reliance may be placed
only on the other identification numbers printed on the Securities.
ARTICLE FOUR
------------
CONVERSION
Section 401. Conversion Privilege.
---------------------
(a) Subject to and upon compliance with the provisions of this ARTICLE
FOUR, at the option of the Holder, any Security may be converted, unless
previously repurchased or converted,
40
into duly authorized, fully paid and nonassessable shares of Common Stock, if
any of the conditions to conversion set forth in Section 401(b) are satisfied.
Conversion rights are subject to the following: (A) prior to the
Stockholder Approval, the Company's obligation to pay cash in lieu of Common
Stock as described in the paragraph below and (B) after the Stockholder
Approval, the Company's right to pay Common Stock, cash or a combination of cash
and Common Stock.
Until the Company obtains the Stockholder Approval, the Company will
deliver upon conversion (other than a conversion pursuant to Section 401(b)(2)):
(i) an amount of cash equal to the lesser of (A) the principal amount of the
Securities to be converted, or (B) the aggregate Conversion Value of such
Securities, and (ii) a number of shares of Common Stock, not to exceed 14.9600
shares (after the 2003 Stock Split, 22.4400 shares) of Common Stock per
Security, equal to the quotient of (i) the excess (if any) of the aggregate
Conversion Value of such Securities over their aggregate principal amount
divided by (ii) the arithmetic average of the Volume Weighted Average Prices of
the Common Stock during the Cash Settlement Average Period. Notwithstanding the
foregoing, until the Company obtains the Stockholder Approval, the aggregate
shares of Common Stock the Company may deliver pursuant to this ARTICLE FOUR
will be limited to the Capped Shares.
After the Company obtains the Stockholder Approval, the Company will
deliver, upon conversion (other than a conversion pursuant to Section 401(b)(2),
Common Stock, cash or a combination of cash and Common Stock and the aggregate
number of shares the Company may deliver pursuant to this ARTICLE FOUR will no
longer be limited to the Capped Shares.
To the extent a Holder converts one or more Securities pursuant to
Section 401(b)(2), the Company will deliver: (i) prior to Stockholder Approval,
an amount of cash equal to the lesser of (A) the aggregate Conversion Value of
such Securities, or (B) the principal amount of such Securities, or (ii) if such
conversion occurs after the Stockholder Approval, such Holder will receive cash,
Common Stock or a combination of cash and Common Stock set forth in Section
403(a)(4).
(b) Subject to and in compliance with this ARTICLE FOUR, the Securities or
any portion thereof may be converted if any of the conditions to conversion set
forth in this Section 401(b) are satisfied.
(1) Conversion Upon Satisfaction of Common Stock Price Conditions
-------------------------------------------------------------
Any Holder may surrender all or any portion of his or her Securities
for conversion (at the then applicable Conversion Rate) during any calendar
quarter if the Sale Price of the Common Stock for at least 20 Trading Days in
the 30 Trading Day period ending on the last day of the preceding calendar
quarter is greater than or equal to 110% of the Conversion Price (the Sale Price
of the Common Stock at or above which the Securities may be converted being
referred to herein as the "Conversion Trigger Price"). Upon satisfaction of this
condition the Securities will remain convertible until Stated Maturity.
41
The initial Conversion Trigger Price per share is $57.42 (and,
assuming the 2003 Stock Split occurs, will be $38.28 assuming no other
adjustments have been made since the Issue Date).
(2) Conversion Upon Satisfaction of Security Price Conditions
---------------------------------------------------------
Any Holder may surrender all or any portion of his or her Securities
for conversion during the five consecutive Trading Day period following any 10
consecutive Trading Day period in which (A) the Security Price of the Securities
for each Trading Day during such 10-day period was less than 105% of the
Conversion Value for the Securities and (B) the Conversion Value for each
Trading Day during such 10-day period was less than 90% of the principal amount
per Security.
(3) Conversion Upon a Credit Rating Event
-------------------------------------
Any Holder may surrender all or any portion of his or her Securities
for conversion at any time at the then-applicable Conversion Rate during any
period in which the Securities are rated by either ▇▇▇▇▇'▇ or S&P and the credit
rating initially assigned to the Securities by ▇▇▇▇▇'▇ or S&P is downgraded by
two or more levels or the Securities cease to be rated; provided, however, that
the Company has no obligation to have the Securities rated. For purposes of
clarity, a credit rating will be deemed to have moved by two levels if, for
example, it moves two notches within a category (e.g., BB+ to BB-).
(4) Conversion Upon Specified Corporate Transactions
------------------------------------------------
Any Holder may surrender all or any portion of his or her Securities
for conversion at any time at the then-applicable Conversion Rate if (A) the
Company distributes to all holders of its shares of Common Stock rights or
warrants entitling them (for a period expiring within 60 days of the record date
for such distribution) to subscribe for or purchase shares of Common Stock, at a
price per share less than the Sale Price of the Common Stock at the time of the
announcement of such distribution, (B) the Company distributes to all holders of
its shares of Common Stock, cash or other assets, debt securities or rights or
warrants to purchase its securities, which distribution (together with all other
distributions covered by this clause (B) not triggering a conversion right
during the preceding 12 months) has a per share value exceeding 5% of the Sale
Price of the Common Stock on the day preceding the declaration date for the
distribution, or (C) a Fundamental Change occurs. In each case, the Security may
be surrendered for conversion into shares of Common Stock at any time after the
Company provides notice of such event (1) until the earlier of the close of
business on the Business Day immediately prior to the Ex-Dividend Time or the
date of the Company's announcement that the distribution will not take place, in
the case of a distribution, or (2) until 40 days thereafter, in the case of a
Fundamental Change. The Company will provide notice to the Holders at least 20
days prior to the Ex-Dividend Time for a distribution or within 20 business days
of the occurrence of a Fundamental Change, as the case may be, of the occurrence
of any such event. In the case of a distribution, Holders may not convert
Securities if they will otherwise participate in the distribution without
conversion as a result of holding the Securities.
42
In addition, any Holder may surrender all or any portion of his or her
Securities for conversion at any time at the then-applicable Conversion Rate if
the Company consolidates with or merges into another corporation, or is a party
to a binding share exchange pursuant to which the shares of Common Stock would
be converted into cash, securities or other property as set forth in Section 413
hereof. In such event, the Security may be surrendered for conversion at any
time from and after the date which is 15 days prior to the date announced by the
Company as the anticipated effective time of such transaction until 15 days
after the actual date of such transaction. In the event a Holder does not
convert its Security during this time period, such Holder will be entitled to
receive, upon conversion, the kind and amount of cash, securities or other
property that it would have received if it had converted its Security
immediately prior to such consolidation, merger or binding share exchange.
(c) The Company shall determine on a daily basis whether the Securities
shall be convertible as a result of the occurrence of an event specified in
clause (b)(1) or clause (b)(2) above and, if the Securities shall be so
convertible, the Company shall promptly deliver to the Trustee written notice
thereof. Whenever the Securities shall become convertible pursuant to Section
401, the Company or, at the Company's written request, the Trustee in the name
and at the expense of the Company, shall notify the Holders of the event
triggering such convertibility in the manner provided in Section 402, and the
Company shall also publicly announce such information and publish it on the
Company's web site (or otherwise broadly disseminate the information in any
manner deemed reasonable by the Company). Any notice so given shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice.
Notwithstanding the foregoing, if a Security is submitted or presented
for repurchase pursuant to ARTICLE FOURTEEN, such conversion right shall
terminate at the close of business on the second Business Day immediately
preceding the Fundamental Change Repurchase Date for such Security or such
earlier date as the Holder presents such Security for purchase (unless the
Company shall default in making the Fundamental Change Repurchase 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). If such Security is submitted or presented for
purchase pursuant to ARTICLE FOURTEEN and is then subsequently withdrawn, such
conversion right shall no longer be deemed terminated, and the Holder of such
Security may convert such Security pursuant to this Section 401.
A Security in respect of which a Holder has delivered a Fundamental
Change Repurchase Notice pursuant to Section 1401 exercising the option of such
Holder to require the Company to repurchase such Security may be converted only
if such Fundamental Change Repurchase Notice is withdrawn by a written notice of
withdrawal delivered to a Paying Agent prior to the close of business on the
second Business Day immediately preceding the Fundamental Change Repurchase Date
in accordance with Sections 1402.
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 FOUR.
43
Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of a Security.
Section 402. Conversion Procedures.
----------------------
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 the
Conversion Agent, (b) surrender the Security to the Conversion Agent, (c)
furnish appropriate endorsements and transfer documents if required by the
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." The Conversion Agent may assume that any Holder that delivers such
conversion notice is entitled to convert the Security without independent
investigation.
Within 5 Trading Days after receiving the conversion notice (the "Cash
Settlement Notice Period"), if the Company is paying all or any part of its
obligation (the "Conversion Obligation") in cash (except for cash paid in lieu
of fractional shares), then the Company will send a notice to the Holder stating
the following:
(1) the Conversion Rate;
(2) the name and address of the Conversion Agent;
(3) the CUSIP number, if any, relating to such Securities.
(4) the dollar amount to be satisfied in cash (which must be
expressed either as 100% of the obligation or as a fixed dollar amount),
provided that the Company will pay cash for fractional interests in shares
of Common Stock;
(5) that Securities must be surrendered to the Conversion Agent prior
to the conversion being paid in cash or shares of Common Stock;
(6) briefly, the conversion rights of the Securities, and that the
Holder must satisfy the requirements set forth in the Indenture in order to
convert the Securities;
(7) whether the conversion notice is subject to withdrawal and the
procedures for withdrawal;
(8) that, unless the Company defaults on the conversion that interest
on Securities surrendered for purchase will cease to accrue on and after
the Conversion Date
The settlement procedures upon conversion are set forth in Section 403 and
404. The Company shall deliver to the Holder through the Conversion Agent a
certificate for the number of whole shares of Common Stock issuable upon the
conversion and cash in lieu of Common Stock (or a combination of cash and Common
Stock) as set forth in this Indenture, and cash for any fractional shares
pursuant to Section 405. The Company shall set forth the full number of shares
and the amounts of the required cash in lieu of fractional shares in an
Officers' Certificate delivered to the Conversion Agent. Anything herein to the
contrary notwithstanding, in the case
44
of Global Securities, conversion notices may be delivered and such Securities
may be surrendered for conversion in accordance with the Applicable Procedures
as in effect from time to time.
The person in whose name the Common Stock certificate is registered
shall be deemed to be a stockholder of record on the Conversion Date; provided,
however, that no surrender of a Security on any date when the stock transfer
books of the Company shall be closed shall be effective to constitute the person
or persons entitled to receive the shares of Common Stock upon such conversion
as the record holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the person or persons entitled
to receive such shares of Common Stock as the record holder or holders thereof
for all purposes at the close of business on the next succeeding day on which
such stock transfer books are open; provided, further, that such conversion
shall be at the Conversion Rate in effect on the Conversion Date as if the stock
transfer books of the Company had not been closed on such date. Upon conversion
of a Security, such person shall no longer be deemed a Holder of such Security.
Securities surrendered for conversion (in whole or in part) during the
period from the close of business on any Regular Record Date for an interest
payment to the opening of business on the next succeeding Interest Payment Date
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
aggregate 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 402, 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 402 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.
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 total principal amount of the Securities converted.
