EXHIBIT 4.9
---------------------------------------------------
STANDARD MANAGEMENT CORPORATION
as Issuer,
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
---------------------------------------------------
INDENTURE
Dated as of
November 30, 2004
---------------------------------------------------
6% CONVERTIBLE NOTES DUE 2008
---------------------------------------------------
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS.......................................................................................... 1
Section 1.01 Definitions............................................................................. 1
ARTICLE 2 ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES..................................... 10
Section 2.01 Designation Amount and Issue of Notes................................................... 10
Section 2.02 Form of Notes........................................................................... 10
Section 2.03 Date and Denomination of Notes; Payments of Interest.................................... 11
Section 2.04 Execution of Notes...................................................................... 12
Section 2.05 Exchange and Registration of Transfer of Notes; Restrictions on Transfer................ 13
Section 2.06 Mutilated, Destroyed, Lost or Stolen Notes.............................................. 17
Section 2.07 Temporary Notes......................................................................... 18
Section 2.08 Cancellation of Notes................................................................... 19
Section 2.09 CUSIP Numbers........................................................................... 19
ARTICLE 3 REDEMPTION OF NOTES................................................................................... 19
Section 3.01 Redemption of Notes at the Option of the Company........................................ 19
Section 3.02 Notice of Optional Redemption; Selection of Notes....................................... 20
Section 3.03 Payment of Notes Called for Redemption by the Company................................... 21
Section 3.04 Conversion Arrangement on Call for Redemption........................................... 22
Section 3.05 Redemption at Option of Holders Upon a Fundamental Change............................... 23
ARTICLE 4 PARTICULAR COVENANTS OF THE COMPANY................................................................... 25
Section 4.01 Payment of Principal, Premium and Interest.............................................. 25
Section 4.02 Maintenance of Office or Agency......................................................... 25
Section 4.03 Appointments to Fill Vacancies in Trustee's Office...................................... 26
Section 4.04 Provisions as to Paying Agent........................................................... 26
Section 4.05 Existence............................................................................... 27
Section 4.06 Maintenance of Properties............................................................... 27
Section 4.07 Payment of Taxes and Other Claims....................................................... 28
Section 4.08 Stay, Extension and Usury Laws.......................................................... 28
Section 4.09 Compliance Certificate.................................................................. 28
Section 4.10 Liquidated Damages Notice............................................................... 29
ARTICLE 5 NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE......................................... 29
Section 5.01 Noteholders' Lists...................................................................... 29
Section 5.02 Preservation and Disclosure of Lists.................................................... 29
Section 5.03 Reports by Trustee...................................................................... 30
Section 5.04 Reports by Company...................................................................... 30
ARTICLE 6 REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT........................................ 31
i
Section 6.01 Events of Default; Acceleration......................................................... 31
Section 6.02 Payments of Notes on Default; Suit Therefor............................................. 33
Section 6.03 Application of Monies Collected by Trustee.............................................. 34
Section 6.04 Proceedings by Noteholder............................................................... 35
Section 6.05 Proceedings by Trustee.................................................................. 36
Section 6.06 Remedies Cumulative and Continuing...................................................... 36
Section 6.07 Direction of Proceedings and Waiver of Defaults by Majority of Noteholders.............. 36
Section 6.08 Notice of Defaults...................................................................... 37
Section 6.09 Undertaking to Pay Costs................................................................ 37
ARTICLE 7 THE TRUSTEE........................................................................................... 38
Section 7.01 Duties and Responsibilities of Trustee.................................................. 38
Section 7.02 Reliance on Documents, Opinions, Etc.................................................... 39
Section 7.03 No Responsibility for Recitals, Etc..................................................... 40
Section 7.04 Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes.................... 41
Section 7.05 Monies to be Held in Trust.............................................................. 41
Section 7.06 Compensation and Expenses of Trustee; Indemnification of Trustee; Certain Limits
on Liability............................................................................ 41
Section 7.07 Officers' Certificate as Evidence....................................................... 42
Section 7.08 Conflicting Interests of Trustee........................................................ 42
Section 7.09 Eligibility of Trustee.................................................................. 42
Section 7.10 Resignation or Removal of Trustee....................................................... 42
Section 7.11 Acceptance by Successor Trustee......................................................... 44
Section 7.12 Succession by Merger.................................................................... 45
Section 7.13 Preferential Collection of Claims....................................................... 45
Section 7.14 Trustee's Application For Instructions From The Company................................. 45
ARTICLE 8 THE NOTEHOLDERS....................................................................................... 46
Section 8.01 Action by Noteholders................................................................... 46
Section 8.02 Proof of Execution by Noteholders....................................................... 46
Section 8.03 Who Are Deemed Absolute Owners.......................................................... 46
Section 8.04 Company-Owned Notes Disregarded......................................................... 47
Section 8.05 Revocation of Consents, Future Holders Bound............................................ 47
ARTICLE 9 MEETINGS OF NOTEHOLDERS............................................................................... 48
Section 9.01 Purpose of Meetings..................................................................... 48
Section 9.02 Call of Meetings by Trustee............................................................. 48
Section 9.03 Call of Meetings by Company or Noteholders.............................................. 49
Section 9.04 Qualifications for Voting............................................................... 49
Section 9.05 Regulations............................................................................. 49
Section 9.06 Voting.................................................................................. 50
Section 9.07 No Delay of Rights by Meeting........................................................... 50
ARTICLE 10 SUPPLEMENTAL INDENTURES.............................................................................. 51
Section 10.01 Supplemental Indentures Without Consent of Noteholders.................................. 51
Section 10.02 Supplemental Indenture with Consent of Noteholders...................................... 52
Section 10.03 Effect of Supplemental Indenture........................................................ 53
ii
Section 10.04 Notation on Notes....................................................................... 54
Section 10.05 Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee............. 54
ARTICLE 11 CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE.................................................... 54
Section 11.01 Company May Consolidate on Certain Terms................................................ 54
Section 11.02 Successor to be Substituted............................................................. 54
Section 11.03 Opinion of Counsel to be Given Trustee.................................................. 55
ARTICLE 12 SATISFACTION AND DISCHARGE OF INDENTURE.............................................................. 55
Section 12.01 Discharge of Indenture.................................................................. 55
Section 12.02 Deposited Monies to be Held in Trust by Trustee......................................... 56
Section 12.03 Paying Agent to Repay Monies Held....................................................... 56
Section 12.04 Return of Unclaimed Monies.............................................................. 56
Section 12.05 Reinstatement........................................................................... 57
ARTICLE 13 IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS...................................... 57
Section 13.01 Indenture and Notes Solely Corporate Obligations........................................ 57
ARTICLE 14 CONVERSION OF NOTES.................................................................................. 57
Section 14.01 Right to Convert; Notice of Certain Transactions........................................ 57
Section 14.02 Conversion Procedures................................................................... 59
Section 14.03 Mandatory Conversion.................................................................... 61
Section 14.04 Limitation on Conversion Shares......................................................... 62
Section 14.05 Cash Payments in Lieu of Fractional Shares.............................................. 62
Section 14.06 Conversion Rate......................................................................... 63
Section 14.07 Adjustment of Conversion Rate and Special Payment Provisions............................ 63
Section 14.08 Mandatory Conversion Price Adjustment................................................... 73
Section 14.09 Effect of Reclassification, Consolidation, Merger or Sale............................... 74
Section 14.10 Taxes on Shares Issued.................................................................. 75
Section 14.11 Reservation of Shares, Shares to be Fully Paid; Compliance with Governmental
Requirements; Listing of Common Stock................................................... 75
Section 14.12 Responsibility of Trustee............................................................... 76
Section 14.13 Notice to Holders Prior to Certain Actions. In case:................................... 77
Section 14.14 Rights Issued in Respect of Common Stock Issued Upon Conversion......................... 78
ARTICLE 15 SUBORDINATION........................................................................................ 78
Section 15.01 Agreement to Subordinate................................................................ 78
Section 15.02 Liquidation; Dissolution; Bankruptcy.................................................... 78
Section 15.03 Default on Designated Senior Indebtedness............................................... 79
Section 15.04 Acceleration of Securities.............................................................. 80
Section 15.05 When Distribution Must Be Paid Over..................................................... 80
Section 15.06 Notice by Company....................................................................... 80
Section 15.07 Subrogation............................................................................. 81
Section 15.08 Relative Rights......................................................................... 81
Section 15.09 Subordination May Not Be Impaired by Company............................................ 81
Section 15.10 Distribution or Notice of Representative................................................ 81
iii
Section 15.11 No Waiver of Subordination Provisions................................................... 82
Section 15.12 Rights of Trustee and Paying Agent...................................................... 82
Section 15.13 Authorization to Effect Subordination................................................... 82
Section 15.14 Amendments.............................................................................. 83
ARTICLE 16 MISCELLANEOUS PROVISIONS............................................................................. 83
Section 16.01 Provisions Binding on Company's Successors.............................................. 83
Section 16.02 Official Acts by Successor Corporation.................................................. 83
Section 16.03 Addresses for Notices, Etc.............................................................. 83
Section 16.04 Governing Law........................................................................... 84
Section 16.05 Evidence of Compliance with Conditions Precedent, Certificates to Trustee............... 84
Section 16.06 Legal Holidays.......................................................................... 84
Section 16.07 Trust Indenture Act Not Applicable...................................................... 84
Section 16.08 No Security Interest Created............................................................ 85
Section 16.09 Benefits of Indenture................................................................... 85
Section 16.10 Table of Contents, Headings, Etc........................................................ 85
Section 16.11 Authenticating Agent.................................................................... 85
Section 16.12 Execution in Counterparts............................................................... 86
Section 16.13 Severability............................................................................ 86
Exhibit A Form of Note............................................................................ A-1
iv
INDENTURE
INDENTURE dated as of November 30, 2004 between Standard Management
Corporation, an Indiana corporation (hereinafter called the "COMPANY"), and U.S.
Bank National Association, a banking corporation organized under the laws of the
United States, as trustee hereunder (hereinafter called the "TRUSTEE").
WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 6% Convertible Notes due 2008 (hereinafter called
the "NOTES"), in an aggregate principal amount not to exceed $10,000,000 and, to
provide the terms and conditions upon which the Notes are to be authenticated,
issued and delivered, the Company has duly authorized the execution and delivery
of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by the
Notes, a form of assignment, a form of option to elect redemption upon a
fundamental change, and a form of conversion notice to be borne by the Notes are
to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as in this Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute this Indenture a valid
agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized,
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. The terms defined in this Section 1.01 (except
as herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.01. All other
terms used in this Indenture that are defined in the Trust Indenture Act or
which are by reference therein defined in the Securities Act (except as herein
otherwise
expressly provided or unless the context otherwise requires) shall have the
meanings assigned to such terms in the Trust Indenture Act and in the Securities
Act as in force at the date of the execution of this Indenture. The words
"herein," "hereof," "hereunder" and words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision. The terms defined in this Article include the plural as well as the
singular.
"ACCEPTED PURCHASED SHARES" has the meaning specified in Section 14.07(g).
"ADJUSTMENT EVENT" has the meaning specified in Section 14.07(l).
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"CONTROL", when used with respect to any specified Person means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"AGENT" means any co-registrar, paying agent, conversion agent, redemption
agent, or similar agent of the Company.
"APPLICABLE STOCK PRICE" means, in respect of a Conversion Date, the
average of the Closing Sale Prices per share of Common Stock over the
five-Trading Day period starting the third Trading Day following such Conversion
Date.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or a
committee of such Board duly authorized to act for it hereunder.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which the banking institutions in the City of New York or
the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close or be closed.
"CAPITALIZED LEASE OBLIGATION" means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP (including Statement of Accounting Standards No. 13 of the Financial
Accounting Standards Board as in effect on the Issue Date) and the amount of
Indebtedness represented by such obligations shall be the capitalized amount of
such obligations, as determined in accordance with GAAP.
"CASH AMOUNT" has the meaning set forth in Section 14.02.
"CLOSING SALE PRICE" of the shares of Common Stock on any date means the
closing sale price per share (or, if no closing sale price is reported, the
average of the closing bid and ask prices or, if more than one in either case,
the average of
2
the average closing bid and the average closing ask prices) on such date as
reported in composite transactions for the principal United States securities
exchange on which shares of Common Stock is traded or, if the shares of Common
Stock are not listed on a United States national or regional securities
exchange, as reported by the Nasdaq system or by the National Quotation Bureau
Incorporated. In the absence of such quotations, the Company shall be entitled
to determine the Closing Sale Price on the basis of such quotations as it
considers appropriate. Closing Sale Price shall be determined without reference
to extended or after hours trading.
"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 any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the provisions
of Section 14.09, however, shares issuable on conversion of Notes shall include
only shares of the class designated as common stock of the Company at the date
of this Indenture (namely, the Common Stock, no par value) or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which are not subject to redemption by the
Company; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable on conversion
shall be substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
"COMPANY" means the corporation named as the "Company" in the first
paragraph of this Indenture, and, subject to the provisions of Article 11 and
Section 14.09, shall include its successors and assigns.
"CONVERSION CAP" has the meaning set forth in Section 14.04.
"CONVERSION DATE" has the meaning set forth in Section 14.02.
"CONVERSION PRICE" as of any day will equal $1,000 divided by the
Conversion Rate as of such date.
"CONVERSION RATE" has the meaning specified in Section 14.06.
"CONVERSION VALUE" has the meaning specified in Section 14.02.
3
"CORPORATE TRUST OFFICE" or other similar term, means the designated
office of the Trustee at which at any particular time its corporate trust
business as it relates to this Indenture shall be administered, which office is,
at the date as of which this Indenture is dated, located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Services,
or such other office as the Trustee may designate from time to time by notice to
the holders and the Company, or the principal corporate trust office of any
successor trustee (or such other address as a successor trustee may designate
from time to time by notice to the holders and the Company).
"CURRENT MARKET PRICE" has the meaning specified in Section 14.07(h).
"DEFAULT" means any event that is, or after notice or passage of time, or
both, would be, an Event of Default.
"DEFAULTED INTEREST" has the meaning specified in Section 2.03.
"DESIGNATED SENIOR INDEBTEDNESS" means (a) without regard to the amounts
outstanding thereunder, any Senior Indebtedness in an original principal amount
(or final accreted value amount in the case of Indebtedness issued in the form
of zero coupon or similar instruments) excess of $1,000,000 which, at the time
of determination, is specifically designated in the instrument creating or
evidencing such Senior Indebtedness as "Designated Senior Indebtedness" by the
Company, and (b) the following existing Senior Indebtedness (including any
Indebtedness incurred pursuant to clause (e) of the definition of Indebtedness
with respect thereto):
(1) Indebtedness under that certain Secured Credit Agreement dated
November 13, 2003; and
(2) Indebtedness under that certain Republic Bank Mortgage due December
, 2011.
"DETERMINATION DATE" has the meaning specified in Section 14.07(l).
"EVENT OF DEFAULT" means any event specified in Section 6.01 as an Event
of Default.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder, as in effect from time to
time.
"EX-DIVIDEND TIME" has the meaning specified in Section 14.01(b).
"EXPIRATION TIME" has the meaning specified in Section 14.07(f).
"FUNDAMENTAL CHANGE" means the occurrence of any transaction or event
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise) in connection
4
with which all or substantially all of the Common Stock shall be exchanged for,
converted into, acquired for or constitutes solely the right to receive, a
consideration which is not all or substantially all common stock that is (or,
upon consummation of or immediately following such transaction or event, which
will be) listed on a United States national securities exchange or approved (or,
upon consummation of or immediately following such transaction or event, which
will be approved) for quotation on the Nasdaq National Market or any similar
United States system of automated dissemination of quotations of securities
prices.
"FUNDAMENTAL CHANGE NOTICE" has the meaning specified in Section 3.05(b).
"FUNDAMENTAL CHANGE EXPIRATION TIME" has the meaning specified in Section
3.05(b).
"FUNDAMENTAL CHANGE REDEMPTION DATE" has the meaning specified in Section
3.05(a).
"INDEBTEDNESS" means, with respect to any Person:
(a) all liabilities, contingent or otherwise, of such Person:
(1) for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a
portion thereof),
(2) evidenced by bonds, notes, debentures, trust preferred
securities, policies of insurance or instruments similar to any of
the foregoing or letters of credit or representing the balance
deferred and unpaid of the purchase price of any property or
services (except any such balance that constitutes a trade payable
in the ordinary course of business),
(3) evidenced by bankers' acceptances or similar instruments
issued or accepted by banks or Interest Swap Obligations,
(4) for the payment of money relating to Capitalized Lease
Obligation, and
(5) pay or reimbursement obligations imposed by any
governmental authority, including but not limited to,
Medicare/Medicaid cost reports adjustments and settlements;
(b) reimbursement obligations of such Person with respect to letters
of credit;
(c) all liabilities of others of the kind described in the preceding
clause (a) or (b) that such Person has guaranteed or that is
5
otherwise its legal liability (provided that the amount of liability
attributable to such guarantee or other legal liability shall be deemed to
be the maximum amount for which such Person could be liable under such
guarantee or otherwise);
(d) all obligations secured by a Lien to which the property or
assets (including, without limitation, leasehold interests and any other
tangible or intangible property rights) of such Person are subject,
whether or not the obligations secured thereby shall have been assumed by
or shall otherwise be such Person's legal liability (provided that, if the
obligations have not been assumed or become the legal liability of such
Person, the amount of the liability shall be deemed to be in an amount not
to exceed the fair market value of the property or properties to which the
Lien relates, as determined by such Person in good faith and as set forth
in an officer's certificate delivered to the Trustee);
(e) any and all deferrals, renewals, extensions, refinancings and
refundings (whether direct or indirect) of, or amendments, modifications,
or supplements to, any liability of the kind described in any of the
preceding clauses (a) through (d) whether or not between or among the same
parties.
"INTEREST" means, when used with reference to the Notes, any interest
payable under the terms of the Notes and Liquidated Damages, if any, payable
under the terms of the Registration Rights Provisions.
"INTEREST SWAP OBLIGATION" means any obligation of any Person pursuant to
any arrangement with any other Person whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such Person calculated by applying a
fixed or floating rate of interest on the same notional amount; provided, that
the term "Interest Swap Obligation" shall also include interest rate exchange,
collar, cap, swap, option or similar agreements intended to provide interest or
currency rate protection.
"LIEN" means any mortgage, lien, pledge, charge, security interest or
other encumbrance of any kind whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any license deemed to constitute a security interest and
any option or other agreement to give any security interest).
"LIQUIDATED DAMAGES" has the meaning specified for "Liquidated Damages
Amount" in Section 13(d) of the Registration Rights Provisions.
"LIQUIDATED DAMAGES NOTICE" has the meaning specified in Section 4.10.
"MANDATORY CONVERSION" has the meaning specified in Section 14.03.
6
"MANDATORY CONVERSION DATE" has the meaning specified in Section 14.03.
"NOTE" or "NOTES" means any Note or Notes, as the case may be,
authenticated and delivered under this Indenture.
"NOTE REGISTER" has the meaning specified in Section 2.05(a).
"NOTE REGISTRAR" has the meaning specified in Section 2.05(a).
"NOTEHOLDER" or "HOLDER" as applied to any Note, or other similar terms
(but excluding the term "beneficial holder"), means any Person in whose name at
the time a particular Note is registered on the Note registrar's books.
"NONELECTING SHARE" has the meaning specified in Section 14.09.
"NOTICE DATE" means the date of mailing of the notice of redemption
pursuant to Section 3.02.
"OFFER EXPIRATION TIME" has the meaning specified in Section 14.07(g).
"OFFICERS' CERTIFICATE", when used with respect to the Company, means a
certificate signed by both (a) the Chairman of the Board, the Chief Executive
Officer, the President or any Vice President (whether or not designated by a
number or numbers or word or words added before or after the title "Vice
President") and (b) the Treasurer or any Assistant Treasurer, the Controller or
any Assistant Controller, or the Secretary or any Assistant Secretary of the
Company.
"OPINION OF COUNSEL" means an opinion in writing signed by legal counsel,
who may be an employee of or counsel to the Company, or other counsel reasonably
acceptable to the Trustee.
"OPTIONAL REDEMPTION" has the meaning specified in Section 3.01.
"OUTSTANDING", when used with reference to Notes and subject to the
provisions of Section 8.04, means, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered to the Trustee
for cancellation;
(b) Notes, or portions thereof, (i) for the redemption of which monies in
the necessary amount shall have been deposited in trust with the Trustee or with
any paying agent (other than the Company) or (ii) which shall have been
otherwise defeased in accordance with Article 12;
(c) Notes in lieu of which, or in substitution for which, other Notes
shall have been authenticated and delivered pursuant to the terms of Section
2.06; and
7
(d) Notes converted into Common Stock pursuant to Article 14 and Notes
deemed not outstanding pursuant to Article 3.
"PERSON" means a corporation, an association, a partnership, a limited
liability company, an individual, a joint venture, a joint stock company, a
trust, an unincorporated organization or a government or an agency or a
political subdivision thereof.
"PREDECESSOR NOTE" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note, and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.06 in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the lost, destroyed or
stolen Note that it replaces.
"PREMIUM" means any premium payable under the terms of the Notes.
"PURCHASED SHARES" has the meaning specified in Section 14.07(f).
"RECORD DATE" has the meaning specified in Section 2.03 with respect to
any interest payment date, and for any other purpose means the record date
established by the Company for a specified purpose.
"REGISTRATION RIGHTS PROVISIONS" means the Registration Rights provisions
contained in Section 13 of the form of subscription agreement attached as
Appendix D to the Company's Confidential Offering Memorandum for the Notes,
dated as of August 13, 2004.
"REPRESENTATIVE" means the trustee, agent or representative for any Senior
Indebtedness.
"RESPONSIBLE OFFICER" means, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any
principal, managing director, director, or any other officer of the Trustee who
customarily performs functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of, and familiarity with,
with the particular subject, and who shall have direct responsibility for the
administration of this Indenture.
"RESTRICTED SECURITIES" has the meaning specified in Section 2.05(b).