If the last day on which Securities may be converted is not a Business
Day in a place where the Conversion Agent is located, the Securities may be
surrendered to that Conversion Agent on the next succeeding day that is a
Business Day.
45
Except as otherwise stated in this Indenture, the Company will not
make any payment in cash or Common Stock or any other adjustment for accrued and
unpaid interest (including Additional Interest) or dividends in connection with
the issuance of any Common Stock issued upon conversion of the Securities. On
conversion of Securities, except as otherwise stated herein, a Holder will not
receive any cash payment or additional shares in respect thereof representing,
accrued and unpaid cash interest (including Additional Interest). Delivery by
the Company to the Holder of the full number of shares of Common Stock into
which the Securities are convertible, or the cash value of such Common Stock or
a combination of Common Stock and the cash value of such Common Stock into which
the Securities are convertible (together with any cash payment in lieu of
fractional shares), will be deemed to satisfy the Company's obligation to pay
the principal amount of the Securities and to satisfy its obligation to pay any
accrued and unpaid interest (including Additional Interest) attributable to the
period from the Issue Date through the Conversion Date. As a result, any accrued
and unpaid cash interest (including Additional Interest) is deemed paid in full
rather than cancelled, extinguished or forfeited. Notwithstanding the foregoing,
accrued cash interest (including Additional Interest and Additional Amounts), if
any, will be payable upon any conversion of the Securities at the option of the
Holder made concurrently with or after acceleration of the Securities following
an Event of Default under the Securities.
Section 403. Settlement Procedures Upon Conversion After the Stockholder
-----------------------------------------------------------
Approval.
---------
(a) If at the time of receipt of the Holder's conversion notice, the
Company has obtained the Stockholder Approval and the Company receives the
conversion notice on or prior to the day that is 30 Trading Days before Stated
Maturity (the "Final Notice Date") the following settlement procedures will
apply:
(1) If the Company timely elects to pay cash for any portion of
Common Stock otherwise issuable to the Holder, the Holder may retract the
conversion notice at any time during the 2 Trading Day period beginning on
the day after the final day of the Cash Settlement Notice Period (the
"Conversion Retraction Period "). No such retraction may be made (and a
Holder's conversion notice shall be irrevocable) if the Company does not
elect to deliver cash in lieu of Common Stock (other than cash in lieu of
fractional shares).
(2) If the conversion notice has not been retracted, then settlement
(in cash and/or Common Stock) will occur on the third Trading Day following
the final day of the 20 Trading Day period beginning on the third Trading
Day following the final day of the Conversion Retraction Period (the "Cash
Settlement Averaging Period ").
(3) The settlement amount for conversion (other than a conversion
pursuant to Section 401(b)(2)) will be computed as follows:
(i) If the Company elects to satisfy the entire Conversion
Obligation in Common Stock, then the Company will deliver the number
of shares equal to (A) the aggregate principal amount of Securities to
be converted divided by $1,000 and multiplied by (B) the Conversion
Rate.
46
(ii) If the Company elects to satisfy the entire Conversion
Obligation in cash, then the Company will deliver cash in an amount
equal to the product of (A) a number equal to the aggregate principal
amount of Securities to be converted divided by $1,000 and multiplied
by the Conversion Rate and (B) the arithmetic average of the Volume
Weighted Average Prices of Common Stock during the Cash Settlement
Averaging Period.
(iii) If the Company elects to satisfy a portion (other than
100%), of the Conversion Obligation in cash the Company will deliver
such cash amount ("Cash Amount") and the number of shares of Common
Stock equal to the greater of (A) zero and (B) the excess, if any, of:
a. the number of shares equal to the aggregate principal
amount of Securities to be converted divided by $1,000 and
multiplied by the Conversion Rate, minus
b. the number of shares that are equal to the quotient of the
Cash Amount divided by the arithmetic average of the Volume
Weighted Average Prices of Common Stock during the Cash
Settlement Averaging Period.
(4) The settlement amount for a conversion pursuant to Section
401(b)(2)) will be calculated as follows:
(i) If the Company elects to pay the Conversion Obligation in
cash, then the Company will deliver the lesser of:
a. the aggregate principal amount of Securities to be
converted, or
b. the product of (A) a number equal to the aggregate
principal amount of Securities to be converted divided by
$1,000 multiplied by the Conversion Rate and (B) the
arithmetic average of the Volume Weighted Average Prices of
Common Stock during the Cash Settlement Averaging Period.
(ii) If the Company elects to pay the Conversion Obligation in
Common Stock, then the Company will deliver the number of shares equal
to the lesser of:
a. the aggregate principal amount of Securities to be
converted divided by $1,000 and multiplied by the Conversion
Rate, or
b. the aggregate principal amount of Securities to be
converted divided by the Sale Price of the Common Stock on the
last Trading Day preceding the Conversion Date.
47
(iii) If the Company elects to satisfy a portion (other than
100%) of the Conversion Obligation in cash, the Company will deliver
such Cash Amount and the number of shares of Common Stock equal to the
lesser of:
a. (X) the aggregate principal amount of Securities to be
converted divided by $1,000 and multiplied by the Conversion
Rate, minus (Y) the quotient of the Cash Amount divided by the
arithmetic average of the Volume Weighted Average Price of a
share of Common Stock during the Cash Settlement Averaging
Period, or
b. (X) the aggregate principal amount of Securities to be
converted divided by the Sale Price of the Common Stock on the
last Trading Day preceding the Conversion Date, minus (Y) the
quotient of the Cash Amount divided by the arithmetic average
of the Volume Weighted Average Price of a share of Common
Stock during the Cash Settlement Averaging Period.
(b) If at the time of at the time of receipt of the Holder's conversion
notice, the Company has obtained the Stockholder Approval and the Company
receives a Holder's notice of conversion after the Final Notice Date, the
following settlement procedures will apply:
(1) If the Company chooses to satisfy all or any portion of the
Conversion Obligation in cash, the Company will have notified Holders
through the Trustee of the dollar amount to be satisfied in cash (which
must be expressed either as 100% of the Conversion Obligation or as a fixed
dollar amount) at any time on or before the Final Notice Date.
(2) Settlement amount will be computed and settlement dates will be
determined in the same manner as set forth in Section 403(a)(3) with
respect to a conversion other than pursuant to Section 401(b)(2) (and as
set forth in Section 403(a)(4) with respect to a conversion pursuant to
Section 401(b)(2)) except that the Cash Settlement Averaging Period shall
be the 20 Trading Day period that begins on the date that is the 23rd
Trading Day prior to Stated Maturity.
(3) Settlement in cash will occur on the third Trading Day following
the final day of such Cash Settlement Averaging Period and settlement in
Common Stock will occur at Stated Maturity.
(4) A Holder cannot retract such Holder's conversion notice if the
Holder delivers the notice after the day that is 30 Trading Days prior to
the Stated Maturity (and the conversion notice therefore will be
irrevocable).
(c) Notwithstanding the foregoing Section 403(a) and 403(b):
(1) If any Trading Day during a Cash Settlement Averaging Period is
not a Undisrupted Trading Day, then determination of the price for that day
will be delayed until the next Undisrupted Trading Day on which no price
observation is occurring in
48
relation to that Cash Settlement Averaging Period (whether because that day
is a Trading Day during the Cash Settlement Averaging Period or because
another delayed price observation is being made on that day). If this would
result in a price being observed later than the eighth Trading Day after
the last of the original 20 Trading Days in the Cash Settlement Averaging
Period, then the Company will determine all prices for all delayed and
undetermined prices on that eighth Trading day based on the Company's good
faith estimate of the Common Stock's value on that date.
(2) If any Trading Day during a Cash Settlement Averaging Period is
not an Undisrupted Trading Day, settlement (in cash and/or Common Stock)
will occur on the third Trading Day following the final day on which a
price is observed in relation to such Cash Settlement Averaging Period.
Section 404. Settlement Procedures Upon Conversion Prior to the
--------------------------------------------------
Stockholder Approval.
---------------------
(a) If at the time of receipt of the Holders' notice of conversion (other
than a conversion pursuant to Section 401(b)(2)), the Company has not obtained
the Stockholder Approval, the Company will satisfy the conversion notice by
delivering:
(1) an amount of cash equal to the lesser of (i) the aggregate
principal amount of Securities to be converted, or (ii) the aggregate
principal amount of Securities to be converted divided by $1,000 and
multiplied by the Conversion Value; and
(2) a number of shares of Common Stock equal to the quotient of (i)
the excess, if any, of (A) the aggregate principal amount of Securities to
be converted divided by $1,000 and multiplied by the Conversion Value, over
(B) the aggregate principal amount of Securities to be converted, divided
by (ii) the arithmetic average of the Volume Weighted Average Price of the
Common Stock during the Cash Settlement Averaging Period; subject to a
maximum of 14.9600 shares (after the 2003 Stock Split, 22.4400 shares) of
Common Stock per Security (or a maximum of the Capped Shares for the
aggregate principal amount of Securities). The Cash Settlement Averaging
Period will be calculated in the same manner and will be the same period
calculated in Section 403.
(b) If at the time of receipt of the Holders' notice of conversion
pursuant to 401(b)(2), the Company has not obtained the Stockholder Approval,
the Company will satisfy the conversion notice by delivering an amount of cash
equal to the lesser of:
(1) the aggregate principal amount of Securities to be converted, or
(2) the aggregate principal amount of Securities to be converted
divided by $1,000 and multiplied by the Conversion Value.
49
Section 405. 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 Sale Price of the Common Stock on the third Trading Day
prior to the Conversion Date.
Section 406. 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 shall refuse to deliver the
certificate representing the Common Stock being issued in a name other than the
Holder's name until the Conversion Agent receives a sum sufficient to pay any
tax which will be due because the shares are to be issued in a name other than
the Holder's name. Nothing herein shall preclude any tax withholding required by
law or regulation.
Section 407. Company to Provide Stock.
-------------------------
(a) Until the Company obtains the Stockholder Approval, the maximum number
of shares of Common Stock that may be delivered pursuant to this ARTICLE FOUR is
limited to 3,140,000 shares (and assuming the 2003 Stock Split occurs, shall be
4,170,000 shares immediately after the 2003 Stock Split, assuming no other
adjustments have been made since the Issue Date) (the "Capped Shares").
(b) The Company hereby agrees to use its reasonable best efforts to obtain
the Stockholder Approval within 120 days from the date hereof (the "Stockholder
Approval Deadline") If the Stockholder Approval is not obtained by the
Stockholder Approval Deadline (the "Stockholder Approval Default"), then the
Company hereby agrees to pay additional interest ("Additional Interest") on the
Securities from and including the day following the Stockholder Approval
Deadline to but excluding the earlier of (i) the 91/st/ day after the
Stockholder Approval Deadline and (ii) the day on which the Stockholder Approval
Default has been cured, in an amount equal to .25% per annum on the principal
amount of the Securities then Outstanding. If the Stockholder Approval is not
obtained within 90 days from the Stockholder Approval Deadline (the "Second
Stockholder Approval Deadline"), then the Company hereby agrees to pay
Additional Interest on the Securities from and including the 91/st/ day after
the Stockholder Approval Deadline to, but excluding, the day on which the
Stockholder Approval Default has been cured in an amount equal to 0.75% per
annum on the principal amount of the Securities then Outstanding. For
clarification, the Additional Interest of 0.75% per annum is in substitute for,
and not in addition to, the Additional Interest of 0.25% per annum applicable
only for the first 90 days after the Stockholder Approval Deadline. The Company
shall give the Trustee written notice if it does not obtain the Stockholder
Approval by the Stockholder Approval Deadline or the Second Stockholder Approval
Deadline. The Company shall also give the Trustee written notice if it obtains
the Stockholder Approval.
50
(c) After Stockholder Approval is obtained, the Company shall, 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.
(d) 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 Securities
into Common Stock in accordance with the provisions of this Indenture, the
Company covenants to list such Common Stock issuable upon conversion of the
Securities in accordance with the requirements of such automated quotation
system or exchange at such time.
Section 408. Adjustment of Conversion Rate.
------------------------------
The Conversion Rate 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 Rate 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, warrants or options 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 (g) of this
Section 408) on the record date for the determination of stockholders entitled
to receive such rights, warrants or options, the Conversion Rate in effect
immediately prior thereto shall be adjusted by multiplying the Conversion Rate
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
51
the number of shares of Common Stock so offered for subscription or purchase (or
into which the convertible securities so offered are convertible), and the
denominator of which shall be the number of shares of Common Stock outstanding
at the close of business on such record date plus the number of shares of Common
Stock which the aggregate offering price of the total number of shares of Common
Stock so offered for subscription or purchase (or the aggregate Conversion Price
of the Securities so offered, which shall be determined by multiplying the
number of shares of Common Stock issuable upon conversion of such convertible
securities by the Conversion Price per share of Common Stock pursuant to the
terms of such convertible securities) would purchase at the current market price
per share (as defined in Section 408(g) herein). Such adjustment shall be made
successively whenever any such rights, warrants or options are issued, and shall
become effective immediately after such record date. If at the end of the period
during which such rights, warrants or options are exercisable not all rights,
warrants or options shall have been exercised, the adjusted Conversion Rate
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). No adjustment shall be made hereunder if as a result the Conversion
Rate would decrease.
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock any Equity Interests 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 dividends or
distributions referred to in subsection (a)(i) or (ii) of this Section 408), or
shall distribute to all or substantially all holders of its Common Stock rights,
warrants or options to subscribe for or purchase any of its securities
(excluding those rights and warrants referred to in subsection (b) of this
Section 408), then in each such case the Conversion Rate shall be adjusted by
multiplying the Conversion Rate in effect immediately prior to the close of
business on the record date for the determination of shareholders entitled to
such distribution by a fraction of which the numerator shall be the current
market price per share of Common Stock (determined as provided in subsection (g)
of this Section 408) on such record date and the denominator shall be such
current market price less the fair market value (as determined by the Board of
Directors whose determination shall be conclusive and described in a Board
Resolution) on such date of the portion of the evidences of indebtedness, shares
of capital stock, and other assets to be distributed or of such subscription
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).
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.
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's Capital Stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 408(c) (and no adjustment to the Conversion Rate under
this Section 408(c) will be required) until the occurrence of the earliest
Trigger Event. If such right or warrant is subject to subsequent events,
52
upon the occurrence of which such right or warrant shall become exercisable to
purchase different securities, evidences of indebtedness or other assets or
entitle the holder to purchase a different number or amount of the foregoing or
to purchase any of the foregoing at a different purchase price, then the
occurrence of each such event shall be deemed to be the date of issuance and
record date with respect to a new right or warrant (and a termination or
expiration of the existing right or warrant without exercise by the holder
thereof). In addition, in the event of any distribution (or deemed distribution)
of rights or warrants, or any Trigger Event or other event (of the type
described in the preceding sentence) with respect thereto, that resulted in an
adjustment to the Conversion Rate under this Section 408(c), (1) in the case of
any such rights or warrants which shall all have been redeemed or repurchased
without exercise by any holders thereof, the Conversion Price shall be
readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder of Common Stock with respect to such rights or warrants (assuming such
holder had retained such rights or warrants), made to all holders of Common
Stock as of the date of such redemption or repurchase, and (2) in the case of
such rights or warrants all of which shall have expired or been terminated
without exercise, the Conversion Rate shall be readjusted as if such rights and
warrants had never been issued.
(d) In case the Company shall, by dividend or otherwise, at any time make
a distribution solely in cash to all or substantially all holders of its Common
Stock that satisfies the conditions described in any of (1), (2) or (3) below (a
"Triggering Distribution"), then the Conversion Rate will be adjusted as set
forth in the corresponding subsection.
(1) If the distribution is neither a quarterly dividend nor any
dividend or distribution in connection with the liquidation, dissolution or
winding up of the Company, then the Conversion Rate shall be adjusted by
multiplying the Conversion Rate in effect immediately prior to the
effectiveness of the Conversion Rate adjustment contemplated by this
subsection (d)(1) by a fraction (A) the numerator of which shall be (I) the
current market price per share of Common Stock (as determined in accordance
with subsection (g) of this Section 408) on the Business Day (the
"Determination Date") immediately preceding the day on which the Triggering
Distribution is declared by the Company, plus (II) the number obtained by
dividing the total amount of cash so distributed to all holders of Common
Stock by the number of shares of Common Stock outstanding on the
Determination Date and (B) the denominator of which shall be such current
market price per share of Common Stock on the Determination Date. Such
adjustment shall become effective immediately prior to the opening of
business following the date on which the Triggering Distribution is paid;
provided that, in the event the portion of the cash so distributed
applicable to one share of Common Stock is equal to or greater than the
market price per share of Common Stock on the Determination Date, an
adequate adjustment provision shall be made so that each holder of
Securities shall have the right to receive upon conversion the amount of
cash such holder would have received had such holder converted each
Security immediately prior to such distribution.
(2) If the distribution is a quarterly dividend that equals or
exceeds the Quarterly Minimum Dividend (as determined in accordance with
subsection (d)(4) of this
53
Section 408) and that exceeds per share of Common Stock the greater of (x)
the per share of Common Stock quarterly cash dividend paid for the prior
quarter (which per share amount shall be adjusted for changes in the number
of shares of Common Stock described in subsection (a) of this Section 408)
to the extent such prior quarterly dividend did not result in a Conversion
Rate adjustment under this subsection (d)(2), and (y) 0.4375% of the
current market price per share of Common Stock (as determined in accordance
with subsection (g) of this Section 408) on the Determination Date, then
the Conversion Rate shall be adjusted by multiplying the Conversion Rate in
effect immediately prior to the effectiveness of the Conversion Rate
adjustment contemplated by this subsection (d)(2) by a fraction (A) the
numerator of which shall be (I) the current market price per share of
Common Stock (as determined in accordance with subsection (g) of this
Section 408) on the Determination Date, plus (II) the excess of the cash
distributed per share of Common Stock over the greater of the per share
amount specified in clause (x) or clause (y) above and (B) the denominator
of which shall be such current market price per share of Common Stock on
the Determination Date. Such adjustment shall become effective immediately
prior to the opening of business following the date on which the Triggering
Distribution is paid; provided that, in the event the excess portion of the
cash so distributed per share of Common Stock is equal to or greater than
the current market price per share of Common Stock on the Determination
Date, an adequate adjustment provision shall be made so that each holder of
Securities shall have the right to receive upon conversion the amount of
cash such holder would have received had such holder converted each
Security immediately prior to such distribution.
(3) If the distribution is a quarterly dividend that is less than the
Quarterly Minimum Dividend (as determined in accordance with subsection
(d)(4) of this Section 408) and is less, per share of Common Stock, than
the lesser of (x) the per share of Common Stock quarterly cash dividend
paid for the prior quarter (which per share amount shall be adjusted for
changes in the number of shares of Common Stock described in subsection (a)
of this Section 408) to the extent such quarterly dividend did not result
in a Conversion Rate adjustment under this subsection (d)(3), and (y) 0.25%
of the current market price per share of Common Stock (as determined in
accordance with subsection (g) of this Section 408) on the Determination
Date, then the Conversion Rate shall be adjusted by multiplying the
Conversion Rate in effect immediately prior to the effectiveness of the
Conversion Rate adjustment contemplated by this subsection (d)(3) by a
fraction (A) the numerator of which shall be (I) the current market price
per share of Common Stock (as determined in accordance with subsection (g)
of this Section 408) on the Determination Date, less (II) the excess of the
lesser of the per share amount specified in clause (x) or clause (y) above
over the cash distributed per share of Common Stock and (B) the denominator
of which shall be such current market price per share of Common Stock on
the Determination Date. Such adjustment shall become effective immediately
prior to the opening of business following the date on which the Triggering
Distribution is paid.
(4) For the purpose of any computation under this subsection (d) of
Section 408, the "Quarterly Minimum Dividend" shall be $0.15 per share of
Common Stock (and, assuming the 2003 Stock Split occurs, shall be $0.10 per
share immediately after the 2003
54
Stock Split, assuming no other adjustments have been made since the Issue
Date), which per share amount shall be adjusted inversely to any changes in
the Conversion Rate made pursuant to the provisions of this Section 408
other than this subsection (d).
(e) 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) (other than a transaction in connection with the
creation of a Wholly-Owned Subsidiary of the Company which would hold all or
substantially all of the Company's broadcast operations and would assume all or
substantially all of the Company's debt other than the Securities) 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 Rate adjustment
pursuant to this Section 408 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 Rate
adjustment pursuant to this Section 408 has been made, exceeds an amount equal
to 5% of the product of the current market price per share of Common Stock (as
determined in accordance with subsection (g) of this Section 408) 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 Rate
shall be adjusted so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to close of business
on the Expiration Date by a fraction of which the numerator shall be the sum of
(x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to holders of Common Stock 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 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 (g) of this Section 408) as of the
Expiration Time, and the denominator of which shall be the product of the number
of shares of Common Stock outstanding (including any 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 (g) of this Section 408) as of the
Expiration Time, such adjustment to become effective immediately prior to the
opening of business on the day following the
55
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 Rate shall again be adjusted to be the
Conversion Rate which would have been in effect based upon the number of shares
actually purchased. If the application of this Section 408(e) to any tender
offer would result in a decrease in the Conversion Rate, no adjustment shall be
made for such tender offer under this Section 408(e).
(f) For purposes of Section 408(d) or 408(e), 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.
(g) For the purpose of any computation under subsections (b), (c), (d) and
(e) of this Section 408, the current market price per share of Common Stock (the
"current market price per share") on any date shall be deemed to be the average
of the daily Sale Price for the 10 consecutive Trading Days immediately
preceding and including (i) the Determination Date or the Expiration Date, as
the case may be, with respect to distributions or tender offers under subsection
(d) or (e) of this Section 408 or (ii) the record date with respect to
distributions, issuances or other events requiring such computation under
subsection (b) or (c) of this Section 408. For purposes of this Section 408, the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company.
(h) In any case in which this Section 408 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 408, 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 411) 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 Equity Interests of
the Company issuable upon such conversion over and above the shares of Common
Stock and other Equity Interests of the Company issuable upon such conversion
only on the basis of the Conversion Rate 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 Rate 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 Rate shall
be readjusted to the Conversion Rate 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.
(i) Whenever adjustments to the Conversion Rate are called for pursuant to
ARTICLE FOUR, such adjustments shall be made to the Conversion Rate as may be
necessary or appropriate to effectuate the intent of this ARTICLE FOUR and to
avoid unjust or inequitable results as determined in good faith by the Board of
Directors.