"RIGHTS" has the meaning specified in Section 14.14.
"RIGHTS AGREEMENT" has the meaning specified in Section 14.14.
"SECURITIES" has the meaning specified in Section 14.07(d).
8
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as in effect from time to time.
"SENIOR INDEBTEDNESS" means all Indebtedness of the Company (present and
future) created, incurred, assumed or guaranteed by the Company (and all
renewals, extensions, increases or refundings thereof), including the principal
of, premium, if any, and unpaid interest thereon (whether accruing before or
after filing of any petition in bankruptcy or any similar proceeding by or
against the Company and whether or not allowed as a claim in bankruptcy or any
similar proceeding) unless, in the case of any particular Indebtedness, renewal,
extension, increase or refunding, the instrument creating or evidencing the same
or the assumption or guarantee thereof expressly provides that such
Indebtedness, renewal extension, increase or refunding shall not be senior in
right of payment to the Notes.
Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness shall not include: (a) Indebtedness or amounts owed for goods or
materials purchased in the ordinary course of business for services; (b)
Indebtedness evidenced by the Company's 7% Convertible Notes due 2008 and the
indenture related thereto; (c) Indebtedness evidenced by the Notes and this
Indenture, and (d) Indebtedness of the Company owed to any Subsidiary of the
Company.
"STANDARD LIFE DIVESTITURE" means the sale of all or substantially all of
the capital stock or assets, substantially as an entirety, of Standard Life
Insurance Company of Indiana.
"SUBSIDIARY" means, with respect to any Person (which for purposes of this
definition shall include any successor obligor on the Notes) (a) a corporation
at least fifty percent of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, or by such Person and one or more Subsidiaries of such Person,
or by one or more Subsidiaries of such Person, or (b) a partnership in which
such Person or a Subsidiary or such Person is, at the time, a general partner of
such partnership, or (c) any other Person (other than a corporation or a
partnership) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof has (1) at least fifty percent ownership
interest or (2) the power to elect or direct the elections of at least a
majority of the directors or other governing body of such Person.
"TRADING DAY" shall mean (a) if the Common Stock or other applicable
security is quoted on the Nasdaq National Market, a day on which trades may be
made thereon or (b) if the applicable security is listed or admitted for trading
on the New York Stock Exchange or such other national securities exchange, a day
on which the New York Stock Exchange or another national securities exchange is
open for business or (c) if the applicable security is not so listed, admitted
for trading or quoted, any day other than a Saturday or Sunday or a day on which
9
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
"TRIGGER EVENT" has the meaning specified in Section 14.07(d).
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended,
as it was in force at the date of this Indenture, except as provided in Sections
10.03 and 14.09; provided that if the Trust Indenture Act of 1939 is amended
after the date hereof, the term "Trust Indenture Act" shall mean, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.
"TRUSTEE" means U.S. Bank National Association and its successors and any
corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee at the time serving
as successor trustee hereunder.
ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
Section 2.01 Designation Amount and Issue of Notes. The Notes shall be
designated as "6% Convertible Notes Due 2008". Notes not to exceed the aggregate
principal amount of $10,000,000 (except pursuant to Sections 2.05, 2.06, 3.03,
3.05 and 14.02 hereof) upon the execution of this Indenture, or from time to
time thereafter, may be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Notes to or upon the written order of the Company, which order shall be signed
by its Chairman of the Board, Chief Executive Officer, President or any Vice
President (whether or not designated by a number or numbers or word or words
added before or after the title "Vice President") and its Treasurer or any
Assistant Treasurer, its Controller or any Assistant Controller or its Secretary
or any Assistant Secretary, without any further action by the Company hereunder.
Section 2.02 Form of Notes. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A. The terms and provisions contained in the form of Note
attached as Exhibit A hereto shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends, endorsements or changes as the
officers executing the same may approve (execution thereof to be conclusive
evidence of such approval) and as are not inconsistent with the provisions of
this Indenture, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any securities exchange or automated quotation system on which the Notes may be
listed, or to
10
conform to usage, or to indicate any special limitations or restrictions to
which any particular Notes are subject.
Section 2.03 Date and Denomination of Notes; Payments of Interest. Subject
to Section 2.02, the Notes shall be issuable in registered form without coupons
in denominations of $1,000 principal amount and multiples thereof. Each Note
shall be dated the date of its authentication and shall bear interest from the
date specified on the face of the form of Note attached as Exhibit A hereto.
Interest on the Notes shall be computed on the basis of a 360-day year comprised
of twelve 30-day months.
The Person in whose name any Note (or its Predecessor Note) is registered
on the Note register at the close of business on any record date with respect to
any interest payment date shall be entitled to receive the interest payable on
such interest payment date, except that the interest payable upon redemption or
repurchase will be payable to the Person to whom principal is payable pursuant
to such redemption or repurchase (unless the redemption date or the Repurchase
Date, as the case may be, is an interest payment date, in which case the
quarterly payment of interest becoming due on such date shall be payable to the
holders of such Notes registered as such on the applicable record date).
Interest shall be payable at the office of the Company maintained by the Company
for such purposes in the City of New York, State of New York, which shall
initially be the corporate trust office of the Trustee, located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at the Corporate Trust Office
of the Trustee, and may, as the Company shall specify to the paying agent in
writing by each record date, be paid either (i) by check mailed to the address
of the Person entitled thereto as it appears in the Note register (provided that
any holder of Notes with an aggregate principal amount in excess of $500,000
shall, at the written election of such holder (such election to be made prior to
the relevant record date and to contain appropriate wire transfer information),
be paid by wire transfer in immediately available funds) or (ii) by transfer to
an account maintained by such Person located in the United States. The term
"RECORD DATE" with respect to any interest payment date shall mean the December
15 and June 15 preceding the applicable January 1 or July 1 interest payment
date, respectively.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any January 1 or July 1 (herein called "DEFAULTED
INTEREST") shall forthwith cease to be payable to the Noteholder on the relevant
record date by virtue of his having been such Noteholder, and such Defaulted
Interest shall be paid by the Company, at its election in each case, as provided
in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on a special record date for the payment of
such Defaulted Interest, which shall 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 Note and the date of the proposed payment
11
(which shall be not less than twenty-five (25) days after the receipt by the
Trustee of such notice, unless the Trustee shall consent to an earlier date),
and at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
on or prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted Interest
as in this clause provided. Thereupon the Trustee shall fix a special record
date for the payment of such Defaulted Interest which shall be not more than
fifteen (15) days and not less than ten (10) days prior to the date of the
proposed payment, and not less than ten (10) days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such special record date and, in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first-class postage
prepaid, to each holder at his address as it appears in the Note register, not
less than ten (10) days prior to such special record date. Notice of the
proposed payment of such Defaulted Interest and the special record date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Notes (or their respective Predecessor Notes) are registered at
the close of business on such special record date and shall no longer be payable
pursuant to the following clause (2) of this Section 2.03.
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Notes may be listed or designated for
issuance, and upon such notice as may be required by such exchange or automated
quotation system, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Section 2.04 Execution of Notes. The Notes shall be signed in the name and
on behalf of the Company by the manual or facsimile signature of its Chairman of
the Board, Chief Executive Officer, President or any Vice President (whether or
not designated by a number or numbers or word or words added before or after the
title "Vice President"). Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Note attached
as Exhibit A hereto, manually executed by the Trustee (or an authenticating
agent appointed by the Trustee as provided by Section 16.11), shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Trustee (or such an authenticating agent) upon any Note
executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
12
the person who signed such Notes had not ceased to be such officer of the
Company, and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.05 Exchange and Registration of Transfer of Notes; Restrictions
on Transfer. (a) The Company shall cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 4.02 being herein
sometimes collectively referred to as the "NOTE REGISTER") in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Notes and of transfers of Notes. The Note register shall be
in written form or in any form capable of being converted into written form
within a reasonably prompt period of time. The Trustee is hereby appointed "NOTE
REGISTRAR" for the purpose of registering Notes and transfers of Notes as herein
provided. The Company may appoint one or more co-registrars in accordance with
Section 4.02.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar, and satisfaction of the requirements for such
transfer set forth in this Section 2.05, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of a
like aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
Notes may be exchanged for other Notes of any authorized denominations and
of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency maintained by the Company pursuant to
Section 4.02. Whenever any Notes are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Notes which
the Noteholder making the exchange is entitled to receive bearing registration
numbers not contemporaneously outstanding.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
All Notes presented or surrendered for registration of transfer or for
exchange, redemption, repurchase or conversion shall (if so required by the
Company or the Note registrar) be duly endorsed, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company, and
the Notes shall be duly executed by the Noteholder thereof or his attorney duly
authorized in writing.
No service charge shall be made to any holder for any registration of
transfer or exchange of Notes, but either the Company, the Trustee or both may
13
require payment by the holder of a sum sufficient to cover any tax, assessment
or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Notes.
Neither the Company nor the Trustee nor any Note registrar shall be
required to exchange or register a transfer of (a) any Notes for a period of
fifteen (15) days next preceding any selection of Notes to be redeemed, (b) any
Notes or portions thereof called for redemption pursuant to Section 3.02, (c)
any Notes or portions thereof surrendered for conversion pursuant to Article 14,
or (d) any Notes or portions thereof tendered for redemption (and not withdrawn)
pursuant to Section 3.05.
(b) Every Note that bears or is required under this Section 2.05(b)
to bear the legend set forth in this Section 2.05(b) (together with any Common
Stock issued upon conversion of the Notes and required to bear the legend set
forth in Section 2.05(c), collectively, the "RESTRICTED SECURITIES") shall be
subject to the restrictions on transfer set forth in this Section 2.05(b)
(including those set forth in the legend below) unless such restrictions on
transfer shall be waived by written consent of the Company, and the holder of
each such Restricted Security, by such Noteholder's acceptance thereof, agrees
to be bound by all such restrictions on transfer. As used in Sections Section
2.05(b) and Section 2.05(c), the term "TRANSFER" encompasses any sale, pledge,
loan, transfer or other disposition whatsoever of any Restricted Security or any
interest therein.
Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Note (and all securities issued in exchange therefor
or substitution thereof, other than Common Stock, if any, issued upon conversion
thereof, which shall bear the legend set forth in Section 2.05(c), if
applicable) shall bear a legend in substantially the following form, unless such
Note has been sold pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer), or unless otherwise agreed by the Company in writing,
with written notice thereof to the Trustee:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 UNDER THE SECURITIES
ACT); (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THIS NOTE UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR
ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THIS NOTE OR THE COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS NOTE EXCEPT (A) TO STANDARD MANAGEMENT
CORPORATION OR ANY
14
SUBSIDIARY THEREOF, (B) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (C) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3)
PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (2)(C) ABOVE),
IT WILL FURNISH TO U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE AND UPON THE COMPANY'S REQUEST, TO THE COMPANY), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT; AND (4) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF
THIS NOTE PURSUANT TO CLAUSE (2)(C) ABOVE OR UPON ANY TRANSFER OF THIS NOTE
UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
ACCOMPANIED BY AN OPINION OF COUNSEL DELIVERED TO THE TRUSTEE AND THE ISSUER BY
THE TRANSFEROR TO THE EFFECT THAT THE HOLDING PERIOD APPLICABLE TO SALES OF THIS
NOTE UNDER SUCH RULE 144(K) HAS EXPIRED, THAT THIS NOTE IS NO LONGER A
"RESTRICTED SECURITY" AS THAT TERM IS DEFINED IN THE INDENTURE AND THAT REMOVAL
OF THIS LEGEND FROM SUCH NOTE IS PERMITTED UNDER THIS INDENTURE.. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTION.
The Company shall instruct the Trustee in writing as to any
certifications, legal opinions or other information required to be delivered
pursuant to the restrictions set forth in the foregoing legend in connection
with any requested transfer or exchange of a Note (or requested removal of such
legend). Any Note (or security issued in exchange or substitution therefor) as
to which such restrictions on transfer shall have expired in accordance with
their terms or as to conditions for removal of the foregoing legend set forth
therein have been satisfied may, upon surrender of such Note for exchange to the
Note registrar in accordance with the provisions of this Section 2.05, be
exchanged for a new Note or Notes, of like tenor and aggregate principal amount,
which shall not bear the restrictive legend required by this Section 2.05(c).
(c) Until the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
any stock certificate representing Common Stock issued upon conversion of any
Note shall bear a legend in substantially the following form,
15
unless such Common Stock has been sold pursuant to a registration statement that
has been declared effective under the Securities Act (and which continues to be
effective at the time of such transfer) or such Common Stock has been issued
upon conversion of Notes that have been transferred pursuant to a registration
statement that has been declared effective under the Securities Act, or unless
otherwise agreed by the Company in writing with written notice thereof to the
transfer agent:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT, UNTIL THE EXPIRATION
OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE COMMON STOCK EVIDENCED HEREBY,
UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), (1) IT
WILL NOT RESELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT
(A) TO STANDARD MANAGEMENT CORPORATION OR ANY SUBSIDIARY THEREOF, (B) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (C) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE
AT THE TIME OF SUCH TRANSFER); (2) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE (1)(C) ABOVE), IT WILL FURNISH TO MELLON INVESTOR SERVICES,
AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE AND UPON THE
COMPANY'S REQUEST, TO THE COMPANY), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (3) IT WILL
DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE (1)(C) ABOVE) A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF
THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE (1)(C)
ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY AFTER THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION).
Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for removal
of the foregoing legend set forth therein have been satisfied may, upon
16
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.05(c).
(d) Any Note or Common Stock issued upon the conversion of a Note that,
prior to the expiration of the holding period applicable to sales thereof under
Rule 144(k) under the Securities Act (or any successor provision), is purchased
or owned by the Company or any Affiliate thereof may not be resold by the
Company or such Affiliate unless registered under the Securities Act or resold
pursuant to an exemption from the registration requirements of the Securities
Act in a transaction which results in such Notes or Common Stock, as the case
may be, no longer being "RESTRICTED SECURITIES" (as defined under Rule 144).
(e) Neither the Note Registrar nor the Trustee shall be under any duty to
monitor or determine compliance with any federal, state or other securities or
tax laws that may be applicable in connection with any of the matters addressed
in this Section 2.05; provided, however, that if a certificate or opinion is
specifically required by the express terms of this Section 2.05 to be delivered
to the Trustee as a requirement to the registration of a Note transfer, the
Trustee shall be, under a duty to receive such certificate or opinion and to
examine it for compliance on its face with the applicable requirements of this
Section 2.05 prior to registration of such transfer.
Section 2.06 Mutilated, Destroyed, Lost or Stolen Notes. In case any Note
shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its written request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and make
available for delivery, a new Note, bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Note, or in lieu of
and in substitution for the Note so destroyed, lost or stolen. In every case,
the applicant for a substituted Note shall furnish to the Company, to the
Trustee, and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or connected with such substitution, and,
in every case of destruction, loss or theft, the applicant shall also furnish to
the Company, to the Trustee, and, if applicable, to such authenticating agent
evidence to their satisfaction of the destruction, loss or theft of such Note
and of the ownership thereof.
Following receipt by the Trustee or such authenticating agent, as the case
may be, of satisfactory security or indemnity and evidence, as described in the
preceding paragraph, the Trustee or such authenticating agent may authenticate
any such substituted Note and make available for delivery such Note. Upon the
issuance of any substituted Note, either the Company, the Trustee or both may
require the payment by the holder of a sum sufficient to cover any tax,
assessment
17
or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith. In case any Note which has matured or is
about to mature or has been called for redemption or has been tendered for
redemption upon a Fundamental Change (and not withdrawn) or has been surrendered
for repurchase on a Repurchase Date (and not withdrawn) or is to be converted
into Common Stock shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Note, pay or authorize the payment
of or convert or authorize the conversion of the same (without surrender thereof
except in the case of a mutilated Note), as the case may be, if the applicant
for such payment or conversion shall furnish to the Company, to the Trustee,
and, if applicable, to such authenticating agent such security or indemnity as
may be required by them to save each of them harmless for any loss, liability,
cost or expense caused by or in connection with such substitution, and, in every
case of destruction, loss or theft, the applicant shall also furnish to the
Company, the Trustee, and, if applicable, any paying agent or conversion agent
evidence to their satisfaction of the destruction, loss or theft of such Note
and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section
2.06 by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion or redemption
or repurchase of mutilated, destroyed, lost or stolen Notes and shall preclude
any and all other rights or remedies notwithstanding any law or statute existing
or hereafter enacted to the contrary with respect to the replacement or payment
or conversion or redemption or repurchase of negotiable instruments or other
securities without their surrender.
Section 2.07 Temporary Notes. Pending the preparation of Notes in
certificated form, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon the written request of the Company,
authenticate and deliver temporary Notes (typewritten, printed or lithographed).
Temporary Notes shall be issuable in any authorized denomination, and
substantially in the form of the Notes in certificated form, but with such
omissions, insertions and variations as may be appropriate for temporary Notes,
all as may be determined by the Company. Every such temporary Note shall be
executed by the Company and authenticated by the Trustee or such authenticating
agent upon the same conditions and in substantially the same manner, and with
the same effect, as the Notes in certificated form. Without unreasonable delay,
the Company will execute and deliver to the Trustee or such authenticating agent
Notes in certificated form and thereupon any or all temporary Notes may be
surrendered in exchange therefor, at each office or agency maintained by the
Company pursuant to Section 4.02 and the Trustee or such authenticating agent
18
shall authenticate and make available for delivery in exchange for such
temporary Notes an equal aggregate principal amount of Notes in certificated
form. Such exchange shall be made by the Company at its own expense and without
any charge therefor. Until so exchanged, the temporary Notes shall in all
respects be entitled to the same benefits and subject to the same limitations
under this Indenture as Notes in certificated form authenticated and delivered
hereunder.
Section 2.08 Cancellation of Notes. If the Company shall acquire any of
the Notes, such acquisition shall not operate as a redemption, repurchase or
satisfaction of the indebtedness represented by such Notes unless and until the
same are delivered to the Trustee for cancellation. All Notes surrendered for
the purpose of payment, redemption, repurchase, conversion, exchange or
registration of transfer shall, if surrendered to the Company or any paying
agent or any Note registrar or any conversion agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be
promptly canceled by it, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Trustee
shall dispose of such canceled Notes in accordance with its customary
procedures.
Section 2.09 CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Noteholders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE 3
REDEMPTION OF NOTES
Section 3.01 Redemption of Notes at the Option of the Company. Except as
otherwise provided in Section 3.05, the Company may not redeem any Notes prior
to November 30, 2006. At any time on or after November 30, 2006 and prior to
maturity, the Notes may be redeemed at the option of the Company (an "OPTIONAL
REDEMPTION"), in whole or in part, upon notice as set forth in Section 3.02, at
a redemption price of 100% of the principal amount, together with accrued and
unpaid interest, if any, to, but excluding the date fixed for redemption if the
Closing Sale Price of the Common Stock, as determined by the Company, exceeds
140% of the Conversion Price for at least 10 Trading Days in the 20 consecutive
Trading Days ending on the Trading Day immediately preceding the date of mailing
of the notice of redemption (such redemption right to continue once in effect
through close of business on the redemption date specified in such notice,
regardless of subsequent changes in the closing sale price of the Common Stock).
19
Section 3.02 Notice of Optional Redemption; Selection of Notes. In case
the Company shall desire to exercise the right to redeem all or, as the case may
be, any part of the Notes pursuant to Section 3.01, it shall fix a date for
redemption and it or, at its written request received by the Trustee not fewer
than forty-five (45) days prior (or such shorter period of time as may be
acceptable to the Trustee) to the date fixed for redemption, the Trustee in the
name of and at the expense of the Company, shall mail or cause to be mailed a
notice of such redemption not fewer than thirty (30) nor more than sixty (60)
days prior to the redemption date to each holder of Notes so to be redeemed as a
whole or in part at its last address as the same appears on the Note register;
provided that if the Company shall give such notice, it shall also give written
notice of the redemption date to the Trustee. Such mailing shall be by first
class mail. The notice, if mailed in the manner herein provided, shall be
conclusively presumed to have been duly given, whether or not the holder
receives such notice. In any case, failure to give such notice by mail or any
defect in the notice to the holder of any Note designated for redemption as a
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Note. Concurrently with the mailing of any such notice
of redemption, the Company shall issue a press release announcing such
redemption, the form and content of which press release shall be determined by
the Company in its sole discretion. The failure to issue any such press release
or any defect therein shall not affect the validity of the redemption notice or
any of the proceedings for the redemption of any Note called for redemption.
Each such notice of redemption shall specify the aggregate principal
amount of Notes to be redeemed, the CUSIP number or numbers (if any) of the
Notes being redeemed, the date fixed for redemption (which shall be a Business
Day), the redemption price at which Notes are to be redeemed, the place or
places of payment, that payment will be made upon presentation and surrender of
such Notes, that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portion thereof to be redeemed will cease to accrue. Such notice shall
also state the current Conversion Rate and the date on which the right to
convert such Notes or portions thereof into Common Stock will expire. If fewer
than all the Notes are to be redeemed, the notice of redemption shall identify
the Notes to be redeemed (including CUSIP numbers, if any). In case any Note is
to be redeemed in part only, the notice of redemption shall state the portion of
the principal amount thereof to be redeemed and shall state that, on and after
the redemption date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be issued.
On or prior to the redemption date specified in the notice of redemption
given as provided in this Section 3.02, the Company will deposit with the
Trustee or with one or more paying agents (or, if the Company is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
4.04) an amount of money in immediately available funds sufficient to redeem on
the redemption date all the Notes (or portions thereof) so called for redemption
(other than those theretofore surrendered for conversion into Common Stock) at
the
20
appropriate redemption price, together with accrued interest to, but excluding,
the redemption date; provided that if such payment is made on the redemption
date it must be received by the Trustee or paying agent, as the case may be, by
10:00 a.m., New York City time, on such date. The Company shall be entitled to
retain any interest, yield or gain on amounts deposited with the Trustee or any
paying agent pursuant to this Section 3.02 in excess of amounts required
hereunder to pay the redemption price and accrued interest to, but excluding,
the redemption date. If any Note called for redemption is converted pursuant
hereto prior to such redemption date, any money deposited with the Trustee or
any paying agent or so segregated and held in trust for the redemption of such
Note shall be paid to the Company upon its written request, or, if then held by
the Company, shall be discharged from such trust. Whenever any Notes are to be
redeemed pursuant to Section 3.01, the Company will give the Trustee written
notice in the form of an Officers' Certificate not fewer than forty-five (45)
days (or such shorter period of time as may be acceptable to the Trustee) prior
to the redemption date as to the aggregate principal amount of Notes to be
redeemed, the date fixed for redemption and certifying that the Closing Sale
Price of the Common Stock of the Company exceeds 140% of the Conversion Price
for the number of Trading Days as and when required by Section 3.01.
If less than all of the outstanding Notes are to be redeemed, the Trustee
shall select the Notes or portions thereof in certificated form to be redeemed
(in principal amounts of $1,000 or multiples thereof) by lot, on a pro rata
basis or by another method the Trustee deems fair and appropriate. If any Note
selected for partial redemption is submitted for conversion in part after such
selection, the portion of such Note submitted for conversion shall be deemed (so
far as may be possible) to be the portion to be selected for redemption. The
Notes (or portions thereof) so selected shall be deemed duly selected for
redemption for all purposes hereof, notwithstanding that any such Note is
submitted for conversion in part before the mailing of the notice of redemption.
Upon any redemption of less than all of the outstanding Notes, the Company
and the Trustee may (but need not), solely for purposes of determining the pro
rata allocation among such Notes as are unconverted and outstanding at the time
of redemption, treat as outstanding any Notes surrendered for conversion during
the period of fifteen (15) days next preceding the mailing of a notice of
redemption and may (but need not) treat as outstanding any Note authenticated
and delivered during such period in exchange for the unconverted portion of any
Note converted in part during such period.
Section 3.03 Payment of Notes Called for Redemption by the Company. If
notice of redemption has been given as provided in Section 3.02, the Notes or
portion of Notes with respect to which such notice has been given shall, unless
converted into Common Stock pursuant to the terms hereof, become due and payable
on the date fixed for redemption and at the place or places stated in such
notice at the applicable redemption price, together with interest accrued to
(but excluding) the redemption date, and on and after said date (unless the
Company shall default in the payment of such Notes at the redemption price,
together with
21
interest accrued to said date) interest on the Notes or portion of Notes so
called for redemption shall cease to accrue and, after the close of business on
the Business Day immediately preceding the redemption date, such Notes shall
cease to be convertible into Common Stock (except as provided in the last
sentence of this Section 3.03) and, except as provided in Sections 7.05 and
12.04, to be entitled to any benefit or security under this Indenture, and the
holders thereof shall have no right in respect of such Notes except the right to
receive the redemption price thereof and unpaid interest to (but excluding) the
redemption date. On presentation and surrender of such Notes at a place of
payment in said notice specified, the said Notes or the specified portions
thereof shall be paid and redeemed by the Company at the applicable redemption
price, together with interest accrued thereon to, but excluding, the redemption
date; provided that if the applicable redemption date is an interest payment
date, the interest payable on such interest payment date shall be payable to the
holders of record of such Notes on the applicable record date instead of the
holders surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Notes so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any Notes or
mail any notice of redemption during the continuance of a default in payment of
interest or premium, if any, on the Notes. If any Note called for redemption
shall not be so paid upon surrender thereof for redemption, the principal and
premium, if any, shall, until paid or duly provided for, bear interest from the
redemption date at a rate equal to 1% per annum plus the rate borne by the Note
(without duplication of the 1% increase provided for under Section 6.02) and
such Note shall remain convertible into Common Stock until the principal and
premium, if any, and interest shall have been paid or duly provided for.
Section 3.04 Conversion Arrangement on Call for Redemption In connection
with any redemption of Notes, the Company may arrange for the purchase and
conversion of any Notes by an agreement with one or more investment banks or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to, but
excluding, the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained in this Article 3, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to, but excluding, the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, a copy of which will be filed
with the Trustee prior to the date fixed for redemption, any Notes not duly
surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
22
purchasers from such holders and (notwithstanding anything to the contrary
contained in Article 14) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the date fixed for redemption
(and the right to convert any such Notes shall be extended through such time),
subject to payment of the above amount as aforesaid. At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it in the
same manner as it would monies deposited with it by the Company for the
redemption of Notes. Without the Trustee's prior written consent, no arrangement
between the Company and such purchasers for the purchase and conversion of any
Notes shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee as set forth in this Indenture.
Section 3.05 Redemption at Option of Holders Upon a Fundamental Change.
(a) If there shall occur a Fundamental Change at any time prior to maturity of
the Notes, then each Noteholder shall have the right, at such holder's option,
to require the Company to redeem all of such holder's Notes, or any portion
thereof that is a multiple of $1,000 principal amount, on the date (the
"FUNDAMENTAL CHANGE REDEMPTION DATE") that is thirty (30) days after the date of
the Fundamental Change Notice (as defined in Section 3.05(b)) of such
Fundamental Change (or, if such 30th day is not a Business Day, the next
succeeding Business Day) at a redemption price equal to 100% of the principal
amount thereof, together with accrued interest to, but excluding, the
Fundamental Change Redemption Date; provided that if such Fundamental Change
Redemption Date is an interest payment date, then the interest payable on such
interest payment date shall be paid to the holders of record of the Notes on the
applicable record date instead of the holders surrendering the Notes for
redemption on such date.
Upon presentation of any Note redeemed in part only, the Company shall
execute and, upon the Company's written direction to the Trustee, the Trustee
shall authenticate and make available for delivery to the holder thereof, at the
expense of the Company, a new Note or Notes, of authorized denominations, in
aggregate principal amount equal to the unredeemed portion of the Notes
presented.
(b) On or before the tenth day after the occurrence of a Fundamental
Change, the Company or at its written request (which must be received by the
Trustee at least five (5) Business Days prior to the date the Trustee is
requested to give notice as described below, unless the Trustee shall agree in
writing to a shorter period), the Trustee, in the name of and at the expense of
the Company, shall mail or cause to be mailed to all holders of record on the
date of the Fundamental Change a notice (the "FUNDAMENTAL CHANGE NOTICE") of the
occurrence of such Fundamental Change and of the redemption right at the option
of the holders arising as a result thereof. Such notice shall, in any case, be
prepared by the Company. Such notice shall be mailed in the manner and with the
effect set forth in the first paragraph of Section 3.02 (without regard for the
time limits set forth therein). If the Company shall give such notice, the
Company shall also deliver a copy of the Fundamental Change Notice to the
23
Trustee at such time as it is mailed to Noteholders. Concurrently with the
mailing of any Fundamental Change Notice, the Company shall issue a press
release announcing such Fundamental Change referred to in the Fundamental Change
Notice, the form and content of which press release shall be determined by the
Company in its sole discretion. The failure to issue any such press release or
any defect therein shall not affect the validity of the Fundamental Change
Notice or any proceedings for the redemption of any Note which any Noteholder
may elect to have the Company redeem as provided in this Section 3.05. The
Trustee shall not be under a duty to verify any determination by the Company of
the occurrence of a Fundamental Change or independently to determine whether a
Fundamental Change has occurred, from time to time.
Each Fundamental Change Notice shall specify the circumstances
constituting the Fundamental Change, the Fundamental Change Redemption Date, the
price at which the Company shall be obligated to redeem Notes, that the holder
must exercise the redemption right on or prior to the close of business on the
Business Day immediately preceding the Fundamental Change Redemption Date (the
"FUNDAMENTAL CHANGE EXPIRATION TIME"), that the holder shall have the right to
withdraw any Notes surrendered prior to the Fundamental Change Expiration Time,
a description of the procedure which a Noteholder must follow to exercise such
redemption right and to withdraw any surrendered Notes, the place or places
where the holder is to surrender such holder's Notes, the amount of interest
accrued on each Note to (but excluding) the Fundamental Change Redemption Date
and the CUSIP number or numbers of the Notes (if any).
No failure of the Company to give the foregoing notices and no defect
therein shall limit the Noteholders' redemption rights or affect the validity of
the proceedings for the redemption of the Notes pursuant to this Section 3.05.
(c) For a Note to be so redeemed at the option of the holder, the
Company must receive at the office or agency of the Company maintained for that
purpose or, at the option of such holder, the Corporate Trust Office, such Note
with the form entitled "Option to Elect Repayment Upon A Fundamental Change" on
the reverse thereof duly completed, together with such Notes duly endorsed for
transfer, on or before the Fundamental Change Expiration Time. All questions as
to the validity, eligibility (including time of receipt) and acceptance of any
Note for redemption shall be determined by the Company, whose determination
shall be final and binding absent manifest error.
(d) Prior to 10:00 am (New York City Time) on the Business Day
immediately following the Fundamental Change Redemption Date, the Company will
deposit with the Trustee or with one or more paying agents (or, if the Company
is acting as its own paying agent, set aside, segregate, and hold in trust as
provided in Section 4.04) an amount of money sufficient to redeem as of the
Fundamental Change Redemption Date all the Notes to be redeemed on such date at
the appropriate redemption price, together with accrued interest to, but
excluding, the Fundamental Change Redemption Date. Payment for Notes surrendered
for redemption (and not withdrawn) prior to the Fundamental Change
24
Expiration Time will be made promptly (but in no event more than five (5)
Business Days) following the Fundamental Change Redemption Date by mailing
checks for the amount payable to the holders of such Notes entitled thereto as
they shall appear in the Note register.
(e) In the case of a reclassification, change, consolidation,
merger, combination, sale or conveyance to which Section 14.09 applies, in which
the Common Stock of the Company is changed or exchanged as a result into the
right to receive stock, securities or other property or assets (including cash),
which includes shares of Common Stock of the Company or shares of common stock
of another Person that are, or upon issuance will be, traded on a United States
national securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such stock, securities or other property or
assets (including cash) (as determined by the Company, which determination shall
be conclusive and binding), then the Person formed by such consolidation or
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture modifying the
provisions of this Indenture relating to the right of holders of the Notes to
cause the Company to redeem the Notes following a Fundamental Change, including
without limitation the applicable provisions of this Section 3.05 and the
definitions of Common Stock and Fundamental Change, as appropriate, as
determined in good faith by the Company (which determination shall be conclusive
and binding), to make such provisions apply to such other Person if different
from the Company and the common stock issued by such Person (in lieu of the
Company and the Common Stock of the Company). Such supplemental indenture shall
be accompanied by delivery to the Trustee by the Company of an Officers'
Certificate and Opinion of Counsel to the effect that such supplemental
indenture is in compliance with this Section 3.05(e).
(f) The Company will comply with the provisions of Rule 13e-4 and
any other tender offer rules under the Exchange Act to the extent then
applicable in connection with the redemption rights of the holders of Notes in
the event of a Fundamental Change.
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
Section 4.01 Payment of Principal, Premium and Interest. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any (including the redemption price upon
redemption pursuant to Article 3), and interest (and any Liquidated Damages, if
applicable), on each of the Notes at the places, at the respective times and in
the manner provided herein and in the Notes.
Section 4.02 Maintenance of Office or Agency. The Company will maintain an
office or agency where the Notes may be surrendered for registration
25
of transfer or exchange or for presentation for payment (a "paying agent") or
for conversion (a "conversion agent)", or redemption (a "redemption agent"), and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not designated or appointed by the Trustee.
The Company may also from time to time designate co-registrars and one or
more offices or agencies where the Notes may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby initially designates the Trustee as paying agent, Note
registrar, Custodian and conversion agent and the Corporate Trust Office shall
be considered as one such office or agency of the Company for each of the
aforesaid purposes.
So long as the Trustee is the Note registrar, the Trustee agrees to mail,
or cause to be mailed, the notice set forth in Section 7.10(a). If co-registrars
have been appointed in accordance with this Section, the Trustee shall mail such
notices only to the Company and the holders of Notes it can identify from its
records.
Section 4.03 Appointments to Fill Vacancies in Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 7.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 4.04 Provisions as to Paying Agent. (a) If the Company shall
appoint a paying agent other than the Trustee, or if the Trustee shall appoint
such a paying agent, the Company will cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section 4.04:
(1) that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or interest on
the Notes (whether such sums have been paid to it by the Company or
by any other obligor on the Notes) in trust for the benefit of the
holders of the Notes;
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Notes) to make any payment
of the principal of and premium, if any, or interest on the Notes
when the same shall be due and payable; and
(3) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it will forthwith pay to the
Trustee all sums so held in trust.
26
The Company shall, on or before each due date of the principal of,
premium, if any, or interest on the Notes, deposit with the paying agent a sum
(in funds which are immediately available on the due date for such payment)
sufficient to pay such principal, premium, if any, or interest, and (unless such
paying agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action; provided that if such deposit is made on the due
date, such deposit shall be received by the paying agent by 10:00 a.m., New York
City time, on such date.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of, premium, if any, or interest on the
Notes, set aside, segregate and hold in trust for the benefit of the holders of
the Notes a sum sufficient to pay such principal, premium, if any, or interest
so becoming due and will promptly notify the Trustee of any failure to take such
action and of any failure by the Company (or any other obligor under the Notes)
to make any payment of the principal of, premium, if any, or interest on the
Notes when the same shall become due and payable.
(c) Anything in this Section 4.04 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any paying agent hereunder
as required by this Section 4.04, such sums to be held by the Trustee upon the
trusts herein contained and upon such payment by the Company or any paying agent
to the Trustee, the Company or such paying agent shall be released from all
further liability with respect to such sums.
(d) Anything in this Section 4.04 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 4.04 is subject
to Sections 12.03 and 12.04.
The Trustee shall not be responsible for the actions of any other paying
agents (including the Company if acting as its own paying agent) and shall have
no control of any funds held by such other paying agents.
Section 4.05 Existence. Subject to Article 11, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence and rights (charter and statutory); provided that the
Company shall not be required to preserve any such right if the Company shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and that the loss thereof is not disadvantageous in
any material respect to the Noteholders.
Section 4.06 Maintenance of Properties. The Company will cause all
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order 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 necessary so that the business carried on in connection
27
therewith may be properly and advantageously conducted at all times; provided
that nothing in this Section shall prevent the Company from discontinuing the
operation or 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 disadvantageous in any material respect to
the Noteholders.
Section 4.07 Payment of Taxes and Other Claims. The Company will pay or
discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or upon the income, profits or property of the Company,
(ii) all claims for labor, materials and supplies which, if unpaid, might by law
become a lien or charge upon the property of the Company and (iii) all stamp
taxes and other duties, if any, which may be imposed by the United States or any
political subdivision thereof or therein in connection with the issuance,
transfer, exchange, conversion, redemption or repurchase of any Notes or with
respect to this Indenture; provided that, in the case of clauses (i) and (ii),
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (A) if the failure to do so
will not, in the aggregate, have a material adverse impact on the Company, or
(B) if the amount, applicability or validity is being contested in good faith by
appropriate proceedings.
Section 4.08 Stay, Extension and Usury Laws. The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law which would prohibit or forgive
the Company from paying all or any portion of the principal of, premium, if any,
or interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 4.09 Compliance Certificate. The Company shall deliver to the
Trustee, within one hundred twenty (120) days after the end of each fiscal year
of the Company, a certificate signed by either the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating whether or not to the best knowledge of the signer thereof the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and the status thereof of
which the signer may have knowledge.
28
The Company will deliver to the Trustee, forthwith upon becoming aware of
(i) any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or (ii) any Event of Default, an
Officers' Certificate specifying with particularity such default or Event of
Default and further stating what action the Company has taken, is taking or
proposes to take with respect thereto.
Any notice required to be given under this Section 4.09 shall be delivered
to the attention of a Responsible Officer of the Trustee at its Corporate Trust
Office.
Section 4.10 Liquidated Damages Notice. In the event that the Company is
required to pay Liquidated Damages to holders of Notes pursuant to the
Registration Rights Provisions, the Company will provide written notice
("LIQUIDATED DAMAGES NOTICE") to the Trustee of its obligation to pay Liquidated
Damages no later than fifteen (15) days prior to the required payment date for
the Liquidated Damages, and the Liquidated Damages Notice shall set forth the
amount of Liquidated Damages to be paid by the Company on such payment date. The
Trustee shall not at any time be under any duty or responsibility to any holder
of Notes to determine the Liquidated Damages, or with respect to the nature,
extent or calculation of the amount of Liquidated Damages when made, or with
respect to the method employed in such calculation of the Liquidated Damages.
The Company shall give written notice to the Trustee immediately upon the
shelf registration statement required to be filed with the SEC under Section
13(a) of the Registration Rights Provisions being declared effective by the SEC,
on which the Trustee may conclusively rely.
ARTICLE 5
NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
Section 5.01 Noteholders' Lists. The Company covenants and agrees that it
will furnish or cause to be furnished to the Trustee, quarterly, not more than
fifteen (15) days after each December 1, March 1, June 1, and September 1 in
each year beginning with December 1, 2004, and at such other times as the
Trustee may request in writing, within thirty (30) days after receipt by the
Company of any such request (or such lesser time as the Trustee may reasonably
request in order to enable it to timely provide any notice to be provided by it
hereunder), a list in such form as the Trustee may reasonably require of the
names and addresses of the holders of Notes as of a date not more than fifteen
(15) days (or such other date as the Trustee may reasonably request in order to
so provide any such notices) prior to the time such information is furnished,
except that no such list need be furnished by the Company to the Trustee so long
as the Trustee is acting as the sole Note registrar.
Section 5.02 Preservation and Disclosure of Lists. (a) The Trustee shall
preserve, in as current a form as is reasonably practicable, all information as
to the
29
names and addresses of the holders of Notes contained in the most recent list
furnished to it as provided in Section 5.01 or maintained by the Trustee in its
capacity as Note registrar or co-registrar in respect of the Notes, if so
acting. The Trustee may destroy any list furnished to it as provided in Section
5.01 upon receipt of a new list so furnished.
(b) The rights of Noteholders to communicate with other holders of
Notes with respect to their rights under this Indenture or under the Notes, and
the corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act, as if it were applicable to the Notes and this Indenture.
(c) Every Noteholder, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of holders of Notes made pursuant to the
Trust Indenture Act.
Section 5.03 Reports by Trustee. (a) Within sixty (60) days after December
15 of each year commencing with the year 2004, the Trustee shall transmit to
holders of Notes such reports dated as of December 15 of the year in which such
reports are made concerning the Trustee and its actions under this Indenture as
shall be required, if any, pursuant to the Trust Indenture Act (if such Act
shall be then applicable to the Notes and this Indenture) at the times and in
the manner provided pursuant thereto, as such reports currently being required.
(b) A copy of such report shall, at the time of such transmission to
holders of Notes, be filed by the Trustee with each stock exchange and automated
quotation system upon which the Notes are listed and with the Company. The
Company will promptly notify the Trustee in writing when the Notes are listed on
any stock exchange or automated quotation system or delisted therefrom.
Section 5.04 Reports by Company. The Company shall file with the Trustee
(and the Commission if at any time the Indenture is required to be qualified
under the Trust Indenture Act), and transmit to holders of Notes, such
information, documents, and other reports and such summaries thereof, as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant to such Act, whether or not the Notes are governed by such
Act; provided that any such information, documents or reports required to be
filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Trustee within fifteen (15) days after the same is so
required to be filed with the Commission (unless the Company files such
documents with the Commission via ▇▇▇▇▇). Delivery of such reports, information,
and documents to the Trustee is for informational purposes only and the
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on an Officers'
Certificates).
30
ARTICLE 6
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT
Section 6.01 Events of Default; Acceleration. In case one or more of the
following Events of Default (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body) shall have occurred and
be continuing:
(a) default in the payment of any installment of interest or
Liquidated Damages with respect to any of the Notes as and when the same shall
become due and payable, and continuance of such default for a period of thirty
(30) days; or
(b) default in the payment of the principal of or premium, if any,
on any of the Notes as and when the same shall become due and payable either at
maturity or in connection with any redemption or repurchase, in each case
pursuant to Article 3, by acceleration or otherwise (and regardless of whether
such payment is to be made in cash, Common Stock or a combination thereof); or
(c) default in the Company's obligation to provide a Fundamental
Change Notice upon a Fundamental Change as provided in Section 3.05; or
(d) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company in the Notes
or in this Indenture (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section 6.01 specifically dealt
with) continued for a period of sixty (60) days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee, or the Company and a Responsible
Officer of the Trustee by the holders of at least twenty-five percent (25%) in
aggregate principal amount of the Notes at the time outstanding determined in
accordance with Section 8.04; or
(e) the Company shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due; or
(f) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief with
respect to its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator,
31
custodian or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain undismissed
and unstayed for a period of ninety (90) consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 6.01(e) or 6.01(f)), unless the principal of all of the Notes shall
have already become due and payable, either the Trustee or the holders of not
less than twenty-five percent (25%) in aggregate principal amount of the Notes
then outstanding hereunder determined in accordance with Section 8.04, by notice
in writing to the Company (and to the Trustee if given by Noteholders)
specifying the respective Event of Default and stating that it is a "notice of
acceleration," may declare the principal of and premium, if any, on all the
Notes and the interest accrued thereon to be due and payable immediately, and
upon receipt of such notice the same shall become and shall be immediately due
and payable. If an Event of Default specified in Section 6.01(e) or (f) occurs,
the principal of all the Notes and the interest accrued thereon shall be
immediately and automatically due and payable without necessity of further
action. This provision, however, is subject to the conditions that if, at any
time after the principal of the Notes shall have been so declared due and
payable, and before any judgment or decree for the payment of the monies due
shall have been obtained or entered as hereinafter provided, the Company shall
pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest upon all Notes and the principal of and premium, if
any, on any and all Notes which shall have become due otherwise than by
acceleration (with interest on overdue installments of interest (to the extent
that payment of such interest is enforceable under applicable law) and on such
principal and premium, if any, at the rate borne by the Notes plus 1%, to the
date of such payment or deposit) and amounts due to the Trustee pursuant to
Section 7.06, and if any and all defaults under this Indenture, other than the
nonpayment of principal of and premium, if any, and accrued interest on Notes
which shall have become due by acceleration, shall have been cured or waived
pursuant to Section 6.07, then and in every such case the holders of a majority
in aggregate principal amount of the Notes then outstanding, by written notice
to the Company and to the Trustee, may waive all defaults or Events of Default
and rescind and annul such declaration and its consequences; but no such waiver
or rescission and annulment shall extend to or shall affect any subsequent
default or Event of Default, or shall impair any right consequent thereon. The
Company shall notify in writing a Responsible Officer of the Trustee, promptly
upon becoming aware thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Notes, and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes, and the Trustee shall continue as
though no such proceeding had been taken.