56
Section 409. No Adjustment.
--------------
No adjustment in the Conversion Rate shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Rate as last adjusted; provided, however, that any adjustments which
by reason of this Section 409 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this ARTICLE FOUR shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. After an adjustment is made to the
Conversion Rate, any subsequent event requiring adjustment shall cause an
adjustment to the Conversion Rate as adjusted.
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 410. Adjustment for Tax Purposes.
----------------------------
Upon 15 days prior notice to the Trustee and the Holders, the Company
shall be entitled to make increases in the Conversion Rate, in addition to those
required by Section 408, 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 or other similar event shall not be taxable or shall be taxable to
a lesser degree to such stockholders.
Section 411. Notice of Adjustment.
---------------------
Whenever the Conversion Rate or conversion privilege is adjusted, the
Company shall promptly mail to Holders a notice of the adjustment and file with
the Trustee and the Conversion Agent 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 Rate, the Trustee may assume without inquiry that
the Conversion Rate has not been adjusted and that the last Conversion Rate of
which it has knowledge remains in effect.
Section 412. Notice of Certain Transactions.
-------------------------------
In the event that:
(a) the Company takes any action which would require an adjustment in the
Conversion Rate;
57
(b) 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
(c) there is a dissolution or liquidation of the Company,
then in each such case 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 10 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 (a), (b) or (c) of this Section 412.
Section 413. Effect of Reclassification, Consolidation, Merger or Sale on
------------------------------------------------------------
Conversion Privilege.
---------------------
If any of the following shall occur, namely: (a) any reclassification
or change of shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination, or any
other change for which an adjustment is provided in Section 408); (b) any
consolidation, merger, binding share exchange or combination to which the
Company is a party as a result of which the holders of Common Stock shall be
entitled to receive stock, securities or other properties or assets with respect
to or in exchange for such Common Stock, 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, in each case in
which holders of the Company's Common Stock would be entitled to receive stock,
other securities, other property, assets or cash for their Common Stock, 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 Rate which shall be as nearly equivalent as may be practicable to the
adjustments of the Conversion Rate provided for in this ARTICLE FOUR. 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
58
Section 413 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 413, 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.
The provisions of this Section 413 shall not apply to transactions in
connection with the creation of a Wholly-Owned Subsidiary of the Company which
would hold all or substantially all of the Company's broadcast operations and
would become a primary obligor under all or substantially all of the Company's
Indebtedness (other than the Securities).
Section 414. Trustee's Disclaimer.
---------------------
The Trustee shall have no duty to determine when an adjustment under
this ARTICLE FOUR 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 411. 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 FOUR.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 413, 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 411.
Section 415. Voluntary Increase.
-------------------
The Company from time to time may increase the Conversion Rate by any
amount for any period of time if the period is at least 20 days and if the Board
of Directors determines that such increase would be in the best interest of the
Company and the Company provides 15 days prior notice to the Holders, the
Trustee and the Conversion Agent of any increase in the Conversion Rate.
Section 416. Rights Issued in Respect of Common Stock Issued Upon
----------------------------------------------------
Conversion.
-----------
Each share of Common Stock issued upon conversion of Securities
pursuant to this ARTICLE FOUR shall be entitled to receive the appropriate
number of common stock or preferred stock purchase rights, as the case may be
(the "Rights"), if any, that all shares of
59
Common Stock are entitled to receive and the certificates representing the
Common Stock issued upon such conversion shall bear such legends, if any, in
each case as may be provided by the terms of any rights agreement adopted by the
Company, as the same may be amended from time to time (in each case, a "Rights
Agreement"). Provided that such Rights Agreement requires that each share of
Common Stock issued by the Company (including those that might be issued upon
conversion of Securities) at any time prior to the distribution of separate
certificates representing the Rights be entitled to receive such Rights, then,
notwithstanding anything else to the contrary in this ARTICLE FOUR, there shall
not be any adjustment to the conversion privilege or Conversion Rate or any
other term or provision of the Securities as a result of the issuance of Rights,
the distribution of separate certificates representing the Rights, the exercise
or redemption of such Rights in accordance with any Rights Agreements, or the
termination or invalidation of Rights.
ARTICLE FIVE
------------
REMEDIES
Section 501. Events of Default.
------------------
"Event of Default", wherever used herein, means any one of the
following events which has occurred and is continuing (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of
ARTICLE TWELVE or be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) there shall be a default in the payment of any interest on any
Security (including Additional Interest and Additional Amounts) when it becomes
due and payable, and such default shall continue for a period of 30 days;
(b) there shall be a default in the payment of the principal of (or
premium, if any) on any Security at its Maturity (upon acceleration, required
repurchase or otherwise);
(c) (i) there shall be a default in the performance, or breach, of any
covenant or agreement of the Company under this Indenture (other than a default
in the performance or breach of a covenant or agreement which is specifically
dealt with in clause (a) or (b) or in clause (ii) or (iii) of this clause (c))
and such default or breach shall continue for a period of 60 days after written
notice has been given, by certified mail, (1) to the Company by the Trustee or
(z) to the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Outstanding Securities; (ii) there shall be a default in
the performance or breach of the provisions of ARTICLE EIGHT; or (iii) the
Company shall have failed to make or consummate an offer to repurchase
Securities upon a Fundamental Change in accordance with the provisions of
ARTICLE FOURTEEN;
(d) there shall have occurred a default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness of the Company or any of its Subsidiaries whether
such Indebtedness now exists, or is created after
60
the date of this Indenture, which default (i) involves the failure to pay
principal of or any premium or interest on such Indebtedness when such
Indebtedness becomes due and payable at the stated maturity thereof, and such
default shall continue after any applicable grace period or (ii) results in the
acceleration of such Indebtedness prior to the stated maturity thereof without
cured, waived or annulled for a period of 20 days after written notice (1) to
the Company by the Trustee or (2) to the Company by the Holders of at least 25%
in the aggregate principal amount of the Outstanding Securities, and, in the
case of (i) or (ii), the principal amount of such Indebtedness, together with
the principal amount of any other Indebtedness so unpaid at its stated maturity
or the stated maturity of which has been so accelerated, aggregates $10,000,000
or more;
(e) there shall be a failure by the Company or any of its Subsidiaries to
pay final judgments aggregating in excess of $10,000,000, which judgments are
not paid, discharged or stayed for a period of 60 days;
(f) there shall have been the entry by a court of competent jurisdiction
of (i) a decree or order for relief in respect of the Company or any Subsidiary
in an involuntary case or proceeding under any applicable Bankruptcy Law or (ii)
a decree or order adjudging the Company or any Subsidiary bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Subsidiary under any applicable federal or state
law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or any Subsidiary or of
any substantial part of their respective properties, or ordering the winding up
or liquidation of their affairs, and any such decree or order for relief shall
continue to be in effect, or any such other decree or order shall be unstayed
and in effect, for a period of 60 consecutive days; or
(g) (i) the Company or any Subsidiary commences a voluntary case or
proceeding under any applicable Bankruptcy Law or any other case or proceeding
to be adjudicated bankrupt or insolvent,
(ii) the Company or any Subsidiary consents to the entry of a
decree or order for relief in respect of the Company or such
Subsidiary in an involuntary case or proceeding under any applicable
Bankruptcy Law or to the commencement of any bankruptcy or insolvency
case or proceeding against it,
(iii) the Company or any Subsidiary files a petition or answer or
consent seeking reorganization or relief under any applicable federal
or state law,
(iv) the Company or any Subsidiary (1) consents to the filing of
such petition or the appointment of, or taking possession by, a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or such Subsidiary or of any
substantial part of its respective properties, (2) makes an assignment
for the benefit of creditors or (3) admits in writing its inability to
pay its debts generally as they become due, or
61
(v) the Company or any Subsidiary takes any corporate action
authorizing any such actions in this paragraph (g).
The Company shall deliver to the Trustee within five Business Days
after the occurrence thereof, written notice, in the form of an Officers'
Certificate, of any Default, its status and what action the Company is taking or
proposes to take with respect thereto. Unless the Corporate Trust Office of the
Trustee has received written notice of an Event of Default of the nature
described in this Section 501, the Trustee shall not be deemed to have knowledge
of such Event of Default for the purposes of ARTICLE FIVE or for any other
purpose.
Section 502. Acceleration of Maturity; Rescission and Annulment.
---------------------------------------------------
If an Event of Default (other than an Event of Default specified in
Sections 501(f) and (g)), shall occur and be continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities
Outstanding may, and the Trustee at the request of the Holders of not less than
25% in aggregate principal amount of the Securities Outstanding shall, declare
an amount equal to the principal amount of the Securities plus accrued and
unpaid cash interest (including Additional Interest and Additional Amounts)
thereon through the date of such declaration to be due and payable immediately,
by a notice in writing to the Company (and to the Trustee if given by the
Holders of the Securities). Thereupon the Trustee may, at its discretion,
proceed to protect and enforce the rights of the Holders of the Securities by
appropriate judicial proceeding. If an Event of Default specified in clause (f)
or (g) of Section 501 occurs and is continuing, then an amount equal to the
principal amount of all the Securities through the occurrence of such event,
together with any accrued and unpaid cash interest (including Additional
Interest and Additional Amounts) through the occurrence of such event, 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.
At any time after such declaration of acceleration has been made but
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this ARTICLE FIVE provided, the Holders of a
majority in aggregate principal amount of the Securities Outstanding, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum sufficient to
pay
(1) all sums paid or advanced by the Trustee under this Indenture and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel,
(2) all overdue interest (including Additional Interest and
Additional Amounts) on all Securities,
(3) the principal amount on any Securities which have become due
otherwise than by such declaration of acceleration and interest (including
Additional Interest and Additional Amounts) thereon at a rate borne by the
Securities, and
62
(4) to the extent that payment of such interest is lawful, interest
upon overdue interest (including Additional Interest and Additional
Amounts) at the rate borne by the Securities; and
(b) all Events of Default, other than the non-payment of the principal
amount and any accrued and unpaid cash interest (including any unpaid Additional
Interest and Additional Amounts) on the Securities which have become due solely
by such declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent Default or impair any right
consequent thereon provided in Section 513.
Section 503. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
--------
The Company covenants that if
(a) default is made in the payment of any interest (including Additional
Interest and Additional Amounts) on any Security when such interest becomes due
and payable and such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of or premium, if any,
on any Security at the Stated Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, subject to ARTICLE TWELVE, the whole amount then due
and payable on such Securities for the principal amount through such date and
premium, if any, and accrued and unpaid cash interest (including Additional
Interest and Additional Amounts), with interest upon the overdue principal and
premium, if any, and, to the extent that payment of such interest shall be
legally enforceable, upon overdue installments of interest, at the rate borne by
the Securities; and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture by such appropriate private or judicial proceedings
as the Trustee shall deem most effectual to protect and enforce such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein or therein, or
to enforce any other proper remedy, subject however to Section 512.
63
Section 504. Trustee May File Proofs of Claim.
---------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor, upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal amount, interest,
Additional Interest, Additional Amounts or the Fundamental Change Repurchase
Price of the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of the principal
amount, interest, Additional Interest, Additional Amounts, or the Fundamental
Change Repurchase Price of the Securities owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) subject to ARTICLE TWELVE, to collect and receive any moneys,
securities or other property payable or deliverable upon any conversion or
exchange of Securities or upon 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 the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims without Possession of Securities.