32
Section 6.02 Payments of Notes on Default; Suit Therefor. The Company
covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Notes as and when the same shall become
due and payable, and such default shall have continued for a period of thirty
(30) days, or (b) in case default shall be made in the payment of the principal
of or premium, if any, on any of the Notes as and when the same shall have
become due and payable, whether at maturity of the Notes or in connection with
any redemption, by or under this Indenture or otherwise, then, upon demand of
the Trustee, the Company will pay to the Trustee, for the benefit of the holders
of the Notes, the whole amount that then shall have become due and payable on
all such Notes for principal and premium, if any, or interest, as the case may
be, with interest upon the overdue principal and premium, if any, and (to the
extent that payment of such interest is enforceable under applicable law) upon
the overdue installments of interest at the rate borne by the Notes, plus 1%
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including reasonable compensation to the
Trustee, its agents, attorneys and counsel, and all other amounts due the
Trustee under Section 7.06. Until such demand by the Trustee, the Company may
pay the principal of and premium, if any, and interest on the Notes to the
registered holders, whether or not the Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor on the Notes under Title 11
of the United States Code, or any other applicable law, or in case a receiver,
assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Company or such other obligor, the property of the Company or such other
obligor, or in the case of any other judicial proceedings relative to the
Company or such other obligor upon the Notes, or to the creditors or property of
the Company or such other obligor, the Trustee, irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand pursuant to the provisions of this Section 6.02, shall be entitled
and empowered, by intervention in such proceedings or otherwise, to file and
prove a claim or claims for the whole amount of principal, premium, if any, and
interest owing and unpaid in respect of the Notes, and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee and of the
Noteholders allowed in such judicial
33
proceedings relative to the Company or any other obligor on the Notes, its or
their creditors, or its or their property, and to collect and receive any monies
or other property payable or deliverable on any such claims, and to distribute
the same after the deduction of any amounts due the Trustee under Section 7.06,
and any receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, custodian or similar official is hereby authorized by each of the
Noteholders to make such payments to the Trustee, and, in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due it for reasonable
compensation, expenses, advances and disbursements, including counsel fees and
expenses incurred by it up to the date of such distribution. To the extent that
such payment of reasonable compensation, expenses, advances and disbursements
out of the estate in any such proceedings shall be denied for any reason,
payment of the same shall be secured by a lien on, and shall be paid out of, any
and all distributions, dividends, monies, securities, and other property which
the holders of the Notes may be entitled to receive in such proceedings, whether
in liquidation or under any plan of reorganization or arrangement or otherwise.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes, or the production thereof at any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes
parties to any such proceedings.
Section 6.03 Application of Monies Collected by Trustee. Any monies
collected by the Trustee pursuant to this Article 6 shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
7.06;
SECOND: In case the principal of the outstanding Notes shall not
have become due and be unpaid, to the payment of interest on the Notes in
default in the order of the maturity of the installments of such interest,
with interest (to the extent that such interest has been collected by the
Trustee) upon the overdue installments of interest at the rate borne by
the
34
Notes plus 1%, such payments to be made ratably to the Persons entitled
thereto;
THIRD: In case the principal of the outstanding Notes shall have
become due, by declaration or otherwise, and be unpaid to the payment of
the whole amount then owing and unpaid upon the Notes for principal and
premium, if any, and interest, with interest on the overdue principal and
premium, if any, and (to the extent that such interest has been collected
by the Trustee) upon overdue installments of interest at the rate borne by
the Notes plus 1%, and in case such monies shall be insufficient to pay in
full the whole amounts so due and unpaid upon the Notes, then to the
payment of such principal and premium, if any, and interest without
preference or priority of principal and premium, if any, over interest, or
of interest over principal and premium, if any, or of any installment of
interest over any other installment of interest, or of any Note over any
other Note, ratably to the aggregate of such principal and premium, if
any, and accrued and unpaid interest; and
FOURTH: To the payment of the remainder, if any, to the Company or
any other Person lawfully entitled thereto.
Section 6.04 Proceedings by Noteholder. No holder of any Note shall have
any right by virtue of or by reference to any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than twenty-five percent (25%)
in aggregate principal amount of the Notes then outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 6.07; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or more holders of Notes shall
have any right in any manner whatever by virtue of or by reference to any
provision of this Indenture to affect, disturb or prejudice the rights of any
other holder of Notes, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
For the protection and enforcement of this Section 6.04, each and every
Noteholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
35
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any (including the redemption price upon redemption
pursuant to Article 3), and accrued interest on such Note, on or after the
respective due dates expressed in such Note or in the event of redemption, or to
institute suit for the enforcement of any such payment on or after such
respective dates against the Company shall not be impaired or affected without
the consent of such holder.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in its own behalf and for its own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, its rights of
conversion as provided herein.
Section 6.05 Proceedings by Trustee. In case of an Event of Default, the
Trustee may, in its discretion, proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as are
necessary to protect and enforce any of such rights, either by suit in equity or
by action at law or by proceeding in bankruptcy or otherwise, whether for the
specific enforcement of any covenant or agreement contained in this Indenture or
in aid of the exercise of any power granted in this Indenture, or to enforce any
other legal or equitable right vested in the Trustee by this Indenture or by
law.
Section 6.06 Remedies Cumulative and Continuing. Except as provided in
Section 2.06, all powers and remedies given by this Article 6 to the Trustee or
to the Noteholders shall, to the extent permitted by law, be deemed cumulative
and not exclusive of any thereof or of any other powers and remedies available
to the Trustee or the holders of the Notes, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any holder of any of the Notes to exercise any right or power accruing
upon any default or Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any such
default or any acquiescence therein, and, subject to the provisions of Section
6.04, every power and remedy given by this Article 6 or by law to the Trustee or
to the Noteholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Noteholders.
Section 6.07 Direction of Proceedings and Waiver of Defaults by Majority
of Noteholders. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 8.04 shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee; provided that (a) such direction shall not be in
conflict with any rule of law or with this Indenture, (b) the Trustee may take
any other action which is not inconsistent with such direction and (c) the
Trustee may decline to take any action that would benefit some Noteholder to the
detriment of
36
other Noteholders. The holders of a majority in aggregate principal amount of
the Notes at the time outstanding determined in accordance with Section 8.04
may, on behalf of the holders of all of the Notes, waive any past or existing
default or Event of Default hereunder and its consequences except:
(1) a past or existing default in the payment of interest or
premium, if any, on, or the principal of, the Notes (including in
connection with an offer to purchase); provided however that holders
of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including
any related payment default that resulted from such acceleration in
accordance with Section 6.01,
(2) a failure by the Company to convert any Notes into Common
Stock,
(3) a default in the payment of the redemption price pursuant
to Article 3, or
(4) a default in respect of a covenant or provisions hereof
under Article 10 which by its terms cannot be modified or amended
without the consent of the holders of each or all Notes then
outstanding or affected thereby.
Upon any such waiver, the Company, the Trustee and the holders of the
Notes shall be restored to their former positions and rights hereunder; but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon. Whenever any default or Event of Default
hereunder shall have been cured or waived as permitted by this Section 6.07,
said default or Event of Default shall for all purposes of the Notes and this
Indenture be deemed to have been cured and to be not continuing for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
Section 6.08 Notice of Defaults. The Trustee shall, within ninety (90)
days after a Responsible Officer of the Trustee has knowledge of the occurrence
of a default, mail to all Noteholders, as the names and addresses of such
holders appear upon the Note register, notice of all defaults known to a
Responsible Officer, unless such defaults or Event of Default shall have been
cured or waived before the giving of such notice; provided that except in the
case of default in the payment of the principal of, or premium, if any, or
interest on any of the Notes, the Trustee shall be protected in withholding such
notice if and so long as a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Noteholders.
Section 6.09 Undertaking to Pay Costs. All parties to this Indenture
agree, and each holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, in any suit for the
37
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided that the provisions of this Section 6.09
(to the extent permitted by law) shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than ten percent in principal amount of the Notes
at the time outstanding determined in accordance with Section 8.04, or to any
suit instituted by any Noteholder for the enforcement of the payment of the
principal of or premium, if any, or interest on any Note on or after the due
date expressed in such Note or to any suit for the enforcement of the right to
convert any Note in accordance with the provisions of Article 14.
ARTICLE 7
THE TRUSTEE
Section 7.01 Duties and Responsibilities of Trustee. The Trustee, prior to
the occurrence of an Event of Default and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default known to the Trustee has occurred (which has not been cured or waived),
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 their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default known to the
Trustee and after the curing or waiving of all Events of Default which may have
occurred:
the duties and obligations of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trust Indenture Act, and the
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture and the Trust
Indenture Act against the Trustee; and
in the absence of bad faith and willful misconduct on the part of the Trustee,
the Trustee may conclusively rely as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture;
but, in the case of any such certificates or opinions which by any provisions
hereof are
38
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Officers of the Trustee, unless the
Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the written
direction of the holders of not less than a majority in principal amount of the
Notes at the time outstanding determined as provided in Section 8.04 relating to
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture;
(d) whether or not therein provided, every provision of this
Indenture relating to the conduct or affecting the liability of, or affording
protection to, the Trustee shall be subject to the provisions of this Section;
(e) the Trustee shall not be liable in respect of any payment (as to
the correctness of amount, entitlement to receive or any other matters relating
to payment) or notice effected by the Company or any paying agent or any records
maintained by any co-registrar with respect to the Notes;
(f) if any party fails to deliver a notice relating to an event the
fact of which, pursuant to this Indenture, requires notice to be sent to the
Trustee, the Trustee may conclusively rely on its failure to receive such notice
as reason to act as if no such event occurred; and
(g) the Trustee shall not be deemed to have knowledge of any Event
of Default hereunder unless it shall have been notified in writing of such Event
of Default by the Company or the holders of at least 10% in aggregate principal
amount of the Notes.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Section 7.02 Reliance on Documents, Opinions, Etc. Except as otherwise
provided in Section 7.01:
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, coupon or other paper or
document
39
(whether in its original or facsimile form) believed by it in good faith to be
genuine and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its own selection and
any advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby;
(e) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall upon prior reasonable notice and during normal business
hours be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder; and
(g) any permissive right or power granted to the Trustee hereunder
shall not be considered to be a mandatory duty to act.
Section 7.03 No Responsibility for Recitals, Etc. The recitals contained
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
40
Section 7.04 Trustee, Paying Agents, Conversion Agents or Registrar May
Own Notes. The Trustee, any authentication agent, any paying agent, any
conversion agent or any Note registrar, in its individual or any other capacity,
may become the owner or pledgee of Notes with the same rights it would have if
it were not Trustee, authentication agent, paying agent, conversion agent or
Note registrar.
Section 7.05 Monies to be Held in Trust. Subject to the provisions of
Section 12.04, all monies received by the Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they were
received. Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
may be agreed in writing from time to time by the Company and the Trustee.
Section 7.06 Compensation and Expenses of Trustee; Indemnification of
Trustee; Certain Limits on Liability. The Company covenants and agrees to pay to
the Trustee from time to time, and the Trustee shall be entitled to, reasonable
compensation for all services rendered by it hereunder in any capacity (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) as mutually agreed to from time to time in writing
between the Company and the Trustee, and the Company will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
reasonably incurred or made by the Trustee 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 Persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
the negligence, willful misconduct, recklessness or bad faith of the Trustee.
The Company also covenants to indemnify the Trustee (and any officer, director
or employee of the Trustee), in any capacity under this Indenture and its agents
and any authenticating agent for, and to hold them harmless against, any and all
loss, liability, damage, claim, action, suit, cost or expense (including fees
and expenses of counsel) including taxes (other than taxes based on the income
of the Trustee or such agents) of any kind and nature whatsoever incurred or
paid without negligence, willful misconduct, recklessness or bad faith on the
part of the Trustee or such officers, directors, employees and agent or
authenticating agent, as the case may be, and arising out of or in connection
with the acceptance or administration of this trust or the performance of its
duties or exercise of its rights or powers hereunder, or in any other capacity
hereunder, including the costs and expenses of defending themselves against any
claim of liability in the premises. The obligations of the Company under this
Section 7.06 to compensate or indemnify the Trustee and to pay or reimburse the
Trustee for expenses, disbursements and advances shall be secured by a lien
prior to that of the Notes upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the holders of
particular Notes. The obligation of the Company under this Section shall survive
the satisfaction and discharge of this Indenture and the resignation or removal
of the Trustee.
41
When the Trustee and its agents and any authenticating agent incur
expenses or render services after an Event of Default specified in Section
6.01(e) or Section 6.01(f) with respect to the Company occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency or similar laws.
To the maximum extent permitted by the Trust Indenture Act, in no event
shall the Trustee be liable for any indirect, special, punitive, or
consequential loss or damage of any kind whatsoever, including, but not limited
to, lost profits, even if the Trustee has been advised of the likelihood of such
loss or damage and regardless of the form of action.
In no event shall the Trustee be liable for any failure or delay in the
performance of its obligations hereunder because of circumstances beyond its
control, including, but not limited to, acts of God, flood, war (whether
declared or undeclared), terrorism, fire, riot, embargo, government action,
including any laws, ordinances, regulations, governmental action or the like
which delay, restrict or prohibit the providing of the services contemplated by
this Agreement.
Section 7.07 Officers' Certificate as Evidence. Except as otherwise
provided in Section 7.01, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of bad faith or willful misconduct on the part
of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee.
Section 7.08 Conflicting Interests of Trustee. If the Trustee has or shall
acquire a conflicting interest within the meaning of the Trust Indenture Act,
the Trustee shall either eliminate such interest or resign, to the extent and in
the manner provided by, and subject to the provisions of, the Trust Indenture
Act and this Indenture.
Section 7.09 Eligibility of Trustee. There shall at all times be a Trustee
hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000 (or if such Person is a member of a bank holding company system, its
bank holding company shall have a combined capital and surplus of at least
$50,000,000). If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of any supervising or examining
authority, then for the purposes of this Section the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 7.09, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 7.10 Resignation or Removal of Trustee.
42
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company and to the holders of Notes. Upon receiving such
notice of resignation, the Company shall promptly appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment thirty (30) days after the mailing of
such notice of resignation to the Noteholders, the resigning Trustee may
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor trustee, or, if any Noteholder who has been a
bona fide holder of a Note or Notes for at least six (6) months may, subject to
the provisions of Section 6.09, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with Section 7.08 after
written request therefor by the Company or by any Noteholder who has
been a bona fide holder of a Note or Notes for at least six (6)
months; or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 7.09 and shall fail to resign after
written request therefor by the Company or by any such Noteholder;
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 such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 6.09, any Noteholder who has been a bona fide holder of a
Note or Notes for at least six (6) 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; provided that
if no successor Trustee shall have been appointed and have accepted appointment
thirty (30) days after either the Company or the Noteholders has removed the
Trustee, the Trustee so removed may petition, at the expense of the Company, any
court of competent jurisdiction for an appointment of a successor trustee. Such
court may thereupon,
43
after such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and nominate a
successor trustee which shall be deemed appointed as successor trustee unless,
within ten (10) days after notice to the Company of such nomination, the Company
objects thereto, in which case the Trustee so removed or any Noteholder, or if
such Trustee so removed or any Noteholder fails to act, the Company, upon the
terms and conditions and otherwise as in Section 7.10(a) provided, may petition
any court of competent jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 7.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 7.11.
Section 7.11 Acceptance by Successor Trustee. Any successor trustee
appointed as provided in Section 7.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amount then due it pursuant to the provisions of Section
7.06, execute and deliver an instrument transferring to such successor trustee
all the rights and powers of the trustee so ceasing to act. Upon request of any
such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property and funds held or collected by
such trustee as such, except for funds held in trust for the benefit of holders
of particular Notes, to secure any amounts then due it pursuant to the
provisions of Section 7.06.
No successor trustee shall accept appointment as provided in this Section
7.11 unless, at the time of such acceptance, such successor trustee shall be
qualified under the provisions of Section 7.08 and be eligible under the
provisions of Section 7.09.
Upon acceptance of appointment by a successor trustee as provided in this
Section 7.11, the Company (or the successor trustee, at the written direction of
the Company) shall mail or cause to be mailed notice of the succession of such
trustee hereunder to the holders of Notes at their addresses as they shall
appear on the Note register. If the Company fails to mail such notice within ten
(10) days after
44
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be mailed at the expense of the Company.
Section 7.12 Succession by Merger. 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 (including any trust created
by this Indenture), shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that in the case of any corporation succeeding to all
or substantially all of the corporate trust business of the Trustee, such
corporation shall be qualified under the provisions of Section 7.08 and eligible
under the provisions of Section 7.09.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or any authenticating agent appointed by such successor
trustee may authenticate such Notes in the name of the successor trustee; and in
all such cases such certificates shall have the full force that is provided in
the Notes or in this Indenture; provided that the right to adopt the certificate
of authentication of any predecessor Trustee or authenticate Notes in the name
of any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
Section 7.13 Preferential Collection of Claims. If and when the Trustee
shall be or become a creditor of the Company (or any other obligor upon the
Notes), the Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of the claims against the Company (or any such
other obligor).
Section 7.14 Trustee's Application For Instructions From The Company. Any
application by the Trustee for written instructions from the Company (other than
with regard to any action proposed to be taken or omitted to be taken by the
Trustee that affects the rights of the holders of the Notes or holders of Senior
Indebtedness under this Indenture, including, without limitation, under Article
4 hereof) may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three (3) Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to any earlier date) unless
45
prior to taking any such action (or the effective date in the case of an
omission), the Trustee shall have received written instructions in response to
such application specifying the action to be taken or omitted.
ARTICLE 8
THE NOTEHOLDERS
Section 8.01 Action by Noteholders. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article 9, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than fifteen
(15) days prior to the date of commencement of solicitation of such action.
Section 8.02 Proof of Execution by Noteholders. Subject to the provisions
of Sections 7.01, 7.02 and 9.05, proof of the execution of any instrument by a
Noteholder or its agent or proxy shall be sufficient if made in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
such manner as shall be satisfactory to the Trustee. The holding of Notes shall
be proved by the registry of such Notes or by a certificate of the Note
registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 9.06.
Section 8.03 Who Are Deemed Absolute Owners. The Company, the Trustee, any
authenticating agent, any paying agent, any conversion agent and any Note
registrar may deem the Person in whose name such Note shall be registered upon
the Note register to be, and may treat it as, the absolute owner of such Note
(whether or not such Note shall be overdue and notwithstanding any notation of
ownership or other writing thereon made by any Person other than the Company or
any Note registrar) for the purpose of receiving payment of or on account of the
principal of, premium, if any, and interest on such Note, for conversion of such
Note and for all other purposes; and neither the Company nor the Trustee nor any
authenticating agent, any paying agent nor any conversion agent nor any Note
registrar shall be affected by any notice to the contrary. All such payments so
made to any holder for the time being, or upon his order, shall be valid, and,
to the
46
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for monies payable upon any such Note.
Section 8.04 Company-Owned Notes Disregarded. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes which
are owned by the Company or any other obligor on the Notes or any Affiliate of
the Company or any other obligor on the Notes shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; provided that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent, waiver or other action, only Notes which
a Responsible Officer knows are so owned shall be so disregarded. Notes so owned
which have been pledged in good faith may be regarded as outstanding for the
purposes of this Section 8.04 if the pledgee shall establish to the satisfaction
of the Trustee the pledgee's right to vote such Notes and that the pledgee is
not the Company, any other obligor on the Notes or any Affiliate of the Company
or any such other obligor. In the case of a dispute as to such right, any good
faith decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee. Upon request of the Trustee, the Company shall
furnish to the Trustee promptly an Officers' Certificate listing and identifying
all Notes, if any, known by the Company to be owned or held by or for the
account of any of the above described Persons, and, subject to Section 7.01, the
Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Notes not
listed therein are outstanding for the purpose of any such determination.
Section 8.05 Revocation of Consents, Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
8.01, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 8.02, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be a continuing action and conclusive and binding upon such holder and upon all
future holders and owners of such Note and of any Notes issued in exchange or
substitution therefor, irrespective of whether any notation in regard thereto is
made upon such Note or any Note issued in exchange or substitution therefor. An
amendment, supplement or waiver becomes effective in accordance with its terms
and thereafter binds every holder.
47
ARTICLE 9
MEETINGS OF NOTEHOLDERS
Section 9.01 Purpose of Meetings. A meeting of Noteholders may be called
at any time and from time to time pursuant to the provisions of this Article 9
for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or to
give any directions to the Trustee permitted under this Indenture,
or to consent to the waiving of any default or Event of Default
hereunder and its consequences, or to take any other action
authorized to be taken by Noteholders pursuant to any of the
provisions of Article 6;
(2) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article 7;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 10.02; or
(4) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of
the Notes under any other provision of this Indenture or under
applicable law.
Nothing in this Article 9 shall be construed to prevent or preclude the
Trustee from otherwise calling or conducting any meeting of Noteholders at which
a formal vote shall not be taken (such as but not limited to an informational
meeting) or to require that a meeting be called or conducted in order to obtain,
or in connection with, any particularly request, demand, authorization,
direction, notice, consent, waiver or other action by Noteholders under this
Indenture.
Section 9.02 Call of Meetings by Trustee. The Trustee may at any time call
a meeting of Noteholders to take any action specified in Section 9.01, to be
held at such time and at such place as the Trustee shall determine; provided,
that any such meeting may in the alternative be conducted by telephone
conference in a manner reasonably designed to be substantially consistent with
the procedures set forth in this Article 9, to the extent applicable. Notice of
every meeting of the Noteholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting and
the establishment of any record date pursuant to Section 8.01, shall be mailed
to holders of Notes at their addresses as they shall appear on the Note
register. Such notice shall also be mailed to the Company. Such notices shall be
mailed not less than twenty (20) nor more than ninety (90) days prior to the
date fixed for the meeting.
Any meeting of Noteholders shall be valid without notice if the holders of
all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the
48
Company and the Trustee are either present by duly authorized representatives or
have, before or after the meeting, waived notice.
Section 9.03 Call of Meetings by Company or Noteholders. In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent (10%) in aggregate principal amount of the Notes
then outstanding, shall have requested the Trustee to call a meeting of
Noteholders, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within twenty (20) days after receipt of such request,
then the Company or such Noteholders may determine the time and the place for
such meeting and may call such meeting to take any action authorized in Section
9.01, by mailing notice thereof as provided in Section 9.02 (provided that such
notice shall also be sent to the Trustee).
Section 9.04 Qualifications for Voting. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes on the record
date pertaining to such meeting. The only persons who shall be entitled to be
present or to speak at any meeting of Noteholders shall be the persons entitled
to vote at such meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company and its counsel.
Notwithstanding the foregoing or any other term herein to the contrary, nothing
in this Article 9 shall preclude or prevent the Trustee from calling or
conducting a meeting of Noteholders (whether pursuant to this Article 9 or
otherwise) at which the Company is not allowed or entitled to be present.
Section 9.05 Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 9.03, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting except that any meeting called by the Company shall be chaired by a
representative of the Company and any meeting called by the Trustee may, at the
Trustee's election, be chaired by the Trustee.
49
Subject to the provisions of Section 8.04, at any meeting each Noteholder
or proxyholder shall be entitled to one vote for each $1,000 principal amount of
Notes held or represented by him. If any vote cast or counted or proposed to be
cast or counted is challenged on the ground that such Note is not outstanding,
or does not comply with the provisions of Section 9.04, the chairman of the
meeting shall determine whether the holder of such Note is authorized to act.
The chairman of the meeting shall have no right to vote other than by virtue of
Notes held by him or instruments in writing as aforesaid duly designating him as
the proxy to vote on behalf of other Noteholders. Any meeting of Noteholders
duly called pursuant to the provisions of Section 9.02 or 9.03 may be adjourned
from time to time by the holders of a majority of the aggregate principal amount
of Notes represented at the meeting, whether or not constituting a quorum, and
the meeting may be held as so adjourned without further notice.
Section 9.06 Voting. The vote upon any resolution submitted to any meeting
of Noteholders shall be by written ballot on which shall be subscribed the
signatures of the holders of Notes or of their representatives by proxy and the
outstanding principal amount of the Notes held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall be representatives of the Trustee, and who shall count all votes cast at
the meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Noteholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was mailed as provided in Section 9.02. The record
shall show the principal amount of the Notes voting in favor of or against any
resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the duplicates shall
be delivered to the Company (except in the case of a meeting at which the
Company was not allowed to be present) and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated, absent manifest error.
Section 9.07 No Delay of Rights by Meeting. Nothing contained in this
Article 9 shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Noteholders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrance or delay in the exercise of any right
or rights conferred upon or reserved to the Trustee or to the Noteholders under
any of the provisions of this Indenture or of the Notes.
50
ARTICLE 10
SUPPLEMENTAL INDENTURES
Section 10.01 Supplemental Indentures Without Consent of Noteholders. The
Company, when authorized by the resolutions of the Board of Directors, and the
Trustee may, from time to time, and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 14.09 and the
redemption obligations of the Company pursuant to the requirements of Section
3.05(e);
(b) to convey, transfer, assign, mortgage or pledge to the Trustee
as security for the Notes, any property or assets;
(c) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Company pursuant to Article 11;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided that in respect of any
such additional covenant, restriction or condition, such supplemental indenture
may provide for a particular period of grace after default (which period may be
shorter or longer than that allowed in the case of other defaults) or may
provide for an immediate enforcement upon such default or may limit the remedies
available to the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to provide
for exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;
(f) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture that may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture that shall not materially adversely affect the
interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
51
(h) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualifications of this
Indenture under the Trust Indenture Act, or under any similar federal statute
hereafter enacted.
Any amendment described in clause (f) above made solely to conform this
Indenture to the final offering memorandum provided to investors in connection
with the initial offering of the Notes by the Company will not be deemed to
materially adversely affect the interests of the holders of the Notes.
Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture, the Trustee
is hereby authorized to join with the Company in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations that may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
that affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
Any supplemental indenture authorized by the provisions of this Section
10.01 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 10.02.
Notwithstanding any other provision of the Indenture or the Notes, the
Registration Rights Provisions and the obligation to pay Liquidated Damages
thereunder may be amended, modified or waived in accordance with the provisions
of the Registration Rights Provisions.
Section 10.02 Supplemental Indenture with Consent of Noteholders. With the
consent (evidenced as provided in Article 8) of the holders of not less than at
least a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Notes; provided that no such supplemental indenture
shall (i) extend the fixed maturity of any Note, or reduce the rate or extend
the time for payment of interest or Liquidated Damages thereon, or reduce the
principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption or repurchase thereof, or impair the right of any
Noteholder to institute suit for the payment thereof, or make the principal
thereof or interest or premium, if any, thereon payable in any coin or currency
other than that provided in or contemplated by the Notes or this Indenture, or
change the obligation of the Company to redeem any Note on a redemption date in
a manner adverse to the holders of Notes, or change the obligation of the
Company to
52
redeem any Note upon the happening of a Fundamental Change in a manner adverse
to the holders of Notes, or impair the right to convert the Notes into Common
Stock subject to the terms set forth herein, including Section 14.09, or reduce
the quorum or the voting requirements under the Indenture, in each case, without
the consent of the holder of each Note so affected, or modify any of the
provisions of this Section 10.02 or Section 6.07, except to increase any such
percentage or to provide that certain other provisions of this Indenture cannot
be modified or waived without the consent of the holder of each Note so
affected, or change any obligation of the Company to maintain an office or
agency in the places and for the purposes set forth in Section 4.01, or (ii)
reduce the aforesaid percentage of Notes, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of all Notes then outstanding.
Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Noteholders under this
Section 10.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 10.03 Effect of Supplemental Indenture. Any supplemental indenture
executed pursuant to the provisions of this Article 10 shall comply with any
mandatorily applicable provisions (if any) of the Trust Indenture Act, as then
in effect, provided that this Section 10.03 shall not require such supplemental
indenture or the Trustee to comply with or be qualified under the Trust
Indenture Act prior to the time such compliance or qualification (if any) is in
fact required under the terms of the Trust Indenture Act or the Indenture has
been qualified under the Trust Indenture Act, nor shall it constitute any
admission or acknowledgment by any party to such supplemental indenture that any
such compliance or qualification is required prior to the time such compliance
or qualification is in fact required under the terms of the Trust Indenture Act
or the Indenture has been qualified under the Trust Indenture Act. Upon the
execution of any supplemental indenture pursuant to the provisions of this
Article 10, this Indenture shall be and be deemed to be modified and amended in
accordance therewith and the respective rights, limitation of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company and the holders of Notes shall thereafter be determined, exercised and
enforced hereunder, subject in all respects to such modifications and amendments
and all the terms and
53
conditions of any such supplemental indenture shall be and be deemed to be part
of the terms and conditions of this Indenture for any and all purposes.
Section 10.04 Notation on Notes. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article 10 may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee shall
so determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Company, to any modification of this Indenture contained in any such
supplemental indenture may, at the Company's expense, be prepared and executed
by the Company, authenticated by the Trustee (or an authenticating agent duly
appointed by the Trustee pursuant to Section 16.11) and delivered in exchange
for the Notes then outstanding, upon surrender of such Notes then outstanding.
Section 10.05 Evidence of Compliance of Supplemental Indenture to be
Furnished to Trustee. Prior to entering into any supplemental indenture, the
Trustee may request, and upon such request shall be entitled to receive, an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article 10.
ARTICLE 11
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 11.01 Company May Consolidate on Certain Terms. Subject to the
provisions of Section 11.02, nothing contained in this Indenture or in any of
the Notes shall prevent any consolidation or merger of the Company with or into
any other Person or Persons (whether or not affiliated with the Company), or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance or
lease (or successive sales, conveyances or leases) of all or substantially all
of the property of the Company, to any other Person (whether or not affiliated
with the Company), authorized to acquire and operate the same; provided that
immediately after giving effect to any such consolidation, merger, sale,
conveyance or lease, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have happened and
be continuing. The Company shall give the conversion notice provided for under
Section 14.01(b) provided that the failure to give such notice or any default
therein shall not affect the validity of such transaction.
Section 11.02 Successor to be Substituted. In case of any such
consolidation, merger or combination in which the Company is not the surviving
Person or in connection with any sale, conveyance or lease pursuant to the terms
of which these Notes are to be assumed by a successor Person and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and premium, if any, and interest on all of
54
the Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
Person shall succeed to and be substituted for the Company, with the same effect
as if it had been named herein as the party of this first part. Such successor
Person thereupon may cause to be signed, and may issue either in its own name or
in the name of Standard Management Corporation any or all of the Notes, issuable
hereunder that theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor Person instead
of the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause
to be authenticated and delivered, any Notes that previously shall have been
signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes that such successor Person thereafter shall cause
to be signed and delivered to the Trustee for that purpose. All the Notes so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Notes theretofore or thereafter issued in accordance with the
terms of this Indenture as though all of such Notes had been issued at the date
of the execution hereof. In the event of any such consolidation, merger, sale,
conveyance or lease, the Person named as the "Company" in the first paragraph of
this Indenture or any successor that shall thereafter have become such in the
manner prescribed in this Article 11 may be dissolved, wound up and liquidated
at any time thereafter and such Person shall be released from its liabilities as
obligor and maker of the Notes and from its obligations under this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.
Section 11.03 Opinion of Counsel to be Given Trustee. The Trustee shall
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance or lease and any
such assumption complies with the provisions of this Article 11.
ARTICLE 12
SATISFACTION AND DISCHARGE OF INDENTURE
Section 12.01 Discharge of Indenture. When (a) the Company shall deliver
to the Trustee for cancellation all Notes theretofore authenticated (other than
any Notes that have been destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
and not theretofore canceled, or (b) all the Notes not theretofore canceled or
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds sufficient to pay at maturity or upon redemption of all
of the Notes (other than any Notes that shall have been mutilated, destroyed,
lost or stolen and in lieu of or in substitution for which other Notes shall
have been
55
authenticated and delivered) not theretofore canceled or delivered to the
Trustee for cancellation, including principal and premium, if any, and interest
due or to become due to such date of maturity or redemption date (and any
Liquidated Damages, if applicable), as the case may be, accompanied by a
verification report, as to the sufficiency of the deposited amount, from an
independent certified accountant or other financial professional satisfactory to
the Trustee, and if the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company, then this Indenture shall cease to be of
further effect (except (x) in the case of clause (b) as to (i) remaining rights
of registration of transfer, substitution and exchange and conversion of Notes
and (ii) rights hereunder of Noteholders to receive payments of principal of and
premium, if any, and interest on, the Notes and the other rights, duties and
obligations of Noteholders, as beneficiaries hereof with respect to the amounts,
if any, so deposited with the Trustee, and (y) the Company's obligations
hereunder which by their terms survive termination or discharge of this
Indenture, including, without limitation, the Company's indemnification
obligations under Section 7.06 and its obligations under Section 12.05). The
rights, obligations (except in respect of obligations, covenants or liabilities
of the Company being discharged), protections and immunities of the Trustee
hereunder shall survive any discharge pursuant to paragraph (a) and (b) of this
Section. The Trustee, on written demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel as required by Section 16.05 and
at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Company,
however, hereby agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee and to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Notes.
Section 12.02 Deposited Monies to be Held in Trust by Trustee. Subject to
Section 12.04, all monies deposited with the Trustee pursuant to Section 12.01,
shall be held in trust for the sole benefit of the Noteholders, and such monies
shall be applied by the Trustee to the payment, either directly or through any
paying agent (including the Company if acting as its own paying agent), to the
holders of the particular Notes for the payment or redemption of which such
monies have been deposited with the Trustee, of all sums due and to become due
thereon for principal and interest and premium, if any.
Section 12.03 Paying Agent to Repay Monies Held. Upon the satisfaction and
discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon written request of the Company, be
repaid to it or paid to the Trustee, and thereupon such paying agent shall be
released from all further liability with respect to such monies.
Section 12.04 Return of Unclaimed Monies. Subject to the requirements of
applicable law and this Indenture, any monies deposited with or paid to the
Trustee for payment of the principal of, premium, if any, or interest on Notes
and not applied but remaining unclaimed by the holders of Notes for one year
after the date upon which the principal of, premium, if any, or interest on such
Notes, as
56
the case may be, shall have become due and payable, shall be repaid to the
Company by the Trustee on demand and all liability of the Trustee shall
thereupon cease with respect to such monies; and the holder of any of the Notes
shall thereafter look only to the Company for any payment that such holder may
be entitled to collect unless an applicable abandoned property law designates
another Person.
Section 12.05 Reinstatement. If the Trustee or the paying agent is unable
to apply any money in accordance with Section 12.02 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 12.01 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 12.02;
provided that if the Company makes any payment of interest on or principal of
any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the holders of such Notes to receive such payment
from the money held by the Trustee or paying agent.
ARTICLE 13
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 13.01 Indenture and Notes Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, attorney, officer, director or
subsidiary, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
ARTICLE 14
CONVERSION OF NOTES
Section 14.01 Right to Convert; Notice of Certain Transactions. (a)
Subject to and upon compliance with the provisions of this Indenture, including
Section 14.02 hereof, the holder of any Note shall have the right, at such
holder's option, to convert the principal amount of the Note, or any portion of
such principal amount which is a multiple of $1,000, into fully paid and
non-assessable shares of Common Stock (as such shares shall then be constituted)
at the Conversion Rate in effect at such time, by surrender of the Note so to be
converted in whole or in part, together with any required funds, in the manner
provided in Section 14.02. The Notes shall be convertible at any time prior to
the
57
close of business on the Business Day immediately preceding the final maturity
date of the Notes, subject to prior redemption or repurchase of the Notes, and
the Company's payment option rights, provided however,
(i) if such Note has been called for redemption, such Note may
not be converted after the close of business on the Business Day
immediately preceding, the redemption date unless the Company fails
to pay the Redemption Price in accordance with Section 3.02 or
Section 3.05(d), as applicable; and
(ii) if the Company is making a distribution as provided in
Section 14.01(b), the participating Notes may not be converted from
the close of business on the Business Day immediately preceding, but
not including, the Ex-Dividend Time until the first Business Day
after the Ex-Dividend Time.
(b) In addition, if: (1) the Company distributes to all holders of
its Common Stock rights or warrants entitling them (for a period expiring within
45 days of the record date for the determination of the stockholders entitled to
receive such distribution) to subscribe for or purchase shares of Common Stock,
at a price per share less than the average of the Closing Sale Price for the ten
Trading Days immediately preceding, but not including, the date such
distribution is first publicly announced by the Company, or (2) the Company
distributes to all holders of its Common Stock, cash, assets (other than cash
distributions permitted by Section 14.07(e)), debt securities or rights to
purchase its securities, where the Fair Market Value of such distribution per
share of Common Stock exceeds 5% of the Closing Sale Price on the Trading Day
immediately preceding the date such distribution is first publicly announced by
the Company, then, the Company shall give notice of such distribution to the
Noteholders, which notice shall be given not less than 20 days prior to the
Ex-Dividend Time. No adjustment to the Conversion Price or the ability of a
holder of a Note to convert will be made if the holder will otherwise
participate in the distribution for which such notice is given. "EX-DIVIDEND
TIME" means, with respect to any 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 distribution. The Company shall give written
notice to the Trustee of the beginning and end of any Ex-Dividend Time, in each
case immediately upon the occurrence thereof, on which the Trustee may
conclusively rely.
(c) If the Company is a party to a consolidation, merger, binding
share exchange or sale of all or substantially all of its assets, in each case
pursuant to which the Common Stock is converted into cash, securities, or other
property, then at the effective time of the transaction, a holder's right to
convert a Note into the Common Stock will be changed into a right to convert it
into the kind and amount of cash, securities and other property which such
holder would have received if such holder had converted such Notes immediately
prior to the transaction.
58
(d) A Note in respect of which a holder is electing to exercise its
option to require redemption upon a Fundamental Change pursuant to Section
3.05(a) may be converted only if such holder withdraws its election in
accordance with Section 3.05(b). A holder of Notes is not entitled to any rights
of a holder of Common Stock until such holder has converted his Notes to Common
Stock, and only to the extent such Notes are deemed to have been converted to
Common Stock under this Article 14.
Section 14.02 Conversion Procedures. To convert a Note, a holder must (a)
complete and manually sign the conversion notice or a facsimile of the
conversion notice on the back of the Note and deliver such notice to the
conversion agent, (b) surrender the Note to the conversion agent, (c) furnish
appropriate endorsements and transfer documents if required by the Registrar or
the conversion agent, (d) pay any transfer or similar tax, if required and (e)
if required (or as may be required by the Company if a Noteholder exercises its
right to convert prior to an interest payment date but after the record date for
such interest payment date), pay funds to the Company equal to the interest
payable on the next interest payment date. The date, within the time periods set
forth in Section 14.01, on which the holder satisfies all of those requirements
is the "CONVERSION DATE." Within two Business Days following the Conversion
Date, the Company shall deliver to the holder, through the Trustee, written
notice of whether such Notes shall be converted into Common Stock or paid in
cash or a combination of cash and Common Stock (unless the Company shall have
already done so pursuant to a notice of redemption pursuant to Section 3.02 in
respect of a Conversion Date occurring before the Redemption Date set forth in
such notice) and in what percentage. If the Company shall have notified the
holder that all of such Notes shall be converted into Common Stock or a
combination of cash and Common Stock, the Company shall deliver to the holder
through the conversion agent, no later than the third Business Day following the
date on which the Applicable Stock Price is determined (as determined by the
Company), a certificate for the number of whole shares of Common Stock issuable
upon the conversion and, if applicable, cash in lieu of such Common Stock and
cash in lieu of any fractional shares pursuant to Section 14.05. Except as
otherwise provided in this Article 14, if the Company shall have notified the
holder that all or a portion of such Note shall be paid solely in cash, the
Company shall deliver to the holder surrendering such Note (or a portion of a
Note) the Cash Amount (as defined below in this Section) no later than the third
Business Day following the date on which the Applicable Stock Price is
determined.
Except as otherwise provided in this Article 14, the Company may not
change its election with respect to the consideration to be delivered upon
conversion of a Note once the Company has notified the holder in accordance with
this paragraph. The Person in whose name the Common Stock certificate is
registered shall be deemed to be a shareholder of record at the close of
business on the date on which the Applicable Stock Price is determined with
respect to the applicable Conversion Date; provided, however, that if any such
date is a date when the stock transfer books of the Company are closed, such
Person shall be
59
deemed a shareholder of record as of the next date on which the stock transfer
books of the Company are open.
In the case of any conversion, a holder will receive, in lieu of Common
Stock, cash, Common Stock or a combination of cash and Common Stock, at the
Company's option, or if required pursuant to clause (2) of the last paragraph of
this Section. If the Company elects (or is required pursuant to the provisions
of clause (2) of the last paragraph of this Section) to pay cash for all or a
portion of the shares of Common Stock otherwise issuable upon conversion of a
Note, the amount of cash which is payable (the "CASH AMOUNT") will be equal to
(i) the Applicable Stock Price multiplied by the Conversion Rate in effect on
the Conversion Date (the "CONVERSION VALUE") minus (ii) the number of shares of
Common Stock (if any) which the Company elects to issue in connection with the
conversion of the applicable note, multiplied by the greater of (x) the
Conversion Price on the Conversion Date, or (y) the Applicable Stock Price as of
the Conversion Date.
No payment or adjustment shall be made for dividends on, or other
distributions with respect to, any Common Stock except as provided in this
Article. On conversion of a Note, except for conversion during the period from
the close of business on any record date immediately preceding any interest
payment date to the close of business on the Business Day immediately preceding
such interest payment date, in which case the holder on such record date shall
receive the interest payable on such interest payment date, that portion of
accrued and unpaid interest on the converted Note attributable to the period
from the most recent interest payment date (or, if no interest payment date has
occurred, from the Issue Date) through the Conversion Date 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 (together with
the cash payment, if any, in lieu of fractional shares), or cash or a
combination of cash and Common Stock in lieu thereof, in exchange for the Note
being converted pursuant to the provisions hereof, and the fair market value of
such shares of Common Stock (together with any such cash payment in lieu of
fractional shares), or cash or a combination of cash and Common Stock in lieu
thereof, shall be treated as issued, to the extent thereof, first in exchange
for accrued and unpaid interest accrued through the Conversion Date and the
balance, if any, of such fair market value of such Common Stock (and any such
cash payment), or cash in lieu thereof, shall be treated as issued in exchange
for the principal amount of the Note being converted pursuant to the provisions
hereof.
If a holder converts more than one Note at the same time, the number of
shares of Common Stock issuable and/or the Cash Amount payable upon the
conversion shall be based on the aggregate principal amount of Notes converted.
Upon surrender of a Note that is converted in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the holder, a new
Note equal in principal amount to the principal amount of the unconverted
portion of the Note surrendered.