------------------------------------------------------------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
and as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
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Section 506. Application of Money Collected.
-------------------------------
Any money collected by the Trustee pursuant to this ARTICLE FIVE or
otherwise on behalf of the Holders or the Trustee pursuant to this ARTICLE FIVE,
or through any proceeding or any arrangement or restructuring in anticipation or
in lieu of any proceeding contemplated by this ARTICLE FIVE shall be applied,
subject to applicable law, in the following order, at the date or dates fixed by
the Trustee and, in case of the distribution of such money on account of
principal, premium, if any, or interest, upon presentation of the Securities and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
606;
SECOND: Subject to ARTICLE TWELVE, to the payment of the amounts then
due and unpaid upon the Securities for principal amount, interest, Additional
Interest, Additional Amounts, or the Fundamental Change Repurchase Price of the
Securities, in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal, premium, if any, and
interest; and
THIRD: Subject to ARTICLE TWELVE, the balance, if any, to the Person
or Persons entitled thereto, including the Company, provided that all sums due
and owing to the Holders and the Trustee have been paid in full as required by
this Indenture.
Section 507. Limitation on Suits.
--------------------
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
trustee hereunder;
(c) such Holder or Holders have offered to the Trustee an indemnity
satisfactory to the Trustee against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount at Maturity of the Outstanding Securities;
65
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner provided in
this Indenture and for the equal and ratable benefit of all the Holders.
Section 508. Unconditional Right of Holders to Receive Principal, Premium
------------------------------------------------------------
and Interest.
-------------
Notwithstanding any other provision in this Indenture, but subject to
ARTICLE TWELVE, the Holder of any Security shall have the right on the terms
stated herein, which is absolute and unconditional, to receive payment of the
principal amount or the Fundamental Change Repurchase Price of the Securities
and (subject to Section 309) interest (including Additional Interest and
Additional Amounts on such Security ) on the Stated Maturity expressed in such
Security (or, in the case of repurchase on the repurchase date), and to convert
the Securities in accordance with ARTICLE FOUR hereof, and to institute suit for
the enforcement of any such payment or the right to convert, and such rights
shall not be impaired without the consent of such Holder, subject to ARTICLE
TWELVE.
Section 509. Restoration of Rights and Remedies.
-----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
-------------------------------
No right or remedy herein conferred upon or reserved to the Trustee or
to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
-----------------------------
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this ARTICLE FIVE or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
66
Section 512. Control by Holders.
-------------------
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any rule of law or with
this Indenture or expose the Trustee to personal liability; and
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
This Section 512 shall be in lieu of Section 316(a)(1)(A) of the Trust
Indenture Act and such Section 316(a)(1)(A) is hereby expressly excluded from
this Indenture, as permitted by the Trust Indenture Act.
Section 513. Waiver of Past Defaults.
------------------------
The Holders of not less than a majority in aggregate Principal Amount
of the Outstanding Securities may on behalf of the Holders of all the Securities
waive any past Default hereunder and its consequences, except a Default
(a) in the payment of the principal amount of, premium, if any, or any
accrued and unpaid interest (including Additional Interest and Additional
Amounts) on any Security or Fundamental Change Repurchase Price; or
(b) in respect of a failure to convert any security into Common Stock,
cash, or a combination of cash and Common Stock as provided in ARTICLE FOUR or
elsewhere in this Indenture; or
(c) in respect of a covenant or a provision hereof which under ARTICLE
NINE cannot be modified or amended without the consent of a higher percentage of
the principal amount of the Outstanding Securities affected.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
This Section 513 shall be in lieu of Section 316(a)(1)(B) of the Trust
Indenture Act and such Section 316(a)(1)(B) is hereby expressly excluded from
this Indenture, as permitted by the Trust Indenture Act.
67
Section 514. Undertaking for Costs.
----------------------
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 514 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder pursuant to Section 508 hereof.
Section 515. Waiver of Stay, Extension or Usury Laws.
----------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive the Company from paying all or any portion of the principal
amount, Fundamental Change Repurchase Price, plus accrued and unpaid interest
(including Additional Interest and Additional Amounts) on the Securities
contemplated herein or in the Securities or which may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
-----------
THE TRUSTEE
Section 601. Notice of Defaults.
-------------------
Within 30 days after the occurrence of any Default, the Trustee shall
transmit by mail to all Holders, as their names and addresses appear in the
Security Register, notice of such Default hereunder known to the Trustee, unless
such Default shall have been cured or waived; provided, however, that, except in
the case of a Default in the payment of the principal of, premium, if any, or
interest on any Security, the Trustee shall be protected in withholding such
notice if and so long as a trust committee of Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interest of the Holders.
Section 602. Certain Rights of Trustee.
--------------------------
Subject to the provisions of Trust Indenture Act Sections 315(a)
through 315(d):
68
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of Indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) the Trustee may consult with counsel and any written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon in accordance with such advice or Opinion
of Counsel;
(d) 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 therein or thereby in
compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or omitted by it
in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture other than any liabilities
arising out of the negligence of the Trustee;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, approval,
appraisal, bond, debenture, note, coupon, security or other paper or document;
provided, that the Trustee in its discretion may make such further inquiry or
investigation into such facts or matters as it may deem 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;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) 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;
(i) 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, except as
otherwise provided herein;
(j) money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law, except as otherwise provided herein;
69
(k) if a Default or 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 thereof as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
Section 603. Trustee Not Responsible for Recitals, Dispositions of
-----------------------------------------------------
Securities or Application of Proceeds Thereof.
----------------------------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements made by
it in any Statement of Eligibility and Qualification on Form T-1 supplied to the
Company are true and accurate subject to the qualifications set forth therein.
The Trustee shall not be accountable for the use or application by the Company
of Securities or the proceeds thereof.
The Company will be responsible for making all calculations called for
under this Security. These calculations include, but are not limited to,
determinations of accrued interest, including Additional Interest and Additional
Amounts, the Fundamental Change Repurchase Price, the Sale Price of the
Company's Common Stock and other calculations related to a Holder's conversion
rights. The Company will make these calculations in good faith and, absent
manifest error, the calculations will be final and binding on any Holder of this
Security. The Company will provide a schedule of its calculations to each of the
Trustee and the Conversion Agent, and each of the Trustee and the Conversion
Agent is entitled to rely upon the accuracy of such calculations with
independent verification. The Trustee may forward the Company's calculations to
any Holder of this Security upon request.
Section 604. Trustee and Agents May Hold Securities; Collections; etc.
---------------------------------------------------------
The Trustee, any Paying Agent, Security Registrar, Conversion Agent,
Bid Solicitation Agent or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities, with the same
rights it would have if it were not the Trustee, Paying Agent, Security
Registrar, Conversion Agent, Bid Solicitation Agent or such other agent and,
subject to Trust Indenture Act Sections 310 and 311, may otherwise deal with the
Company and receive, collect, hold and retain collections from the Company with
the same rights it would have if it were not the Trustee, Paying Agent, Security
Registrar, Conversion Agent, Bid Solicitation Agent or such other agent.
Section 605. Money Held in Trust.
--------------------
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
mandatory provisions of law. The Trustee may invest all moneys received by the
Trustee, until used or applied as herein provided, in Temporary
70
Cash Investments in accordance with the written directions of the Company. The
Trustee shall not be liable for any losses incurred in connection with any
investments made in accordance with this Section 605, unless the Trustee acted
with gross negligence or in bad faith. With respect to any losses on investments
made under this Section 605, the Company is liable for the full extent of any
such loss.
Section 606. Compensation and Indemnification of Trustee, Conversion
-------------------------------------------------------
Agent and Bid Solicitation Agent and the Trustee's Prior Claim.
---------------------------------------------------------------
The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such reasonable compensation for all
services rendered by it hereunder (which shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust) set forth
in a letter agreement executed by the Company and the Trustee, as such agreement
may be amended or supplemented, and the Company covenants and agrees to pay or
reimburse the Trustee and each predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on behalf
of it in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Company also covenants to indemnify the Trustee and each predecessor Trustee
for, and to hold it harmless against, any loss, liability, tax, assessment or
other governmental charge (other than taxes applicable to the Trustee's
compensation hereunder) or expense incurred without negligence or bad faith on
such Trustee's part, arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder and such Trustee's
duties hereunder, including enforcement of this Indenture and also including any
liability which the Trustee may incur as a result of failure to withhold, pay or
report any tax, assessment or other governmental charge, and the costs and
expenses of defending itself against or investigating any claim of liability
(whether asserted by any Holder, the Company or any other Person) in connection
with the exercise or performance of any of its powers or duties under this
Indenture. The obligations of the Company under this Section 606 to compensate
and indemnify the Trustee and each predecessor Trustee and to pay or reimburse
the Trustee and each predecessor Trustee for expenses, disbursements and
advances shall constitute an additional obligation hereunder and shall survive
the satisfaction and discharge of this Indenture.
The Company covenants and agrees to pay to the Conversion Agent from
time to time, and the Trustee shall be entitled to, such reasonable compensation
for all services rendered by it hereunder (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
to the extent set forth in a letter agreement executed by the Company and the
Conversion Agent, as such agreement may be amended or supplemented, and the
Company covenants and agrees to pay or reimburse the Conversion Agent and each
predecessor Conversion Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by or on behalf of it in accordance
with any of the provisions of this Indenture (including the reasonable
compensation and the expenses and disbursements of its counsel and of all agents
and other persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify the Conversion Agent and each predecessor
Conversion Agent for, and to
71
hold it harmless against, any loss, liability, tax, assessment or other
governmental charge (other than taxes applicable to the Conversion Agent's
compensation hereunder) or expense incurred without negligence or bad faith on
such Conversion Agent's part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and such
Conversion Agent's duties hereunder, including enforcement of this Indenture and
also including any liability which the Conversion Agent may incur as a result of
failure to withhold, pay or report any tax, assessment or other governmental
charge, and the costs and expenses of defending itself against or investigating
any claim of liability (whether asserted by any Holder, the Company or any other
Person) in connection with the exercise or performance of any of its powers or
duties under this Indenture. The obligations of the Company under this Section
606 to compensate and indemnify the Conversion Agent and each predecessor
Conversion Agent and to pay or reimburse the Conversion Agent and each
predecessor Conversion Agent for expenses, disbursements and advances shall
constitute an additional obligation hereunder and shall survive the satisfaction
and discharge of this Indenture.
All payments and reimbursements pursuant to this Section 606 shall be
made with interest at the rate borne by the Securities.
As security for the performance of the obligations of the Company
under this Section 606, the Trustee shall have a Lien prior to the Securities
upon all property and funds held or collected by the Trustee, except funds held
in trust for the payment of principal of (and premium, if any) or interest on
particular Securities. The Trustee's right to receive payment of any amounts due
under this Section 606 shall not be subordinate to any other liability or
indebtedness of the Company (even though the Securities may be so subordinate),
and the Securities shall be subordinate to the Trustee's right to receive such
payment.
Section 607. Conflicting Interests.
----------------------
The Trustee shall comply with the provisions of Section 310(b) of the
Trust Indenture Act.
Section 608. Corporate Trustee Required; Eligibility.