60
Notes or portions thereof surrendered for conversion during the period
from the close of business on any record date immediately preceding any interest
payment date to the close of business on the Business Day immediately preceding
such interest payment date shall be accompanied by payment to the Company or its
order, in clearing house funds or other funds acceptable to the Company, of an
amount equal to the interest payable on such interest payment date with respect
to the principal amount of Notes or portions thereof being surrendered for
conversion; provided that no such payment need be made if (1) the Company has
specified a Redemption Date that occurs during the period from the close of
business on a record date to the close of business on the Business Day
immediately preceding the interest payment date to which such record date
relates, (2) the Company has specified a Fundamental Change Redemption Date
during such period or (3) only to the extent of overdue interest, any overdue
interest exists on the Conversion Date with respect to the Notes converted.
Section 14.03 Mandatory Conversion. (a) The Notes shall be subject to
mandatory conversion ("MANDATORY CONVERSION") upon the earlier to occur of: (i)
the date on which the Closing Sale Price of the Common Stock exceeds $8.00 for
the 15th consecutive Trading Day or (ii) the third anniversary of the date of
this Indenture. The Notes shall be automatically converted on the Business Day
following the first day on which the conditions to Mandatory Conversion have
been satisfied (the "MANDATORY CONVERSION DATE") into that number of fully paid
and non-assessable whole shares (calculated to the nearest 1/100th of a share)
of Common Stock determined by dividing the aggregate principal amount of Notes
then outstanding by the Conversion Rate in effect on the Mandatory Conversion
Date.
(b) The Company shall monitor the Closing Sale Price of the Common Stock
and shall give written notice to the Trustee and the holders of the Notes as
soon as practicable following the first date on which the conditions for a
Mandatory Conversion have been satisfied which notice shall set forth the
Mandatory Conversion Date. The Notes shall be deemed to have been converted
immediately prior to the close of business on the Mandatory Conversion Date, and
at such time the rights of the holders of the Notes as holders of the Notes
shall cease, and the Person or Persons entitled to receive the Common Stock
issuable upon conversion shall be treated for all purposes as the record holder
or holders of such Common Stock as of the Mandatory Conversion Date. The holder
of any Note shall be required to surrender such Note, duly endorsed or assigned
to the Company or in blank, at any office or agency of the Company maintained
pursuant to Section 4.02, for the purpose of receiving a certificate or
certificates for the number of whole shares of Common Stock to which such holder
is entitled as a result of the Mandatory Conversion. As promptly as practicable
on or after the Mandatory Conversion Date, the Company shall issue and shall
deliver at such office or agency a certificate or certificates for the number of
full shares of Common Stock issuable upon Mandatory Conversion, together with
payment in lieu of any fraction of a share, as provided in Section 14.05. The
Company shall pay to the holder upon surrender of a Note for Mandatory
Conversion interest accrued on such Note to the Mandatory Conversion Date
(subject to the right of
61
holders of record on the relevant record date to receive interest due on an
Interest Payment Date that is on or prior to the Mandatory Conversion Date).
Section 14.04 Limitation on Conversion Shares. The holders' rights to
convert Notes into Common Stock are subject to the Company's right to elect
instead to pay each such holder the amount of cash determined pursuant to this
Article (or an equivalent amount in a combination of cash and shares of Common
Stock), in lieu of delivering such Common Stock; provided, however, (1) that if
an Event of Default (other than a default in a cash payment upon conversion of
the Notes) shall have occurred and be continuing, the Company shall (subject to
clause (2) of this paragraph and Article 15) deliver Common Stock in accordance
with this Article, whether or not the Company has delivered a notice pursuant to
this Section 14.02 to the effect that the Notes would be paid in cash or a
combination of cash and Common Stock; and (2) the Company will be required to
pay the Cash Amount in lieu of issuing shares of Common Stock upon conversion of
the Notes from and to the extent that the issuance of shares of Common Stock
would exceed that number of shares which the Company may issue on the conversion
of the Notes without breaching the Company's obligations under the rules or
regulations of the Nasdaq National Market (or, if the Common Stock is not traded
on the Nasdaq National Market, the then applicable rules (if any) of the
principal securities exchange or trading market for the Common Stock, if such
rules mandatorily apply) (the "CONVERSION CAP"), unless the Company obtains the
approval of its stockholders as required by the applicable rules of the Nasdaq
National Market or such other exchange for issuances of shares in excess of such
amount. No holder of Notes shall be issued, upon conversion of the Notes, shares
of Common Stock in an amount greater than the product of (i) the Conversion Cap
amount minus the number of shares issued by the Company pursuant to previous
conversions of Notes, multiplied by (ii) a fraction, the numerator of which is
the principal amount of the Notes held of record by the applicable holder(s) of
Notes seeking conversion or being mandatorly converted pursuant to Section 14.02
and the denominator of which is the aggregate principal amount of all of the
outstanding Notes issued pursuant to this Indenture and outstanding on the
applicable Conversion Date.
Section 14.05 Cash Payments in Lieu of Fractional Shares. No fractional
shares of Common Stock or scrip certificates representing fractional shares
shall be issued upon conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same holder, the number of full
shares that shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Notes (or specified portions thereof to
the extent permitted hereby) so surrendered. If any fractional share of stock
would be issuable upon the conversion of any Note or Notes, the Company shall
make an adjustment and payment therefor in cash at the current market price
thereof to the holder of Notes. For purposes of this Section 14.05, the "CURRENT
MARKET PRICE" of a fractional share of Common Stock shall be the Closing Sale
Price on the last Business Day immediately preceding the Conversion Date.
62
Section 14.06 Conversion Rate. Each $1,000 principal amount of the Notes
shall be convertible into the number of shares of Common Stock specified in the
form of Note (herein called the "CONVERSION RATE") attached as Exhibit A hereto,
subject to adjustment as provided in this Article 14.
Section 14.07 Adjustment of Conversion Rate and Special Payment
Provisions. The Conversion Rate shall be adjusted from time to time by the
Company as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Rate shall be increased so that the same shall equal the
rate determined by multiplying the Conversion Rate in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution by a
fraction,
(1) the numerator of which shall be the sum of the number of
shares of Common Stock outstanding at the close of business on the
date fixed for the determination of stockholders entitled to receive
such dividend or other distribution plus the total number of shares
of Common Stock constituting such dividend or other distribution;
and
(2) the denominator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed
for such determination,
such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purpose of this
paragraph (a), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company will
not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company. If any dividend or distribution of the type
described in this Section 14.07(a) is declared but not so paid or made, the
Conversion Rate shall again be adjusted to the Conversion Rate that would then
be in effect if such dividend or distribution had not been declared.
(b) In case the Company shall issue rights or warrants to all
holders of its outstanding shares of Common Stock entitling them (for a period
expiring within forty-five (45) days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price on the date fixed for determination of stockholders entitled to
receive such rights or warrants, the Conversion Rate shall be increased so that
the same shall equal the rate determined by multiplying the Conversion Rate in
effect immediately prior to the date fixed for determination of stockholders
entitled to receive such rights or warrants by a fraction,
63
(1) the numerator of which shall be the number of shares of
Common Stock outstanding on the date fixed for determination of
stockholders entitled to receive such rights or warrants plus the
total number of additional shares of Common Stock offered for
subscription or purchase, and
(2) the denominator of which shall be the sum of the number of
shares of Common Stock outstanding at the close of business on the
date fixed for determination of stockholders entitled to receive
such rights or warrants plus the number of shares that the aggregate
offering price of the total number of shares so offered would
purchase at such Current Market Price.
Such adjustment shall be successively made whenever any such rights or
warrants are issued, and shall become effective immediately after the opening of
business on the day following the date fixed for determination of stockholders
entitled to receive such rights or warrants. To the extent that shares of Common
Stock are not delivered after the expiration of such rights or warrants, the
Conversion Rate shall be readjusted to the Conversion Rate that would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made on the basis of delivery of only the number of shares of Common Stock
actually delivered. If such rights or warrants are not so issued, the Conversion
Rate shall again be adjusted to be the Conversion Rate that would then be in
effect if such date fixed for the determination of stockholders entitled to
receive such rights or warrants had not been fixed. In determining whether any
rights or warrants entitle the holders to subscribe for or purchase shares of
Common Stock at less than such Current Market Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account any consideration received by the Company for such rights or
warrants and any amount payable on exercise or conversion thereof, the value of
such consideration, if other than cash, to be determined by the Board of
Directors.
(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased, and
conversely, in case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Conversion Rate in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately reduced, such increase or reduction,
as the case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision or combination
becomes effective.
(d) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock shares of any class of capital stock of the
Company or evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 14.07(b), and excluding
64
any dividend or distribution (x) paid exclusively in cash or (y) referred to in
Section 14.07(a) (any of the foregoing hereinafter in this Section 14.07(d))
called the "SECURITIES")), then, in each such case (unless the Company elects to
reserve such Securities for distribution to the Noteholders upon the conversion
of the Notes so that any such holder converting Notes will receive upon such
conversion, in addition to the shares of Common Stock to which such holder is
entitled, the amount and kind of such Securities which such holder would have
received if such holder had converted its Notes into Common Stock immediately
prior to the Record Date, the Conversion Rate shall be increased so that the
same shall be equal to the rate determined by multiplying the Conversion Rate in
effect on the Record Date with respect to such distribution by a fraction,
(1) the numerator of which shall be the Current Market Price
on such Record Date; and
(2) the denominator of which shall be the Current Market Price
on such Record Date less the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive, and
described in a resolution of the Board of Directors) on the Record
Date of the portion of the Securities so distributed applicable to
one share of Common Stock,
such adjustment to become effective immediately prior to the opening of business
on the day following such Record Date; provided that if the then fair market
value (as so determined) of the portion of the Securities so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Noteholder shall have the right to receive
upon conversion the amount of Securities such holder would have received had
such holder converted each Note on the Record Date. If such dividend or
distribution is not so paid or made, the Conversion Rate shall again be adjusted
to be the Conversion Rate that would then be in effect if such dividend or
distribution had not been declared. If the Board of Directors determines the
fair market value of any distribution for purposes of this Section 14.07(d) by
reference to the actual or when issued trading market for any securities, it
must in doing so consider the prices in such market over the same period used in
computing the Current Market Price on the applicable Record Date.
Notwithstanding the foregoing, if the Securities distributed by the Company to
all holders of its Common Stock consist of capital stock of, or similar equity
interests in, a Subsidiary or other business unit, the Conversion Rate shall be
increased so that the same shall be equal to the rate determined by multiplying
the Conversion Rate in effect on the Record Date with respect to such
distribution by a fraction:
(1) the numerator of which shall be the sum of (i) the average
Closing Price of one share of Common Stock over the ten consecutive
Trading Day period (the "SPINOFF VALUATION PERIOD") commencing on
and including the fifth Trading Day after the date on which
"ex-dividend trading" commences on the Common Stock
65
on the New York Stock Exchange or such other national or regional
exchange or market on which the Common Stock is then listed or
quoted and (ii) the average Closing Price over the Spinoff Valuation
Period of the portion of the Securities so distributed applicable to
one share of Common Stock; and
(2) the denominator of which shall be the average Closing
Price of one share of Common Stock over the Spinoff Valuation
Period,
such adjustment to become effective immediately prior to the opening of business
on the day following such Record Date; provided that the Company may in lieu of
the foregoing adjustment make adequate provision so that each Noteholder shall
have the right to receive upon conversion the amount of Securities such holder
would have received had such holder converted each note on the Record Date with
respect to 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"): (1) are deemed to be transferred with such shares of Common
Stock; (2) are not exercisable; and (3) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 14.07 (and no adjustment to the Conversion Rate under
this Section 14.07 will be required) until the occurrence of the earliest
Trigger Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the Conversion
Rate shall be made under this Section 14.07(d). If any such right or warrant,
including any such existing rights or warrants distributed prior to the date of
this Indenture, are subject to events, upon the occurrence of which such rights
or warrants become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any and each
such event shall be deemed to be the date of distribution and record date with
respect to new rights or warrants with such rights (and a termination or
expiration of the existing rights or warrants without exercise by any of the
holders thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Rate under this Section 14.07 was made, (1) in the case of any such
rights or warrants that shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Rate shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Stock as of
the date of such redemption or repurchase, and (2) in the
66
case of such rights or warrants that shall have expired or been terminated
without exercise by any holders thereof, the Conversion Rate shall be readjusted
as if such rights and warrants had not been issued.
No adjustment of the Conversion Rate shall be made pursuant to this
Section 14.07(d) in respect of rights or warrants distributed or deemed
distributed on any Trigger Event to the extent that such rights or warrants are
actually distributed, or reserved by the Company for distribution to holders of
Notes upon conversion by such holders of Notes to Common Stock.
For purposes of this Section 14.07(d) and Section 14.01(a) and (b), any
dividend or distribution to which this Section 14.07(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Rate adjustment required by this Section 14.07(d) with respect to
such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Rate adjustment required by Sections
14.07(a) and (b) with respect to such dividend or distribution shall then be
made), except
(1) the Record Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution", "the date
fixed for the determination of stockholders entitled to receive such
rights or warrants" and "the date fixed for such determination"
within the meaning of Section 14.07(a) and (b) and
(2) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the
meaning of Section 14.07(a).
(e) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding (1) any quarterly cash
dividend on the Common Stock to the extent the aggregate cash dividend per share
of Common Stock in any fiscal quarter does not exceed the greater of (i) the
amount per share of Common Stock of the next preceding quarterly cash dividend
on the Common Stock to the extent that such preceding quarterly dividend did not
require any adjustment of the Conversion Rate pursuant to this Section 14.07(e)
(as adjusted to reflect subdivisions, or combinations of the Common Stock), and
(ii) 1.25% of the arithmetic average of the Closing Sale Price during the ten
Trading Days immediately prior to the date of declaration of such dividend, and
(2) any dividend or distribution in connection with the liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary (excluding any
67
Standard Life Divestiture), then, in such case, the Conversion Rate shall be
increased so that the same shall equal the rate determined by multiplying the
Conversion Rate in effect immediately prior to the close of business on such
record date by a fraction,
(A) the numerator of which shall be the Current Market Price
on such record date; and
(B) the denominator of which shall be the Current Market Price
on such record date less the amount of cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock,
such adjustment to be effective immediately prior to the opening of business on
the day following the record date; provided that if the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price on the record date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Noteholder shall have
the right to receive upon conversion the amount of cash such holder would have
received had such holder converted each Note on the record date; and further
provided however that if the Company shall be dividend or otherwise distribute
cash distributions in addition to the cash otherwise permitted in the preceding
clause (1) of this Section 14.07(e), following a Standard Life Divestiture and
out of the proceeds of such Standard Life Divestiture, then in such case the
Conversion Rate shall not be adjusted for any such special dividend or other
distribution with a record date that is not more than 180 days after the closing
of any such Standard Life Divestiture and in lieu there of the Company shall
make a special payment on the Notes per $1,000 principal amount of the Notes in
cash equal to the amount of such special dividend or other distribution per
share of Common Stock multiplied by the number of shares of Common Stock that
would be issuable under such Note on an as-converted basis as of the record date
of such special dividend or distribution without taking into consideration any
other adjustment which would otherwise be due on the Conversion Rate due to such
distribution. If such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such dividend or distribution had not been declared. If any
adjustment is required to be made as set forth in this Section 14.07(e) as a
result of a distribution that is a quarterly dividend, such adjustment shall be
based upon the amount by which such distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant hereto. If an
adjustment is required to be made as set forth in this Section 14.07(e) above as
a result of a distribution that is not a quarterly dividend, such adjustment
shall be based upon the full amount of the distribution.
(f) In case a tender or exchange offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall expire and such
tender or exchange offer (as amended upon the expiration thereof) shall require
the payment to stockholders of consideration per share of Common Stock having a
Fair Market Value (as determined by the Board of Directors, whose
68
determination shall be conclusive and described in a resolution of the Board of
Directors) that as of the last time (the "EXPIRATION TIME") tenders or exchanges
may be made pursuant to such tender or exchange offer (as it may be amended)
exceeds the Closing Sale Price of a share of Common Stock on the Trading Day
next succeeding the Expiration Time, the Conversion Rate shall be increased so
that the same shall equal the rate determined by multiplying the Conversion Rate
in effect immediately prior to the Expiration Time by a fraction,
(1) the numerator of which shall be the sum of (i) the Fair
Market Value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer)
of all shares validly tendered or exchanged and not withdrawn as of
the Expiration Time (the shares deemed so accepted up to any such
maximum, being referred to as the "PURCHASED SHARES") and (ii) the
product of the number of shares of Common Stock outstanding (less
any Purchased Shares) at the Expiration Time and the Closing Sale
Price of a share of Common Stock on the Trading Day next succeeding
the Expiration Time, and
(2) the denominator of which shall be the number of shares of
Common Stock outstanding (including any tendered or exchanged
shares) at the Expiration Time multiplied by the Closing Sale Price
of a share of Common Stock on the Trading Day next succeeding the
Expiration Time
such adjustment to become effective immediately prior to the opening of business
on the day following the Expiration Time. If the Company is obligated to
purchase shares pursuant to any such tender or exchange offer, but the Company
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Rate shall again be adjusted to
be the Conversion Rate that would then be in effect if such tender or exchange
offer had not been made.
(g) In case of a tender or exchange offer made by a Person other
than the Company or any Subsidiary for an amount that increases the offeror's
ownership of Common Stock to more than twenty-five percent (25%) of the Common
Stock outstanding and shall involve the payment by such Person of consideration
per share of Common Stock having a Fair Market Value (as determined by the Board
of Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) that as of the last time (the "OFFER
EXPIRATION TIME") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the Closing Price of
a share of Common Stock on the Trading Day next succeeding the Offer Expiration
Time, and in which, as of the Offer Expiration Time the Board of Directors is
not recommending rejection of the offer, the Conversion Rate shall be increased
so that the same shall equal the rate determined by multiplying the
69
Conversion Rate in effect immediately prior to the Offer Expiration Time by a
fraction
(1) the numerator of which shall be the sum of (i) the Fair
Market Value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer)
of all shares validly tendered or exchanged and not withdrawn as of
the Offer Expiration Time (the shares deemed so accepted, up to any
such maximum, being referred to as the "ACCEPTED PURCHASED SHARES")
and (ii) the product of the number of shares of Common Stock
outstanding (less any Accepted Purchased Shares) at the Offer
Expiration Time and the Closing Sale Price of a share of Common
Stock on the Trading Day next succeeding the Offer Expiration Time,
and
(2) the denominator of which shall be the number of shares of
Common Stock outstanding (including any tendered or exchanged
shares) at the Offer Expiration Time multiplied by the Closing Sale
Price of a share of Common Stock on the Trading Day next succeeding
the Offer Expiration Time,
such adjustment to become effective immediately prior to the opening of business
on the day following the Offer Expiration Time. If such Person is obligated to
purchase shares pursuant to any such tender or exchange offer, but such Person
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Rate shall again be adjusted to
be the Conversion Rate that would then be in effect if such tender or exchange
offer had not been made. Notwithstanding the foregoing, the adjustment described
in this Section 14.07(g) shall not be made if, as of the Offer Expiration Time,
the offering documents with respect to such offer disclose a plan or intention
to cause the Company to engage in any transaction described in Article 11.
(h) For purposes of this Section 14.07, the following terms shall
have the meaning indicated:
(1) "CURRENT MARKET PRICE" shall mean the average of the daily
Closing Sale Prices per share of Common Stock for the ten
consecutive Trading Days selected by the Company commencing no more
than 30 Trading Days before and ending not later than the earlier of
such date of determination and the day before the "ex" date with
respect to the issuance, distribution, subdivision or combination
requiring such computation immediately prior to the date in
question. For purpose of this paragraph, the term "ex" date, (1)
when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades, regular way, on the
relevant exchange or in the relevant market from which the Closing
Sale Price was
70
obtained without the right to receive such issuance or distribution,
and (2) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the Common
Stock trades, regular way, on such exchange or in such market after
the time at which such subdivision or combination becomes effective.
If another issuance, distribution, subdivision or combination
to which Section 14.07 applies occurs during the period applicable
for calculating "Current Market Price" pursuant to the definition in
the preceding paragraph, "Current Market Price" shall be calculated
for such period in a manner determined by the Board of Directors to
reflect the impact of such issuance, distribution, subdivision or
combination on the Closing Sale Price of the Common Stock during
such period.
(2) "FAIR MARKET VALUE" shall mean the amount which a willing
buyer would pay a willing seller in an arm's-length transaction, as
reasonably determined by the Company.
(3) "RECORD DATE" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security)
is exchanged for or converted into any combination of cash,
securities or other property, the date fixed for determination of
stockholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).
(i) The Company may make such increases in the Conversion Rate, in
addition to those required by Section 14.07(a), (b), (c), (d), (e), (f) or (g)
as the Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to time
may increase the Conversion Rate by any amount for any period of time if the
period is at least twenty (20) days, the increase is irrevocable during the
period and the Board of Directors shall have made a determination that such
increase would be in the best interests of the Company, which determination
shall be conclusive. Whenever the Conversion Rate is increased pursuant to the
preceding sentence, the Company shall mail to holders of record of the Notes a
notice of the increase at least fifteen (15) days prior to the date the
increased Conversion Rate takes effect, and such notice shall state the
increased Conversion Rate and the period during which it will be in effect.
71
(j) No adjustment in the Conversion Rate shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in such rate; provided that any adjustments that by reason of this Section
14.07(j) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article 14
shall be made by the Company and shall be made to the nearest cent or to the
nearest one-ten thousandth (1/10,000) of a share, as the case may be. No
adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. To the extent the Notes
become convertible into cash, assets, property or securities (other than capital
stock of the Company), no adjustment need be made thereafter as to the cash,
assets, property or such securities. Interest will not accrue on any cash into
which the Notes are convertible.
(k) Whenever the Conversion Rate is adjusted as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other than
the Trustee an Officers' Certificate setting forth the Conversion Rate after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Unless and until a Responsible Officer of the Trustee shall have
received such Officers' Certificate, the Trustee shall not be deemed to have
knowledge of any adjustment of the Conversion Rate and may assume that the last
Conversion Rate of which it has knowledge is still in effect. Promptly after
delivery of such certificate, the Company shall prepare a notice of such
adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and
the date on which each adjustment becomes effective and shall mail such notice
of such adjustment of the Conversion Rate to the holder of each Note at his last
address appearing on the Note register provided for in Section 2.05 of this
Indenture, within twenty (20) days after execution thereof. Failure to deliver
such notice shall not affect the legality or validity of any such adjustment.
(l) In any case in which this Section 14.07 provides that an
adjustment shall become effective immediately after (1) a record date or Record
Date for an event, (2) the date fixed for the determination of stockholders
entitled to receive a dividend or distribution pursuant to Section 14.07(a), (3)
a date fixed for the determination of stockholders entitled to receive rights or
warrants pursuant to Section 14.07(b), (4) the Expiration Time for any tender or
exchange offer pursuant to Section 14.07(f), or (5) the Offer Expiration Time
for a tender or exchange offer pursuant to Section 14.07(g) (each a
"DETERMINATION DATE"), the Company may elect to defer until the occurrence of
the applicable Adjustment Event (as hereinafter defined) (i) issuing to the
holder of any Note converted after such Determination Date and before the
occurrence of such Adjustment Event, the additional shares of Common Stock or
other securities issuable upon such conversion by reason of the adjustment
required by such Adjustment Event over and above the Common Stock issuable upon
such conversion before giving effect to such adjustment and (ii) paying to such
holder any amount in cash in lieu of any fraction pursuant to Section 14.05. For
purposes of this Section 14.07(l), the term "ADJUSTMENT EVENT" shall mean:
72
(A) in any case referred to in clause (1) hereof, the
occurrence of such event,
(B) in any case referred to in clause (2) hereof, the date any
such dividend or distribution is paid or made,
(C) in any case referred to in clause (3) hereof, the date of
expiration of such rights or warrants, and
(D) in any case referred to in clause (4) or clause (5)
hereof, the date a sale or exchange of Common Stock pursuant to such
tender or exchange offer is consummated and becomes irrevocable.
(m) For purposes of this Section 14.07, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
Section 14.08 Mandatory Conversion Price Adjustment. At any time prior to
November 30, 2005, if the Company issues shares of its Common Stock at a price
per share less than the Conversion Price of the Notes as then in effect, or
issues any security exchangeable or convertible into its Common Stock with a
conversion or exchange price per share less than the Conversion Price of the
Notes as then in effect (initially $4.20 per share) on an equivalent per share
basis (the "PRICE PROTECTION PRICE"), the conversion ratio will be adjusted to a
ratio determined by dividing $1,000 by the Price Protection Price, provided,
however, that no adjustment will be made for the issuance of any Common Stock or
Common Stock equivalent issued in connection with:
(1) any employment benefit plan of the Company or its
Subsidiaries or controlled Affiliates approved by the Company's
Board of Directors;
(2) the acquisition of all or substantially all of the
business or a line of business (whether by the acquisition of
capital stock, assets or a combination thereof) of any Person,
provided such Common Stock is issued for a per share price, or the
applicable security is convertible or exchangeable into Common Stock
at a per share price which is, not less than the Fair Market Value
of the Common Stock;
(3) any obligation of the Company to issue Common Stock or
Common Stock equivalents in existence as of the date of this
Indenture; or
73
(4) any registered public offering of the Company's Common
Stock or other securities convertible into or exchangeable for
Common Stock.
(b) For purposes of this Section 14.08, "FAIR MARKET VALUE" means,
as of the date the Company or one or more Subsidiaries of the Company, enter
into a binding acquisition agreement (the "DETERMINATION Date"), the price per
share of Common Stock which is equal to the weighted average of the closing sale
price per share of the Common Stock for ten (10) consecutive Trading Days in a
period of twenty (20) consecutive Trading Days immediately prior to the
Determination Date.
Section 14.09 Effect of Reclassification, Consolidation, Merger or Sale.
If any of the following events occur, namely (i) any reclassification or change
of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 14.07(c) applies), (ii) any consolidation, merger
or combination of the Company with another Person in which the Company is not
the surviving Person and as a result of which holders of Common Stock as a class
shall be entitled to receive stock, other securities or other property or assets
(including cash) in exchange for such Common Stock (but not as a result of any
distribution or dividend of cash, properties or assets by the Company and not as
the result of any repurchase by the Company of not more than eighty percent
(80%) of the Company's then outstanding Common Stock), or (iii) any sale or
conveyance of all or substantially all of the properties and assets of the
Company to any other Person as a result of which holders of Common Stock as a
class shall be entitled to receive stock, other securities or other property or
assets (including cash) in exchange for such Common Stock (but not as a result
of any distribution or dividend of cash, properties or assets by the Company and
not as the result of any repurchase by the Company of not more than eighty
percent (80%) of the Company's then outstanding Common Stock), then the Company
or the successor or purchasing Person, as the case may be, shall execute with
the Trustee a supplemental indenture (which, if the Trust Indenture Act shall be
applicable to this Indenture and the Notes, shall comply with the Trust
Indenture Act as in force at the date of execution of such supplemental
indenture) providing that each Note shall be convertible into the kind and
amount of shares of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance by a holder of a number of shares of
Common Stock issuable upon conversion of such Notes (assuming, for such
purposes, a sufficient number of authorized shares of Common Stock are available
to convert all such Notes) immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance assuming such holder of
Common Stock did not exercise his rights of election, if any, as to the kind or
amount of stock, other securities or other property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance (provided that, if the kind or amount of stock,
other securities or other property or assets (including cash) receivable upon
such reclassification, change, consolidation, merger, combination, sale or
conveyance is not the same for each share of Common Stock in respect of which
74
such rights of election shall not have been exercised ("NONELECTING SHARE"),
then for the purposes of this Section 14.09 the kind and amount of stock, other
securities or other property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
14. Any such supplemental indenture shall be accompanied by delivery to the
Trustee by the Company of an Officers' Certificate to the effect that such
supplemental indenture is in compliance with this Section 14.09.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at its address appearing on the
Note register provided for in Section 2.05 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.
If this Section 14.09 applies to any event or occurrence, Section 14.07
and Section 14.08 shall not apply.
Section 14.10 Taxes on Shares Issued. The issue of stock certificates on
conversions of Notes shall be made without charge to the converting Noteholder
for any documentary, stamp or similar issue or transfer tax in respect of the
issue thereof. The Company shall not, however, be required to pay any such tax
which may be payable in respect of any transfer involved in the issue and
delivery of stock in any name other than that of the holder of any Note
converted, and the Company shall not be required to issue or deliver any such
stock certificate unless and until the Person or Persons requesting the issue
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
Section 14.11 Reservation of Shares, Shares to be Fully Paid; Compliance
with Governmental Requirements; Listing of Common Stock. The Company shall
provide, free from preemptive rights, out of its authorized but unissued shares
or shares held in treasury, sufficient shares of Common Stock to provide for the
conversion of the Notes from time to time as such Notes are presented for
conversion.
Before taking any action which would cause an adjustment increasing the
Conversion Rate to an amount that would cause the Conversion Price to be reduced
below the then par value, if any, of the shares of Common Stock issuable upon
conversion of the Notes, the Company will take all corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
75
validly and legally issue shares of such Common Stock at such adjusted
Conversion Rate.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Notes will upon issue be fully paid and non-assessable by the
Company and free from all taxes, liens and charges with respect to the issue
thereof.
The Company covenants that, if any shares of Common Stock to be provided
for the purpose of conversion of Notes hereunder require registration with or
approval of any governmental authority under any federal or state law before
such shares may be validly issued upon conversion, the Company will in good
faith and as expeditiously as possible, to the extent then permitted by the
rules and interpretations of the Commission (or any successor thereto), endeavor
to secure such registration or approval, as the case may be.
The Company further covenants that, if at any time the Common Stock shall
be listed on the Nasdaq National Market or any other national securities
exchange or automated quotation system, the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Note;
provided that if the rules of such exchange or automated quotation system permit
the Company to defer the listing of such Common Stock until the first conversion
of the Notes into Common Stock in accordance with the provisions of this
Indenture, the Company covenants to list such Common Stock issuable upon
conversion of the Notes in accordance with the requirements of such exchange or
automated quotation system at such time.
Section 14.12 Responsibility of Trustee. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine the Conversion Rate or whether any facts exist
which may require any adjustment of the Conversion Rate, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. Without limiting the generality of
the foregoing, the Company shall determine Applicable Stock Price, Closing Sale
Price, Current Market Price, Fair Market Value, any applicable Conversion Cap
and any Mandatory Conversion Date (pursuant to clause "(i)" of the definition
thereof) with respect to the Common Stock from time to time, as necessary for
purposes of this Indenture, and neither the Trustee nor any conversion agent
shall be under any duty to verify the Company's determination of any of the
foregoing, or independently to make any such determination. The Trustee and any
other conversion agent shall not be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock, or of any
securities or property, which may at any time be issued or delivered upon the
conversion of any Note; and the Trustee and any other conversion agent make no
representations with respect thereto. Neither the Trustee nor any conversion
agent
76
shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article 14. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 14.09 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 14.09 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 7.01, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
Section 14.13 Notice to Holders Prior to Certain Actions. In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock that would require an adjustment in the Conversion Rate
pursuant to Section 14.07; or
(b) the Company shall authorize the granting to the holders of all
or substantially all of its Common Stock of rights or warrants to subscribe for
or purchase any share of any class or any other rights or warrants; or
(c) of any reclassification or reorganization of the Common Stock of
the Company (other than a subdivision or combination of its outstanding Common
Stock, or a change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register provided for in
Section 2.05 of this Indenture, as promptly as possible but in any event at
least ten (10) days prior to the applicable date hereinafter specified, a notice
stating (1) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (2) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective or occur,
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification,
77
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Section 14.14 Rights Issued in Respect of Common Stock Issued Upon
Conversion. Each share of Common Stock issued upon conversion of Notes pursuant
to this Article 14 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 shares of 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 shareholder
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 upon conversion of Notes 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 14 there shall not be any adjustment to the conversion
privilege or Conversion Rate as a result of the issuance of Rights, but an
adjustment to the Conversion Rate shall be made pursuant to Section 14.07(d) (to
the extent required thereby) upon the separation of the Rights from the Common
Stock.
ARTICLE 15
SUBORDINATION
Section 15.01 Agreement to Subordinate. The Company agrees, and each
holder by accepting a Note agrees, that the payment of principal, interest,
premium, if any, and Liquidated Damages, if any on the Notes and any payment on
account of the acquisition or redemption of the Notes by the Company is
subordinated in right of payment, to the extent and in the manner provided in
this Article 15, to the prior payment in full of all Senior Indebtedness
(whether outstanding on the date hereof or hereafter created, incurred, assumed
or guaranteed), and that the subordination is for the benefit of the holders of
Senior Indebtedness.
Section 15.02 Liquidation; Dissolution; Bankruptcy. The holders of Senior
Indebtedness of the Company will be entitled to receive payment in full in cash
of all obligations due in respect of Senior Indebtedness of the Company
(including interest after the commencement of any bankruptcy proceeding at the
rate specified in the applicable Senior Indebtedness of the Company) before the
holders of Notes will be entitled to receive any payment with respect to the
Notes, in the event of any distribution to creditors of the Company: (1) in a
liquidation or dissolution of the Company; (2) in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property; (3) in an assignment by the Company for the benefit of its creditors;
or (4) in any marshaling of the Company's assets and liabilities.
78
Section 15.03 Default on Designated Senior Indebtedness.
(a) Upon and during the continuation of any default in the payment
of principal of, or premium, if any, or interest on, any Senior Indebtedness, or
any obligation owing under or in respect of Senior Indebtedness, or if any event
of default (other than a payment default) with respect to any Senior
Indebtedness shall have occurred and be continuing and shall have resulted in
such Senior Indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable (collectively, a
"MAJOR DEFAULT"), or
(b) If any event of default other than a Major Default with respect
to any Designated Senior Indebtedness will have occurred and be continuing
permitting the holders of such Designated Senior Indebtedness to declare such
Designated Senior Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable (a "MINOR DEFAULT"),
then no payment will be made by or on behalf of the Company on account of the
Notes:
(1) in case of any Major Default (whether a payment or
nonpayment default), unless and until such event of default will
have been cured or waived in writing in accordance with the
instruments governing such Senior Indebtedness or such acceleration
will have been rescinded or annulled, or such Senior Indebtedness
shall have been paid in full, or
(2) in case of any Minor Default, during the period (a
"PAYMENT BLOCKAGE PERIOD") commencing on the date that the Company
and the Trustee receive written notice (a "PAYMENT NOTICE") of such
event of Minor Default (which notice will be binding on the Trustee
and the holders of Notes as to the occurrence of such an event of
Minor Default) from holders of Designated Senior Indebtedness (or
their representative) and ending on the earliest of:
(i) 179 days after such date;
(ii) the date, if any, on which such Designated Senior
Indebtedness to which such default relates is paid in
full or such default is cured or waived in writing in
accordance with the instruments governing such
Designated Senior Indebtedness by the holders of such
Designated Senior Indebtedness; and
(iii) the date on which the Trustee receives from the holders
of such Designated Senior Indebtedness (or their
Representative or Representatives) that commenced the
Payment Blockage Period written
79
notice that the Payment Blockage Period has been
terminated.
(c) During any consecutive 360-day period, the aggregate of all
Payment Blockage Periods shall not exceed 179 days and there shall be a period
of at least 181 consecutive days in each consecutive 360-day period when no
Payment Blockage Period is in effect. No event of default that existed or was
continuing with respect to Designated Senior Indebtedness for which notice
commencing a Payment Blockage Period was given on the date such Payment Blockage
Period commenced shall be, or be made, the basis for the commencement of any
subsequent Payment Blockage Period unless such event of default is cured or
waived for a period of not less than 90 consecutive days.
Section 15.04 Acceleration of Securities. If payment of the Notes is
accelerated because of an Event of Default, the Company shall promptly notify
holders of Designated Senior Indebtedness of the acceleration.
Section 15.05 When Distribution Must Be Paid Over. In the event that the
Trustee or any holder of Notes receives any payment of any Obligations with
respect to the Notes at a time when the Trustee or such holder, as applicable,
has, subject to Section 15.12 knowledge that such payment is prohibited by
Section 15.03 hereof, such payment shall be held by the Trustee or such holder,
as applicable, in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request to, the holders of Senior Indebtedness as their
interests may appear or their Representative under this Indenture or other
agreement (if any) pursuant to which Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
obligations with respect to Senior Indebtedness remaining unpaid to the extent
necessary to pay such obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 15, and no implied covenants or obligations with
respect to the holders of Senior Indebtedness shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness, and shall not be liable to any such
holders if the Trustee shall pay over or distribute to or on behalf of holders
or the Company or any other Person money or assets to which any holders of
Senior Indebtedness shall be entitled by virtue of this Article 15, except if
such payment is made as a result of the willful misconduct or gross negligence
of the Trustee.
Section 15.06 Notice by Company. The Company shall promptly notify the
Trustee and the paying agent in writing of any facts known to the Company that
would cause a payment of any obligations with respect to the Notes to violate
this Article 15, but failure to give such notice shall not affect the
subordination of the Notes to the Senior Indebtedness as provided in this
Article 15.
80
Section 15.07 Subrogation. After all Senior Indebtedness is paid in full
and until the Notes are paid in full, holders of Notes shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Notes) to
the rights of holders of Senior Indebtedness to receive distributions applicable
to Senior Indebtedness to the extent that distributions otherwise payable to the
holders of Notes have been applied to the payment of Senior Indebtedness. A
distribution made under this Article 15 to holders of Senior Indebtedness that
otherwise would have been made to holders of Notes is not, as between the
Company and holders of Notes, a payment by the Company on the Notes.
Section 15.08 Relative Rights. This Article 15 defines the relative rights
of holders of Notes and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(a) impair, as between the Company and holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms.
(b) affect the relative rights of holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior
Indebtedness; or
(c) prevent the Trustee or any holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Indebtedness to receive distributions and payments
otherwise payable to holders of Notes.
If the Company fails because of this Article 15 to pay principal of or interest
on a Note on the due date, the failure is still a default or Event of Default.
Section 15.09 Subordination May Not Be Impaired by Company. No right of
any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any holder or by the failure of the Company or any holder
to comply with this Indenture.
Section 15.10 Distribution or Notice of Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 15, the Trustee and the holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
15.
81
Section 15.11 No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by an act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder or
any Representative, or by any non-compliance by the Company with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or the notice to the Trustee or the holders of the
Notes, without incurring responsibility to the holders of the Notes and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the holders of the Notes to the holders of Senior
Indebtedness, do any one or more of the following: (1) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (2) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (3) release any Person liable in any manner for the collection or
payment of Senior Indebtedness; (4) exercise or refrain from exercising any
rights against the Company and any other Person; and (5) sell, assign or
transfer the Senior Indebtedness to any Person; provided, however, that in no
event shall any such actions limit the right of the holders of the Notes to take
any action to accelerate the maturity of the Notes pursuant to Article 6 of this
Indenture or to pursue any rights or remedies hereunder or under applicable laws
if the taking of such action does not otherwise violate the terms of this
Article.
Section 15.12 Rights of Trustee and Paying Agent. Notwithstanding the
provisions of this Article 15 or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment or distribution by the Trustee, and the
Trustee and the Paying Agent may continue to make payments on the Notes, unless
the Trustee shall have received at its Corporate Trust Office at least two
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any obligations with respect to the Notes to violate
this Article 15. Only the Company or a Representative may give the notice.
Nothing in this Article 15 shall impair the claims of, or payment to, the
Trustee under or pursuant to Section 7.06 hereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
Section 15.13 Authorization to Effect Subordination. Each holder of Notes,
by the holder's acceptance thereof, authorizes and directs the Trustee on
82
such holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article 15, and appoints the
Trustee to act as such holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in Section 6.09 hereof at least 30
days before the expiration of the time to file such claim, holders of any Senior
Indebtedness (or their Representatives), are hereby authorized to file an
appropriate claim for and on behalf of the holders of the Notes.
Section 15.14 Amendments. The provisions of this Article 15 shall not be
amended or modified without the written consent of the holders of all Designated
Senior Indebtedness bound by such amendment or modification.
ARTICLE 16
MISCELLANEOUS PROVISIONS
Section 16.01 Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
Section 16.02 Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any Person that shall at the time be the lawful sole successor of the
Company.
Section 16.03 Addresses for Notices, Etc. Any notice, direction request or
demand which by any provision of this Indenture is required or permitted to be
given or served by the Trustee or by the holders of Notes on the Company shall
be deemed to have been sufficiently given or made, for all purposes, if given or
served by being deposited postage prepaid by registered or certified mail with
the United States Postal Service, or if sent by nationally recognized delivery
or courier service, or if sent by confirmed telecopier with simultaneous mailing
by first class mail addressed (until another address is filed in writing by the
Company with the Trustee) to Standard Management Corporation, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel
(telecopier: (▇▇▇) ▇▇▇-▇▇▇▇). Any notice, direction, request or demand hereunder
to or upon the Trustee shall be deemed to have been sufficiently given or made,
for all purposes, if given or served in writing and deposited, postage prepaid,
by registered or certified mail in a post office letter box addressed to the
Corporate Trust Office (provided, however, that in no instance shall any notice,
direction, request or demand be deemed to have been sent to or received by the
Trustee unless and until actually received by it at the Corporate Trust Office).
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
83
Any notice or communication mailed to a Noteholder shall be mailed to him
by first class mail, postage prepaid, at his address as it appears on the Note
register and shall be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Noteholder or any defect in
it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed to a Noteholder or the Company in the manner
provided above, it is duly given, whether or not the addressee receives it.
Section 16.04 Governing Law. This Indenture and each Note shall be deemed
to be a contract made under the laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of the State of New
York, without regard to conflicts of laws principles thereof.
Section 16.05 Evidence of Compliance with Conditions Precedent,
Certificates to Trustee. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include: (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 16.06 Legal Holidays. In any case in which the date of maturity of
interest on or principal of the Notes or the redemption date of any Note will
not be a Business Day, then payment of such interest on or principal of the
Notes need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the date of maturity
or the redemption date, and no interest shall accrue for the period from and
after such date.
Section 16.07 Trust Indenture Act Not Applicable. This Indenture is
neither subject to, nor governed by, the provisions of the Trust Indenture Act
except for such terms which are expressly incorporated by reference herein as a
matter of contract. In the event this Indenture becomes subject to the
requirements of the Trust Indenture Act then this Indenture shall be subject to
and
84
governed by only such provisions of the Trust Indenture Act which are required
to be part of and to govern indentures qualified under the Trust Indenture Act;
provided that unless otherwise required by law, notwithstanding the foregoing,
this Indenture and the Notes issued hereunder shall not be subject to the
provisions of subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the Trust
Indenture Act as now in effect or as hereafter amended or modified; provided
further that this Section 16.07 shall not require this Indenture or the Trustee
to be qualified under the Trust Indenture Act prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act,
nor shall it constitute any admission or acknowledgment by any party to the
Indenture that any such qualification is required prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act. If
this Indenture becomes subject to the Trust Indenture Act and if any provision
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in an indenture qualified under the Trust Indenture Act,
such required provision shall control.
Section 16.08 No Security Interest Created. Nothing in this Indenture or
in the Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction in which property of the
Company or its subsidiaries is located.
Section 16.09 Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto, any paying agent, any authenticating agent, conversion agent, any Note
registrar and their successors hereunder and the holders of Notes any benefit or
any legal or equitable right, remedy or claim under this Indenture.
Section 16.10 Table of Contents, Headings, Etc. The table of contents and
the titles and headings of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 16.11 Authenticating Agent. The Trustee may appoint an
authenticating agent that shall be authorized to act on its behalf, and subject
to its direction, in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.04, 2.05, 2.06, 2.07, 3.03 and 3.05, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a Person
eligible to serve as trustee hereunder pursuant to Section 7.09.