----------------------------------------
There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under Trust Indenture Act Section 310(a)(1) and which
shall have a combined capital and surplus of at least $100,000,000, to the
extent there is an institution eligible and willing to serve. The Trustee shall
be a participant in the Depository Trust Company and FAST distribution systems.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section 608, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 608, the Trustee
shall resign immediately in the manner and with the effect hereinafter specified
in this ARTICLE SIX. The Corporate Trust Office shall initially be located at
▇▇▇▇▇ Fargo Bank, National Association, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department.
72
Section 609. Resignation and Removal; Appointment of Successor Trustee.
----------------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this ARTICLE SIX shall become effective until the
acceptance of appointment by the successor trustee under Section 610.
(b) The Trustee, or any trustee or trustees hereafter appointed, may at
any time resign by giving 30 days written notice thereof to the Company. Upon
such resignation, the Company shall promptly appoint a successor trustee by
written instrument executed by authority of the Board of Directors of the
Company, a copy of which shall be delivered to the resigning Trustee and a copy
to the successor trustee. If an instrument of acceptance by a successor trustee
shall not have been delivered to the Trustee within 60 days after the giving of
such notice of resignation, the resigning Trustee may, or any Holder who has
been a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper, appoint a successor
trustee.
(c) The Trustee may be removed at any time by an Act of the Holders of not
less than a majority in aggregate principal amount of the Outstanding
Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of Trust
Indenture Act Section 310(b) after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Security for at least
six months, or
(2) the Trustee shall cease to be eligible under Section 608 and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 514, the Holder of any Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(e) If the Trustee shall be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause, the Company, by a
Board Resolution, shall promptly appoint a successor trustee. If, within one
year after such removal or incapability, or the occurrence of such vacancy, a
successor trustee shall be appointed by Act of the Holders of a
73
majority in principal amount of the Outstanding Securities delivered to the
Company and the retiring Trustee, the successor trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor trustee
and supersede the successor trustee appointed by the Company. If no successor
trustee shall have been so appointed by the Company or the Holders of the
Securities and accepted appointment in the manner hereinafter provided, the
Holder of any Security who has been a bona fide Holder for at least six months
may, subject to Section 514, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of
Securities as their names and addresses appear in the Security Register. Each
notice shall include the name of the successor trustee and the address of its
Corporate Trust Office or agent hereunder.
Section 610. Acceptance of Appointment by Successor.
---------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee as if originally named as Trustee hereunder;
but, nevertheless, on the written request of the Company or the successor
trustee, upon payment of its charges then unpaid, such retiring Trustee shall,
pay over to the successor trustee all moneys at the time held by it hereunder
and shall execute and deliver an instrument transferring to such successor
trustee all such rights, powers, duties and obligations. Upon request of any
such successor trustee, the Company shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor trustee all
such rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a
prior claim upon all property or funds held or collected by such Trustee or such
successor trustee to secure any amounts then due such Trustee pursuant to the
provisions of Section 606.
No successor Trustee with respect to the Securities shall accept
appointment as provided in this Section 610 unless at the time of such
acceptance such successor trustee shall be eligible to act as trustee under the
provisions of Trust Indenture Act Section 310(a) and this ARTICLE SIX and shall
have a combined capital and surplus of at least $100,000,000.
Upon acceptance of appointment by any successor Trustee as provided in
this Section 610, the Company shall give notice thereof to the Holders of the
Securities, by mailing such notice to such Holders at their addresses as they
shall appear on the Security Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
609. If the Company fails to give such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be given at the expense of the Company.
74
Section 611. Merger, Conversion, Consolidation or Succession to Business.
------------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be eligible under Trust Indenture Act Section
310(a) and this ARTICLE SIX and shall have a combined capital and surplus of at
least $100,000,000, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have; provided that the right to adopt
the certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
Section 612. Preferential Collection of Claims Against Company.
--------------------------------------------------
If and when the Trustee shall be or become a creditor of the Company
(or other obligor under the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor). A Trustee who has resigned or been
removed shall be subject to the Trust Indenture Act Section 311(a) to the extent
indicated therein.
ARTICLE SEVEN
-------------
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
----------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 15 days after each Regular Record Date, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Company of any such request, a list of similar form
and content as of a date not more than 15 days prior to the time such list is
furnished;
75
provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.
Section 702. Disclosure of Names and Addresses of Holders.
---------------------------------------------
Holders may communicate pursuant to Trust Indenture Act Section 312(b)
with other Holders with respect to their rights under this Indenture or the
Securities, and the Trustee shall comply with Trust Indenture Act Section
312(b). The Company, the Trustee, the Security Registrar and any other Person
shall have the protection of Trust Indenture Act 312(c). Every Holder of
Securities, by receiving and holding the same, agrees with the Company and the
Trustee that neither the Company nor the Trustee nor any agent of either of them
shall be held accountable by reason of the disclosure of any information as to
the names and addresses of the Holders in accordance with Trust Indenture Act
Section 312, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under Trust Indenture Act Section 312.
Section 703. Reports by Trustee.
-------------------
Within 60 days after May 15 of each year commencing with the first May
15 after the first issuance of Securities, the Trustee shall transmit by mail to
all Holders, as their names and addresses appear in the Security Register, as
provided in Trust Indenture Act Section 313(c), a brief report dated as of such
May 15 in accordance with and to the extent required by Trust Indenture Act
Section 313(a).
Section 704. Reports by Company.
-------------------
The Company shall:
(a) file with the Trustee, within 15 days after the Company is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company
is not required to file information, documents or reports pursuant to either of
said Sections, then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents and
reports which may be required pursuant to Section 13 of the Exchange Act in
respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance with the rules
and regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company,
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and
76
(c) transmit or cause to be transmitted by mail to all Holders, as their
names and addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, in the manner and to the extent provided in
Trust Indenture Act Section 313(c), such summaries of any information, documents
and reports required to by filed by the Company, pursuant to Subsections (a) and
(b) of this Section 704 as may be required by rules and regulations prescribed
from time to time by the Commission.
Notwithstanding the foregoing, but solely to the extent permitted by
the Trust Indenture Act, if the Company merges or consolidates with or sells,
assigns, transfers, conveys or otherwise disposes of all or substantially all of
its assets to a direct or indirect Wholly-Owned Subsidiary of the Company in a
transaction or series of transactions in which such Subsidiary assumes all or
substantially all of the Indebtedness of the Company (other than the Securities)
and the Company remains the obligor on the Securities, and as a result of such
transactions the Company and this Wholly-Owned Subsidiary are permitted by the
rules and regulations of the Commission to file and/or submit periodic reports
collectively on behalf of the consolidated Company, then in such event the
Company shall be deemed to comply with this ARTICLE SEVEN to the extent the
filings by the Company together with such Wholly-Owned Subsidiary comply with
the rules and regulations of the Commission.
ARTICLE EIGHT
-------------
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 801. Company May Consolidate, etc., Only on Certain Terms.
-----------------------------------------------------
(a) The Company shall not, in a single transaction or through a series of
related transactions, consolidate with or merge with or into any other Person or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets as an entirety to any Person or
group of affiliated Persons, or permit any of its Subsidiaries to enter into any
such transaction or transactions if such transaction or transactions, in the
aggregate, would result in a sale, assignment, conveyance, transfer, lease or
disposal of all or substantially all of the properties and assets of the Company
and its Subsidiaries on a consolidated basis to any other Person or group of
affiliated Persons, unless at the time and after giving effect thereto:
(1) either (i) the Company shall be the continuing corporation, or
(ii) the Person (if other than the Company) formed by such consolidation or
into which the Company is merged or the Person which acquires by sale,
assignment, conveyance, transfer, lease or disposition of all or
substantially all of the properties and assets of the Company and its
Subsidiaries on a consolidated basis (the "Surviving Entity") shall be a
corporation, a limited liability company, limited partnership, partnership,
trust or other entity duly organized and validly existing under the laws of
the United States of America, any state thereof or the District of Columbia
and such Person assumes, by a supplemental indenture in a form reasonably
satisfactory to the Trustee, all the obligations of the Company under the
Securities and this Indenture and the Registration Rights Agreement, and
this Indenture and the Registration Rights Agreement shall remain in full
force and effect;
77
(2) immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and
(3) the Company or the Surviving Entity shall have delivered, or
caused to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion of
Counsel, each to the effect that such consolidation, merger, transfer,
sale, assignment, conveyance, lease or other transaction and the
supplemental indenture in respect thereto comply with this Indenture and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
Notwithstanding the foregoing, the Company may merge or consolidate
with or into to sell, assign, transfer, convey or otherwise dispose of all or
substantially all of its assets to a direct or indirect Wholly-Owned Subsidiary
of the Company without complying with the above provisions in a transaction or
series of transactions in which the Company remains the obligor on the
Securities.
Section 802. Successor Substituted.
----------------------
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of the Company in accordance with Section 801, the successor Person
formed by such consolidation or into which the Company is merged or the
successor Person to which such sale, assignment, conveyance, transfer, lease or
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture, the Registration
Rights Agreement and the Securities with the same effect as if such successor
had been named as the Company herein and in the Securities. When a successor
assumes all the obligations of its predecessor under this Indenture and the
Securities, the predecessor shall be released from those obligations; provided
that in the case of a transfer by lease, the predecessor shall not be released
from the payment of principal and interest (including Additional Interest and
Additional Amounts), if any, on the Securities and the Registration Rights
Agreement.
ARTICLE NINE
------------
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without Consent of
---------------------------------------------------------
Holders.
--------
Without the consent of any Holders, the Company when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, or agreements or other
instruments, in form and substance satisfactory to the Trustee, for any of the
following purposes:
(a) to evidence the succession of another Person to the Company or any
other obligor upon the Securities, and the assumption by any such successor of
the covenants of the Company
78
or such obligor herein and in the Securities, in each case in compliance with
the provisions of this Indenture;
(b) to add to the covenants of the Company or any other obligor upon the
Securities for the benefit of the Holders, or to surrender any right or power
herein conferred upon the Company or any other obligor upon the Securities, as
applicable, herein or in the Securities;
(c) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture or the Securities; provided that, in each case, such provisions
shall not adversely affect the interests of the Holders;
(d) to comply with the requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture Act,
as contemplated by Section 905 or otherwise;
(e) to add a guarantor;
(f) to evidence and provide the acceptance of the appointment of a
successor trustee hereunder;
(g) to mortgage, pledge, hypothecate or grant a security interest in favor
of the Trustee for the benefit of the Holders as additional security for the
payment and performance of the Indenture Obligations, in any property or assets,
including any which are required to be mortgaged, pledged or hypothecated, or in
which a security interest is required to be granted to the Trustee pursuant to
this Indenture or otherwise; or
(h) to provide for uncertificated Securities in place of or in addition to
certificated Securities.
Section 902. Supplemental Indentures and Agreements with Consent of
------------------------------------------------------
Holders.