85
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 16.11, without the execution or filing of any paper or any further act
on the part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written notice
of resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any authenticating agent by giving written notice of
termination to such authenticating agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time any
authenticating agent shall cease to be eligible under this Section, the Trustee
shall either promptly appoint a successor authenticating agent or itself assume
the duties and obligations of the former authenticating agent under this
Indenture and, upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of such appointment of
a successor authenticating agent to all holders of Notes as the names and
addresses of such holders appear on the Note register.
The Company agrees to pay to the authenticating agent from time to time
such reasonable compensation for its services as shall be agreed upon in writing
between the Company and the authenticating agent.
The provisions of Sections 7.02, 7.03, 7.04, 8.03 and this Section 16.11
shall be applicable to any authenticating agent.
Section 16.12 Execution in Counterparts. This Indenture may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 16.13 Severability. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, then (to the extent
permitted by law) the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
86
U.S. Bank National Association hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions herein above set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed.
STANDARD MANAGEMENT
CORPORATION, as Issuer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
U.S. BANK NATIONAL
ASSOCIATION, as Trustee
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
87
EXHIBIT A
[Include only for Notes that are Restricted Securities]
[THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 UNDER THE SECURITIES
ACT); (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THIS NOTE UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR
ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THIS NOTE OR THE COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS NOTE EXCEPT (A) TO STANDARD MANAGEMENT
CORPORATION OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (C)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
(2)(C) ABOVE), IT WILL FURNISH TO U.S. BANK NATIONAL ASSOCIATION , AS TRUSTEE
(OR A SUCCESSOR TRUSTEE, AS APPLICABLE) AND UPON THE COMPANY'S REQUEST, TO THE
COMPANY, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT; AND (4) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE
NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE (2)(C) ABOVE OR UPON ANY TRANSFER OF
THIS NOTE UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION) , ACCOMPANIED BY AN OPINION OF COUNSEL DELIVERED TO THE TRUSTEE AND
THE ISSUER BY THE TRANSFEROR TO THE EFFECT THAT THE HOLDING PERIOD APPLICABLE TO
SALES OF THIS NOTE UNDER SUCH RULE 144(K) HAS EXPIRED, THAT THIS NOTE IS NO
LONGER A "RESTRICTED SECURITY" AS THAT TERM IS DEFINED IN THE INDENTURE AND THAT
REMOVAL OF THIS LEGEND FROM SUCH NOTE IS PERMITTED UNDER THIS INDENTURE. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTION.]
A-1
STANDARD MANAGEMENT CORPORATION
6% CONVERTIBLE NOTE DUE 2008
CUSIP: __________
No. ___________ $________________
Standard Management Corporation, a corporation duly organized and validly
existing under the laws of the State of Indiana (herein called the "COMPANY",
which term includes any successor corporation under the Indenture referred to on
the reverse hereof), for value received hereby promises to pay to __________ or
its registered assigns, the principal sum of ________ DOLLARS on January 1, 2008
at the office or agency of the Company maintained for that purpose in accordance
with the terms of the Indenture, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, semi-annually on January 1 and
July 1 of each year, commencing January 1, 2005, on said principal sum at said
office or agency, in like coin or currency, at the rate per annum of 6.00%, from
the January 1 or July 1, as the case may be, next preceding the date of this
Note to which interest has been paid or duly provided for, unless the date
hereof is a date to which interest has been paid or duly provided for, in which
case from the date of this Note, or unless no interest has been paid or duly
provided for on the Notes, in which case from November 30, 2004 until payment of
said principal sum has been made or duly provided for. Notwithstanding the
foregoing, if the date hereof is after any December 15 or June 15, as the case
may be, and before the following January 1 or July 1, this Note shall bear
interest from such January 1 or July 1; provided that if the Company shall
default in the payment of interest due on such January 1 or July 1, then this
Note shall bear interest from the next preceding January 1 and July 1 to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for on such Note, from November 30, 2004. Except as otherwise
provided in the Indenture, the interest payable on the Note pursuant to the
Indenture on any January 1 or July 1 will be paid to the Person entitled thereto
as it appears in the Note register at the close of business on the record date,
which shall be the December 15 or June 15 (whether or not a Business Day) next
preceding such January 1 or July 1, as provided in the Indenture; provided that
any such interest not punctually paid or duly provided for shall be payable as
provided in the Indenture. Interest may, at the option of the Company, be paid
(i) by check mailed to the registered address of such Person (provided that the
holder of Notes with an aggregate principal amount in excess of $500,000 shall,
at the written election (timely made and containing appropriate wire transfer
information) of such holder, be paid by wire transfer of immediately available
funds, or (ii) by transfer to an account maintained by such Person located in
the United States.
The Company promises to pay interest on overdue principal, premium, if any
(to the extent that payment of such interest is enforceable under applicable
law) at the rate of 7%, per annum.
A-2
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions giving the holder of
this Note the right to convert this Note into Common Stock of the Company on the
terms and subject to the limitations referred to on the reverse hereof and as
more fully specified in the Indenture. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of the State of New York, without regard to conflicts
of laws principles thereof.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
A-3
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
STANDARD MANAGEMENT
CORPORATION
By: ____________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-named Indenture.
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By: _____________________________
Authorized Officer
Dated: _______ ____, 2004
A-4
FORM OF REVERSE OF NOTE
STANDARD MANAGEMENT CORPORATION
6% CONVERTIBLE NOTE DUE 2008
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 6% Convertible Notes Due 2008 (herein called the "NOTES"),
limited in aggregate principal amount to $10,000,000, issued and to be issued
under and pursuant to an Indenture dated as of November 30, 2004 (herein called
the "INDENTURE"), between the Company and U.S. Bank National Association, as
trustee (herein called the "TRUSTEE"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Notes.
The indebtedness evidenced by this Note is, to the extent provided in the
Indenture, subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness of the Company, and this Note is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided, and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
In case an Event of Default shall have occurred and be continuing, the
principal of, premium, if any, and accrued interest, on all Notes may be
declared by either the Trustee or the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding, and upon said declaration shall
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of at least a majority in aggregate principal
amount of the Notes at the time outstanding, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in any
manner the rights of the holders of the Notes; provided that no such
supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the rate or extend the time for payment of interest or Liquidated Damages
thereon, or reduce the principal amount thereof or premium, if any, thereon, or
reduce any amount payable upon redemption or repurchase thereof, or impair the
right of any Noteholder to institute suit for the payment thereof, or make the
principal thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes, or change the obligation of the
Company to redeem any Note upon the happening of a Fundamental Change in a
manner adverse to the holder of the Notes, or impair the right to convert the
Notes into Common Stock subject to the terms set forth in the Indenture,
including Section 14.09
A-5
thereof, without the consent of the holder of each Note so affected, or modify
any of the provisions of Section 10.02 or Section 6.07 thereof, except to
increase any such percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the holder of each
Note so affected, or change any obligation of the Company to maintain an office
or agency in the places and for the purposes set forth in Section 4.02 thereof,
or (ii) reduce the aforesaid percentage of Notes, the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of all Notes then outstanding. Subject to the provisions of the
Indenture, the holders of a majority in aggregate principal amount of the Notes
at the time outstanding may on behalf of the holders of all of the Notes waive
any past default or Event of Default under the Indenture and its consequences
except a default in the payment of interest, or any premium on, or the principal
of, any of the Notes, or a failure by the Company to convert any Notes into
Common Stock of the Company, or a default in the payment of the redemption
price, or a default in respect of a covenant or provisions of the Indenture
which under Article 10 of the Indenture cannot be modified or amended without
the consent of the holders of each or all Notes then outstanding or affected
thereby. Any such consent or waiver by the holder of this Note (unless revoked
as provided in the Indenture) shall be conclusive and binding upon such holder
and upon all future holders and owners of this Note and any Notes which may be
issued in exchange or substitution hereof, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and
interest, including contingent interest, if any, on this Note at the place, at
the respective times, at the rate and in the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months.
The Notes are issuable in fully registered form, without coupons, in
denominations of $1,000 principal amount and any multiple of $1,000. At the
office or agency of the Company referred to on the face hereof, and in the
manner and subject to the limitations provided in the Indenture, without payment
of any service charge but with payment of a sum sufficient to cover any tax,
assessment or other governmental charge that may be imposed in connection with
any registration or exchange of Notes, Notes may be exchanged for a like
aggregate principal amount of Notes of any other authorized denominations.
At any time on or after November 30, 2006 and prior to maturity, the Notes
may be redeemed at the option of the Company, in whole or in part, upon mailing
a notice of such redemption not less than 30 days but not more than 60 days
before the redemption date to the holders of Notes at their last registered
addresses, all as provided in the Indenture, at a redemption price equal to 100%
of the principal amount of the Notes to be redeemed, together with accrued and
unpaid interest to, but excluding, the redemption date if the closing sale price
of
A-6
the Common Stock exceeds 140% of the Conversion Price for at least 10 Trading
Days in the 20 consecutive trading days ending on the trading day preceding the
date of mailing of the notice of redemption (such redemption right to continue
once in effect through close of business on the redemption date specified in
such notice, regardless of subsequent changes in the closing sale price of the
Common Stock); provided that if the redemption date is on a January 1 or July 1,
then the interest payable on such date shall be paid to the holder of record on
the preceding December 15 or June 15, respectively.
The Company may not give notice of any redemption of the Notes if a
default in the payment of interest, or premium, if any, on the Notes has
occurred and is continuing.
The Notes are not subject to redemption through the operation of any
sinking fund.
If a Fundamental Change occurs at any time prior to maturity of the Notes,
this Note will be redeemable on a Fundamental Change Redemption Date, 30 days
after notice thereof, at the option of the holder of this Note at a redemption
price equal to 100% of the principal amount thereof, together with accrued
interest to (but excluding) the redemption date; provided that if such
Fundamental Change Redemption Date is a January 1 or July 1, the interest
payable on such date shall be paid to the holder of record of this Note on the
preceding December 15 or June 15, respectively. The Notes will be redeemable in
multiples of $1,000 principal amount. The Company shall mail to all holders of
record of the Notes a notice of the occurrence of a Fundamental Change and of
the redemption right arising as a result thereof on or before the 10th day after
the occurrence of such Fundamental Change. For a Note to be so redeemed at the
option of the holder, the Company must receive at the office or agency of the
Company maintained for that purpose in accordance with the terms of the
Indenture, such Note with the form entitled "Option to Elect Repayment Upon a
Fundamental Change" on the reverse thereof duly completed, together with such
Note, duly endorsed for transfer, on or before the 30th day after the date of
such notice of a Fundamental Change (or if such 30th day is not a Business Day,
the immediately succeeding Business Day).
Subject to the occurrence of certain events and in compliance with the
provisions of the Indenture, the holder hereof has the right, at its option, to
convert each $1,000 principal amount of the Notes into 238.09524 shares of the
Company's Common Stock (subject to adjustment from time to time as provided in
Article 14 of the Indenture (the "CONVERSION RATE")). A Note in respect of which
a holder is exercising its right to require redemption upon a Fundamental Change
may be converted only if such holder withdraws its election to exercise either
such right in accordance with the terms of the Indenture. The Conversion Rate
for the Notes on any Conversion Date shall be determined as set forth in the
Indenture. The Company shall deliver cash or a check in lieu of any fractional
share of Common Stock.
A-7
A holder's right to convert the Notes into Common Stock of the Company is
also subject to the Company's right to elect to pay such holder the amount of
cash set forth in the next succeeding sentence in lieu of delivering all or part
of such Common Stock; provided, however, that (i) if such payment of cash is not
permitted pursuant to the provisions of the Indenture, the Company shall, from
and to the extent necessary, deliver Common Stock (and cash in lieu of
fractional shares of Common Stock) in accordance with the Indenture, and (ii) if
such payment of Common Stock is not permitted in accordance with the Indenture,
then the Company shall, from and to the extent necessary, deliver cash in
accordance with the Indenture, in either case, whether or not the Company has
delivered a notice pursuant to the Indenture to the effect that the Notes will
be paid, in whole or in part, in cash or Common Stock. If the Company shall
elect to make such payment in shares of Common Stock or a combination of cash
and Common Stock, the Company shall deliver to the holder through the Conversion
Agent, no later than the third Business Day following the date on which the
Applicable Stock Price is determined, a certificate for the number of whole
shares of Common Stock issuable upon the conversion and, if applicable, cash in
lieu of such Common Stock and cash in lieu of any fractional shares. If,
however, the Company shall elect to make all or a portion of such payment in
cash, the Company shall deliver to the holder surrendering a Note the amount of
cash per Note (or a portion of a Note) equal to (i) the Applicable Stock Price
multiplied by the Conversion Rate in effect with respect to such Conversion Date
minus (ii) the number of shares of Common Stock (if any) which the Company
elects to issue in connection with such conversion of such Note, no later than
the third Business Day following such Conversion Date.
If an Event of Default (other than a default in a cash payment upon
conversion of the Securities) shall have occurred and be continuing, the Company
shall deliver Common Stock in accordance with the terms of the Indenture, and if
the Company is prohibited from delivering shares of Common Stock it shall, from
and to the extent necessary, pay cash in lieu of issuing such shares as
described in Section 14.02 in each case, whether or not the Company has
delivered a notice pursuant to Section 14.02 of the Indenture to the effect that
the Notes would be paid in cash or a combination of cash and Common Stock.
A holder may convert a portion of a Note if the principal amount of such
portion is $1,000 or an integral multiple 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 a Note, except for conversion during the period from
the close of business on any record date immediately preceding any interest
payment date to the close of business on the Business Day immediately preceding
such interest payment date, in which case the holder on such record date shall
receive the interest payable on such interest payment date, that portion of
accrued and unpaid interest on the converted Note attributable to the period
from the most recent interest payment date (or, if no interest payment date has
occurred, from the Issue Date) through the Conversion Date 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 (together with
the cash payment, if any, in
A-8
lieu of fractional shares), or cash in lieu thereof, in exchange for the Note
being converted pursuant to the provisions hereof.
Notes or portions thereof surrendered for conversion during the period
from the close of business on any record date immediately preceding any interest
payment date to the close of business on the Business Day immediately preceding
such interest payment date shall be accompanied by payment to the Company or its
order, in New York Clearing House funds or other funds acceptable to the
Company, of an amount equal to the interest payable on such interest payment
date with respect to the principal amount of Notes or portions thereof being
surrendered for conversion; provided that no such payment need be made if (1)
the Company has specified a Redemption Date that occurs during the period from
the close of business on a record date to the close of business on the Business
Day immediately preceding the interest payment date to which such record date
relates, (2) the Company has specified a Fundamental Change Redemption Date
during such period or (3) only to the extent of overdue interest, any overdue
interest exists on the Conversion Date with respect to the Notes converted.
The Notes are subject to mandatory conversion ("MANDATORY CONVERSION")
upon the earlier to occur of: (i) the date on which the Closing Sale Price of
the Common Stock exceeds $8.00 for the 15th consecutive Trading Day or (ii) the
third anniversary of the date of the Indenture. The Notes shall be automatically
converted on the Business Day following the first day on which the conditions to
Mandatory Conversion have been satisfied (the "MANDATORY CONVERSION DATE") into
that number of fully paid and non-assessable whole shares (calculated to the
nearest 1/100th of a share) of Common Stock determined by dividing the aggregate
principal amount of Notes then outstanding by the Conversion Rate in effect on
the Mandatory Conversion Date. After the Mandatory Conversion Date, the Notes
will no longer represent indebtedness of the Company and will no longer accrue
interest or require the Company to make any payment of principal; and the
Company's obligation to make any further payments with respect to the Notes will
terminate.
No fractional shares will be issued upon conversion; in lieu thereof, an
amount will be paid in cash based upon the Applicable Stock Price.
To convert a Note, a holder must (a) complete and manually sign the
conversion notice set forth below or a facsimile thereof and deliver such notice
to the conversion agent, (b) surrender the Note to the conversion agent, (c)
furnish appropriate endorsements and transfer documents (including any
certification that may be required under applicable law) if required by the
conversion agent, (d) pay any transfer or similar tax, if required, and (e) if
required pay funds equal to the interest payable on the next interest payment
date. The Company has initially designated the Trustee as its conversion agent.
The Conversion Rate will be adjusted as set forth in Article 14 of the
Indenture.
A-9
Any Notes called for redemption, unless surrendered for conversion by the
holders thereof on or before the close of business on the Business Day preceding
the redemption date, may be deemed to be redeemed from the holders of such Notes
for an amount equal to the applicable redemption price, together with accrued
but unpaid interest to, but excluding, the date fixed for redemption, by one or
more investment banks or other purchasers who may agree with the Company (i) to
purchase such Notes from the holders thereof and convert them into shares of the
Company's Common Stock and (ii) to make payment for such Notes as aforesaid to
the Trustee in trust for the holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, a new Note or Notes of authorized denominations for
an equal aggregate principal amount will be issued to the transferee in exchange
thereof, subject to the limitations provided in the Indenture, without charge
except for any tax, assessment or other governmental charge imposed in
connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent, any
conversion agent and any Note registrar may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Note registrar) for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.
No recourse for the payment of the principal of or any premium or interest
on this Note, or for any claim based hereon or otherwise in respect hereof, and
no recourse under or upon any obligation, covenant or agreement of the Company
in the Indenture or any supplemental indenture or in any Note, or because of the
creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
This Note shall be deemed to be a contract made under the laws of New
York, and for all purposes shall be construed in accordance with the laws of New
York, without regard to conflicts of laws principles thereof.
A-10
Terms used in this Note and defined in the Indenture are used herein as
therein defined.
A-11
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT -___ Custodian ___
TEN ENT - as tenant by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors Act
survivorship and not as tenants in _________________________________
common (State)
Additional abbreviations may also be used though not in the above list.
CONVERSION NOTICE
TO: STANDARD MANAGEMENT CORPORATION
U.S. BANK NATIONAL ASSOCIATION
The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion thereof (which is $1,000 or a
multiple thereof) below designated, into shares of Common Stock of Standard
Management Corporation (the "COMPANY") in accordance with the terms of the
Indenture (including the Company's payment options) referred to in this Note,
and directs that the shares issuable and deliverable upon such conversion,
together with any check for any cash payment, whether for fractional shares or
pursuant to the Company's payment options and any Notes representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below. Capitalized
terms used herein but not defined shall have the meanings ascribed to such terms
in the Indenture. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
provide the appropriate information below and pay all transfer taxes payable
with respect thereto. Any amount required to be paid by the undersigned on
account of interest, including contingent interest, if any, accompanies this
Note.
Dated: ______________________
________________________________
Name of Holder
________________________________
________________________________
Signature(s)
Signature(s) must be guaranteed
by an "eligible guarantor
institution" meeting the
requirements of the Note
registrar, which requirements
include membership or
participation in the Security
Transfer Agent Medallion Program
("STAMP") or such other
"signature guarantee program" as
may be determined by the Note
registrar in addition to, or in
substitution for, STAMP, all in
accordance with the Securities
Exchange Act of 1934, as
amended.
________________________________
Signature Guarantee
Fill in the registration of shares of Common Stock if to be issued, and
Notes if to be delivered, other than to and in the name of the registered
holder:
___________________________________________
(Name)
___________________________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
___________________________________________
(City, State and Zip Code)
___________________________________________
Please print name and address
Principal amount to be converted
(if less than all):
$
___________________________________________
Social Security or Other Taxpayer
Identification Number:
___________________________________________
OPTION TO ELECT REDEMPTION
UPON A FUNDAMENTAL CHANGE
TO: STANDARD MANAGEMENT CORPORATION
U.S. BANK NATIONAL ASSOCIATION
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Standard Management Corporation (the
"COMPANY") as to the occurrence of a Fundamental Change with respect to the
Company and requests and instructs the Company to redeem the entire principal
amount of this Note, or the portion thereof (which is $1,000 or a multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Note at the price of 100% of such entire principal amount or
portion thereof, together with accrued interest to, but excluding, the
Fundamental Change Redemption Date, to the registered holder hereof. Capitalized
terms used herein but not defined shall have the meanings ascribed to such terms
in the Indenture.
Dated: ______________________
________________________________
________________________________
Signature(s)
NOTICE: The above signatures of
the holder(s) hereof must
correspond with the name as
written upon the face of the
Note in every particular
without alteration or
enlargement or any change
whatever.
Principal amount to be repaid
(if less than all):
________________________________
________________________________
Social Security or Other
Taxpayer Identification Number
ASSIGNMENT
For value received ______________________________hereby sell(s) assign(s)
and transfer(s) unto ___________________________________ (Please insert social
security or other Taxpayer Identification Number of assignee) the within Note,
and hereby irrevocably constitutes and appoints
______________________________________ attorney to transfer said Note on the
books of the Company, with full power of substitution in the premises.
In connection with any transfer of the Note prior to the expiration of the
holding period applicable to sales thereof under Rule 144(k) under the
Securities Act (or any successor provision) (other than any transfer pursuant to
a registration statement that has been declared effective under the Securities
Act), the undersigned confirms that such Note is being transferred:
[ ] To Standard Management Corporation or a Subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144 under the
Securities Act of 1933, as amended; or
[ ] Pursuant to a Registration Statement which has been declared
effective under the Securities Act of 1933, as amended, and
which continues to be effective at the time of transfer;
and unless the Note has been transferred to Standard Management Corporation or a
Subsidiary thereof, the undersigned confirms that such Note is not being
transferred to an "affiliate" of the Company as defined in Rule 144 under the
Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Notes evidenced by this certificate in the name of any person other
than the registered holder thereof.
Dated: ______________________
________________________________
________________________________
Signature(s)
Signature(s) must be guaranteed
by an "eligible guarantor
institution" meeting
the requirements of the Note
registrar, which requirements
include membership or
participation in the Security
Transfer Agent Medallion Program
("STAMP") or such other
"signature guarantee program" as
may be determined by the Note
registrar in addition to, or in
substitution for, STAMP, all in
accordance with the Securities
Exchange Act of 1934, as
amended.
________________________________
Signature Guarantee
NOTICE: The signature on the Conversion Notice, the Option to Elect Redemption
Upon a Fundamental Change, or the Assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.