--------
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto or agreements or other instruments in form and substance
satisfactory to the Trustee for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders under this Indenture or the
Securities; provided, however, that no such supplemental indenture, agreement or
instrument shall, without the consent of the Holder of each Outstanding Security
affected thereby:
(a) change the Stated Maturity of the principal of, or any installment of
interest (including Additional Interest and Additional Amounts) on, any
Security, or reduce the principal amount at Maturity thereof or the rate of
interest (including Additional Interest and Additional Amounts) on any Security
or change the coin or currency in which the principal of any Security or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement
79
of any such payment after the Stated Maturity thereof or with respect to
conversion of the Securities;
(b) amend, change or modify the obligation of the Company to make and
consummate an offer to repurchase Securities upon a Fundamental Change in the
event of a Fundamental Change in accordance with ARTICLE FOURTEEN, including
amending, changing or modifying any definitions with respect thereto;
(c) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver or
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;
(d) modify any of the provisions of this Section 902 or Sections 513 or
1010, except to increase the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such actions or to
provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Security affected thereby;
(e) except as otherwise permitted under ARTICLE EIGHT, consent to the
assignment or transfer by the Company of any of its rights and obligations under
this Indenture; or
(f) amend or modify any of the provisions of this Indenture relating to
the subordination of the Securities in any manner adverse to the Holders of the
Securities;
(g) adversely affect the right of Holders to convert Securities other than
as provided in this Indenture; or
(h) reduce the principal amount or the Fundamental Change Repurchase Price
of any Security, or amend or modify in any manner adverse to the Holders of
Securities the Company's obligations to make such payments, whether through an
amendment or waiver of provisions in the covenants, definitions or otherwise.
Upon the written request of the Company, accompanied by a copy of a
Board Resolution authorizing the execution of any such supplemental indenture,
and upon the filing with the Trustee of evidence of the consent of Holders as
aforesaid, the Trustee shall, subject to Section 903, join with the Company in
the execution of such supplemental indenture.
It shall not be necessary for any Act of Holders under this Section
902 to approve the particular form of any proposed supplemental indenture or
agreement or instrument, but it shall be sufficient if such Act shall approve
the substance thereof.
Section 903. Execution of Supplemental Indentures and Agreements.
----------------------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture, agreement or instrument permitted by this ARTICLE NINE
or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and
80
(subject to Trust Indenture Act Section 315(a) through 315(d) and Section 602
hereof) shall be fully protected in relying upon, an Opinion of Counsel and an
Officers' Certificate stating that the execution of such supplemental indenture,
agreement or instrument is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture, agreement or instrument which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
----------------------------------
Upon the execution of any supplemental indenture under this ARTICLE
NINE, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
------------------------------------
Every supplemental indenture executed pursuant to this ARTICLE NINE shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 906. Reference in Securities to Supplemental Indentures.
---------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this ARTICLE NINE may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
ARTICLE TEN
-----------
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
-------------------------------------------
Subject to the provisions of ARTICLE TWELVE, the Company will duly and
punctually pay the principal amount, interest (including Additional Interest and
Additional Amounts) on the Securities in accordance with the terms of the
Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
--------------------------------
The Company will maintain an office or agency where Securities may be
presented or surrendered for purchase or payment. The Company also will maintain
an office or agency where Securities may be surrendered for registration of
transfer, or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location and any change in the
location of any such offices or agencies. If at any time the Company shall fail
to
81
maintain any such required offices or agencies or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the office of the agent of the Trustee
described above and the Company hereby appoints such agent as its agent to
receive all such presentations, surrenders, notices and demands.
The Company will also maintain an office or agency where Securities
may be presented for conversion (which may be the office of the Trustee
described above if consented to by the Trustee). The Company will give written
notice to the Trustee of the location and any change in the office. If at any
time the Company shall fail to maintain such office, Securities may be presented
for conversion at the office of the Company.
The Company may from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes, and may from time to time rescind such designation. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and any change in the location of any such office or agency.
Section 1003. Money for Security Payments to Be Held in Trust.
------------------------------------------------
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of, premium, if any, or interest on
any of the Securities, segregate and hold in trust for the benefit of the
Holders entitled thereto a sum sufficient to pay the principal, premium, if any,
or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
If the Company is not acting as Paying Agent, the Company will, before
each due date of the principal of, premium, if any, or interest on any
Securities, deposit with a Paying Agent a sum in same day funds sufficient to
pay the principal, premium, if any, or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal, premium
or interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will cause
each Paying Agent other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee, subject
to the provisions of this Section 1003, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of, premium,
if any, or interest on Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal, premium,
if any, or interest;
(c) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
82
(d) acknowledge, accept and agree to comply in all aspects with the
provisions of this Indenture relating to the duties, rights and disabilities of
such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee shall serve as the Paying Agent.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal and premium, if any, or interest has become due and payable shall
promptly be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in The New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will promptly be repaid to the Company.
Section 1004. Corporate Existence.
Subject to ARTICLE EIGHT, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence and related rights and franchises (charter and statutory) of the
Company and each Subsidiary; provided, however, that the Company shall not be
required to preserve any such right or franchise or the corporate existence of
any such Subsidiary if the Board of Directors of the Company shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries as a whole and that the loss
thereof would not reasonably be expected to have a material adverse effect on
the ability of the Company to perform its obligations hereunder; and provided,
further, however, that the foregoing shall not prohibit a sale, transfer or
conveyance of a Subsidiary or any of its assets in compliance with the terms of
this Indenture.
Section 1005. Payment of Taxes and Other Claims.
----------------------------------
The Company will pay or discharge or cause to be paid or discharged,
on or before the date the same shall become due and payable, (a) all taxes,
assessments and
83
governmental charges levied or imposed upon the Company or any Subsidiary shown
to be due on any return of the Company or any Subsidiary or otherwise assessed
or upon the income, profits or property of the Company or any Subsidiary if
failure to pay or discharge the same could reasonably be expected to have a
material adverse effect on the ability of the Company to perform its obligations
hereunder and (b) all lawful claims for labor, materials and supplies, which, if
unpaid, would by law become a Lien upon the property of the Company or any
Subsidiary, except for any Lien if failure to pay or discharge the same could
reasonably be expected to have a material adverse effect on the ability of the
Company to perform its obligations hereunder; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings properly
instituted and diligently conducted and in respect of which appropriate reserves
(in the good faith judgment of management of the Company) are being maintained
in accordance with generally accepted accounting principles consistently
applied.
Section 1006. Maintenance of Properties.
--------------------------
The Company will cause all material properties owned by the Company or
any Subsidiary or used or held for use in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order (ordinary wear and tear excepted) and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be consistent with sound business practice and necessary so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section 1006 shall prevent the Company from discontinuing the maintenance of any
of such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary and
not reasonably expected to have a material adverse effect on the ability of the
Company to perform its obligations hereunder.
Section 1007. Insurance.
----------
The Company will at all times keep all of its and its Subsidiaries'
properties which are of an insurable nature insured with insurers, believed by
the Company to be responsible, against loss or damage to the extent that
property of similar character is usually so insured by corporations similarly
situated and owning like properties.
Section 1008. Provision of Financial Statements.
----------------------------------
(a) The Company shall comply with Section 704 of this Indenture.
(b) So long as any of the Securities remain outstanding, the Company will
make available to any prospective purchaser of Securities or beneficial owner of
Securities in connection with any sale of Securities Rule 144A Information,
until such time as the holders of Securities have disposed of such Securities
pursuant to an effective registration statement under the Securities Act.
84
Section 1009. Statement by Officers as to Default.
------------------------------------
(a) The Company will deliver to the Trustee, on or before a date not more
than 60 days after the end of each fiscal quarter and not more than 120 days
after the end of each fiscal year of the Company ending after the date hereof, a
written statement signed by two executive officers of the Company, one of whom
shall be the principal executive officer, principal financial officer or
principal accounting officer of the Company, stating whether or not, after a
review of the activities of the Company during such year or such quarter and of
the Company's performance under this Indenture, to the best knowledge, based on
such review, of the signers thereof, the Company has fulfilled all its
obligations and is in compliance with all conditions and covenants under this
Indenture throughout such year or quarter, as the case may be, and, if there has
been a Default specifying each Default and the nature and status thereof.
(b) When any Default or Event of Default has occurred and is continuing,
or if the Trustee or any Holder or the trustee for or the holder of any other
evidence of Indebtedness of the Company or any Subsidiary gives any notice or
takes any other action with respect to a claimed default (other than with
respect to Indebtedness in the principal amount of less than $10,000,000), the
Company shall deliver to the Trustee by registered or certified mail or by
telegram, telex or facsimile transmission followed by hard copy an Officers'
Certificate specifying such Default, Event of Default, notice or other action
within five Business Days of its occurrence.
Section 1010. Waiver of Certain Covenants.
----------------------------
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1006 and 1007, if, before or
after the time for such compliance, the Holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding shall, by
Act of such Holders, waive such compliance in such instance with such covenant
or condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.
ARTICLE ELEVEN
--------------
NO REDEMPTION OF SECURITIES
Section 1101. No Rights of Redemption.
------------------------
The Securities may not be redeemed, at the Company's option, in whole
or from time to time in part, for cash, at any time. No sinking fund is provided
for the Securities.
85
ARTICLE TWELVE
--------------
RANKING
Section 1201. Ranking.
--------
This Security constitutes a senior unsecured general obligation of the
Company, ranking equally with other existing and future senior unsecured
Indebtedness the Company has incurred or may incur, ranking senior in right of
payment to any future Indebtedness that is expressly made subordinate to the
Securities and ranking subordinate to secured Indebtedness the Company has
incurred or guaranteed Indebtedness the Company has incurred.
ARTICLE THIRTEEN
----------------
SATISFACTION AND DISCHARGE
Section 1301. Satisfaction and Discharge of Indenture.
----------------------------------------
When (1) the Company shall deliver to the Trustee for cancellation all
Securities theretofore authenticated (other than any Securities which have been
destroyed, lost or stolen and in lieu of or in substitution for which other
Securities shall have been authenticated and delivered) and not theretofore
canceled, or (2) all the Securities not theretofore canceled or delivered to the
Registrar for cancellation shall have (a) been deposited for conversion and the
Company shall deliver to the Holders shares of Common Stock (or cash or a
combination of cash or Common Stock at the Company's option) sufficient to pay
all amounts owing in respect of all Securities (other than any Securities which
shall have been mutilated, destroyed, lost or stolen and in lieu of or in
substitution for which other Securities shall have been authenticated and
delivered) not theretofore canceled or delivered to the Registrar for
cancellation or (b) become due and payable on their Stated Maturity or
Fundamental Change Repurchase Date, as applicable, and the Company shall deposit
with the Trustee cash sufficient to pay all amounts owing in respect of all
Securities (other than any Securities which shall have been mutilated,
destroyed, lost or stolen and in lieu of or in substitution for which other
Securities shall have been authenticated and delivered) not theretofore canceled
or delivered to the Registrar for cancellation, including the principal amount
and interest (including Additional Interest and Additional Amounts, if any)
accrued and unpaid to such Stated Maturity, Fundamental Change Repurchase Date,
as the case may be, and if in either case (1) or (2) the Company shall also pay
or cause to be paid all other sums payable hereunder by the Company, then the
Indenture with respect to the Securities shall cease to be of further effect
(except as to (i) remaining rights of registration of transfer, substitution and
exchange and conversion of Securities; (ii) rights hereunder of Holders to
receive payments of the amounts then due, including interest and Additional
Interest and Additional Amounts with respect to the Securities and the other
rights, duties and obligations of Holders, as beneficiaries hereof with respect
to the amounts, if any, so deposited with the Trustee; and (iii) the rights,
obligations and immunities of the Trustee, Authenticating Agent, Paying Agent,
Conversion Agent and Registrar under the Indenture with respect to the
Securities), and the Trustee, on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel as required by Section 1303 and
at the cost and
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expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging the Indenture with respect to the Securities.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606 and, if United
States dollars shall have been deposited with the Trustee pursuant to this
Section 1301, the obligations of the Trustee under Section 1302 and the last
paragraph of Section 1003 shall survive.
Subject to the provisions of the last paragraph of Section 1003, all
United States dollars deposited with the Trustee pursuant to Section 1301 shall
be held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture (Including, without limitation, Section 605), to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal of, premium, if any, and interest on the
Securities for whose payment such United States dollars have been deposited with
the Trustee.
Section 1302. Reinstatement.
--------------
If the Trustee or the Paying Agent is unable to apply any money to the
Holders entitled thereto by reason of any order or judgment of any court of
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under the Indenture with respect to the
Securities and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1301 until such time as the Trustee or
the Paying Agent is permitted to apply all such money in accordance with the
Indenture and the Securities to the Holders entitled thereto; provided, however,
that if the Company makes any payment of principal amount or interest (including
Additional Interest or Additional Amounts) of any Securities following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money held by
the Trustee or Paying Agent.
Section 1303. Officers' Certificate; Opinion of Counsel.
------------------------------------------
Upon any application or demand by the Company to the Trustee to take
any action under Section 1301, the Company shall furnish to the Trustee (A) an
Officers' Certificate stating that all conditions precedent, if any, provided
for in the Indenture relating to the proposed action have been complied with and
that such satisfaction and discharge will not result in a breach or violation of
or constitute a default under, this Indenture or any other material agreement or
instrument to which the Company is a party or by which the Company is bound, and
(B) if requested, an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Opinions of counsel required to be delivered under this Section 1303
may have qualifications customary for opinions of the type required and counsel
delivering such Opinions of counsel may rely on certificates of the Company or
government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact, including that various
financial covenants have been complied with.
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ARTICLE FOURTEEN
----------------
REPURCHASE OF SECURITIES AT THE OPTION OF HOLDERS
UPON A FUNDAMENTAL CHANGE
Section 1401. Fundamental Change Put.
-----------------------
(a) In the event that a Fundamental Change shall occur, each Holder shall
have the right, at the Holder's option, but subject to the provisions of Section
1401 hereof, to require the Company to repurchase, and upon the exercise of such
right, the Company shall repurchase, all of such Holder's Securities, or any
portion of the principal amount thereof that is equal to $1,000 or an integral
multiple thereof, as directed by such Holder pursuant to Section 1401, on the
date (the "Fundamental Change Repurchase Date") that is a Business Day no later
than 35 Business Days after the date of notice pursuant to Section 1401(b) of
the occurrence of a Fundamental Change (subject to extension to comply with
applicable law). The Company shall be required to purchase such Securities at a
purchase price in cash equal to 100% of the principal amount plus any accrued
and unpaid interest (including Additional Interest and Additional Amounts) if
any, to, but excluding, the Fundamental Change Repurchase Date (the "Fundamental
Change Repurchase Price"); provided, however, that installments of interest
(including Additional Interest and Additional Amounts) on Securities whose
Maturity is prior to or on the Fundamental Change Repurchase Date shall be
payable to the Holders of such Securities, registered as such on the relevant
Regular Record Date.
(b) On or before the 20/th/ day after the occurrence of a Fundamental
Change, the Company shall mail a written notice of the Fundamental Change to the
Trustee (and the Paying Agent if the Trustee is not then acting as Paying Agent)
and to all Holders at their addresses shown in the Security Register of the
Registrar, and to beneficial owners as required by applicable law. The notice
shall include the form of a Fundamental Change Repurchase Notice to be completed
by the Holder and shall state:
(1) the date of such Fundamental Change and, briefly, the events
causing such Fundamental Change;
(2) the date by which the Fundamental Change Repurchase Notice
pursuant to this Section 1401 must be given;
(3) the Fundamental Change Repurchase Date;
(4) the Fundamental Change Repurchase Price;
(5) the name and address of each Paying Agent and Conversion Agent;
(6) the Conversion Rate and any adjustments thereto;
(7) that Securities as to which a Fundamental Change Repurchase
Notice has been given may be converted into Common Stock pursuant to
ARTICLE FOUR of this
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Indenture only to the extent that the Fundamental Change Repurchase Notice
has been withdrawn in accordance with the terms of this Indenture;
(8) the procedures that the Holder must follow to exercise rights
under this Section 1401 and a brief description of such rights;
(9) that Securities must be surrendered to the Paying Agent to
collect payments of the Fundamental Change Repurchase Price and interest,
if any;
(10) briefly, the conversion rights of the Securities, and that the
Holder must satisfy the requirements set forth in the Indenture in order to
convert the Securities;
(11) the procedures for withdrawing a Fundamental Change Repurchase
Notice, including a form of notice of withdrawal;
(12) that, unless the Company defaults in making payment of such
Fundamental Change Repurchase Price, interest (including Additional
Interest and Additional Amounts), if any, on Securities surrendered for
purchase will cease to accrue on and after the Fundamental Change
Repurchase Date; and
(13) the CUSIP number of the Securities.
At the Company's request, the Trustee or the Paying Agent shall give
such notice in the Company's name and at the Company's expense; provided,
however, that in all cases, the text of such notice shall be prepared by the
Company.
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.
Simultaneously with providing such notice, the Company will publish a
notice containing this information in a newspaper of general circulation in the
City of New York or publish the information on its website or through such other
public medium as the Company may use at that time.
(c) A Holder may exercise its rights specified in subsection (a) of this
Section 1401 upon delivery of a written notice (which shall be in substantially
the form included on the reverse side of the Securities entitled "Option of
Holder to Elect Purchase" 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 "Fundamental Change Repurchase Notice") to any Paying Agent at
any time on or before the 30/th/ Business Day after the date of the Company's
notice of the Fundamental Change (subject to extension to comply with applicable
law).
The Fundamental Change Repurchase Notice delivered by a Holder shall
state (i) if certificated Securities, the certificate number or numbers of the
Security or Securities which
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the Holder will deliver to be purchased (if not certificated, the notice must
comply with appropriate Depositary procedures), (ii) the portion of the
principal amount of the Security which the Holder will deliver to be purchased,
which portion must be $1,000 or an integral multiple thereof, and (iii) that
such Security shall be purchased pursuant to the terms and conditions specified
in the Securities and this Indenture.
Delivery of a Security to the Paying Agent by book-entry transfer or
physical delivery prior to, on or after the Fundamental Change Repurchase Date
(together with all necessary endorsements) at the offices of the Paying Agent is
a condition to receipt by the Holder of the Fundamental Change Repurchase Price
therefor; provided, however, that such Fundamental Change Repurchase Price shall
be so paid pursuant to this Section 1401 only if the Security so delivered to
the Paying Agent shall conform in all respects to the description thereof in the
related Fundamental Change Repurchase Notice, as determined by the Company.
The Company shall purchase from the Holder thereof, pursuant to this
Section 1401, 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 1401 through 1406 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 Fundamental Change Repurchase Notice contemplated by this
subsection (c) shall have the right to withdraw such Fundamental Change
Repurchase 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 Fundamental Change Repurchase
Date by delivery of a written notice of withdrawal to the Paying Agent in
accordance with Section 1402.
A Paying Agent shall promptly notify the Company of the receipt by it
of any Fundamental Change Repurchase Notice or written withdrawal thereof.
Anything herein to the contrary notwithstanding, in the case of Global
Securities, any Fundamental Change Repurchase 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 1402. Effect of Fundamental Change Repurchase Notice.
-----------------------------------------------
Upon receipt by any Paying Agent of the Fundamental Change Repurchase
Notice specified in Section 1401(c), the Holder of the Security in respect of
which such Fundamental Change Repurchase Notice was given shall (unless such
Fundamental Change Repurchase Notice is withdrawn as specified below) thereafter
be entitled to receive the Fundamental Change Repurchase Price with respect to
such Security. Such Fundamental Change Repurchase Price shall be paid to such
Holder promptly following the later of (a) the Fundamental Change Repurchase
Date with respect to such Security (provided the conditions in Section 1401(c)
have been satisfied) and (b) the time of book-entry transfer or delivery of such
Security to a Paying
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Agent by the Holder thereof in the manner required by Section 1401(c).
Securities in respect of which a Fundamental Change Repurchase 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 Fundamental Change Repurchase Notice
unless such Fundamental Change Repurchase Notice has first been validly
withdrawn.
A Fundamental Change Repurchase 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 Fundamental Change Repurchase Date,
specifying (i) 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,
(ii) if certificated Securities have been issued, the certificate numbers of the
withdrawn Securities, or if not certificated, such notice must comply with
appropriate Depositary procedures, and (iii) the principal amount, if any, which
remains subject to the Fundamental Change Repurchase Notice.
Section 1403. Deposit of Fundamental Change Repurchase Price.
-----------------------------------------------
On or before 11:00 a.m., New York City time, on the Fundamental Change
Repurchase Date or the Business Day following the Fundamental Change Repurchase
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 Fundamental Change Repurchase Price of all the Securities or
portions thereof that are to be purchased as of such Fundamental Change
Repurchase Date. The manner in which the deposit required by this Section 1403
is made by the Company shall be at the option of the Company, provided that such
deposit shall be made in a manner such that the Trustee or a Paying Agent shall
have immediately available funds on the Fundamental Change Repurchase Date.
If a Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Fundamental Change Repurchase Price of any Security for
which a Fundamental Change Repurchase Notice has been tendered and not withdrawn
in accordance with this Indenture on the Business Day following the Fundamental
Change Repurchase Date then, on the Fundamental Change Repurchase Date, such
Security will cease to be outstanding and interest, including any Additional
Interest and Additional Amounts, if any, on the Securities will cease to accrue
(whether or not book-entry transfer of the Securities is made or whether or not
the Securities are delivered to the Paying Agent) and the rights of the Holder
in respect thereof shall terminate (other than the right to receive the
Fundamental Change Repurchase Price and any previously accrued and unpaid
interest, Additional Interest and Additional Amounts upon delivery or transfer
of the Securities)). The Company shall publicly announce the principal amount of
Securities purchased as a result of such Fundamental Change on or as soon as
practicable after the Fundamental Change Repurchase Date.
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Section 1404. 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 Fundamental Change
Repurchase 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 1405. Compliance with Securities Laws Upon Purchase of Securities.
------------------------------------------------------------
In connection with any offer to purchase or purchase of Securities
under Section 1401, 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 1401 through 1406 to be exercised in
the time and in the manner specified therein.
Section 1406. Repayment to the Company.
-------------------------
To the extent that the aggregate amount of cash deposited by the
Company pursuant to Section 1403 exceeds the aggregate Fundamental Change
Repurchase Price together with interest (including Additional Interest and
Additional Amounts), if any, thereon of the Securities or portions thereof that
the Company is obligated to purchase, then promptly after the Fundamental Change
Repurchase Date the Trustee or a Paying Agent, as the case may be, shall return
any such excess cash to the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
New Century Financial Corporation, as
Issuer
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice Chairman and Chief Financial
Officer
Attest: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Secretary
▇▇▇▇▇ Fargo Bank, N.A., as Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇
Title: Vice President
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