BMB MUNAI, INC., as Issuer and The bank of new york, as Trustee INDENTURE Dated as of September 19, 2007 U.S. $60,000,000 5.0% CONVERTIBLE SENIOR Notes DUE 2012

 

 

 

 

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CROSS-REFERENCE TABLE

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This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture.

 

 

 

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THIS INDENTURE, dated as of September 19, 2007,

BETWEEN:

RECITALS OF THE ISSUER

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

It is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows:

For all purposes of this Indenture and the Notes, the following terms are defined as follows:

“Additional Interest” means all additional interest then owing pursuant to the Registration Rights Agreement.

“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 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 the Paying and Conversion Agent, the Registrar, the Transfer Agent or any of them.

“Aggregate Consideration” has the meaning given in Section 11.18(a) hereof.

“American Stock Exchange” means the American Stock Exchange LLC.

 

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“Anniversary” has the meaning given in Section 10.2 hereof.

“Applicable Rate” means, with respect to the principal amount of any Note on a Change of Control Put Date, the sum of (A) 100% and (B) an amount equal to the product of (i) 7.2% multiplied by (ii) a fraction, the numerator of which is the number of days from the Original Issue Date to such Change of Control Put Date, using a 360-day year of twelve 30-day months, and the denominator of which is 1,800.

“Authorized Signatory” means any director or Officer notified to the Trustee as being an Authorized Signatory pursuant to Section 9.24 hereof.

“Bankruptcy Law” means Title 11 of the U.S. Code or any similar federal or state law for the relief of debtors.

“Block Voting Instruction” means, in relation to any Meeting, a document in the English language issued by the Registrar:

“Bonus Issue” means any issue of Shares credited as fully paid to the Shareholders by way of capitalization of profits or reserves (including any share premium account or capital redemption reserve) other than a Dividend in Shares.

“Business Day”, in any place, means a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in that place.

“Chairman” means, in relation to any Meeting, the individual who takes the chair in accordance with Section 8.5 hereof.

“Change of Control Event” has the meaning given in Section 11.5(c) hereof.

“Change of Control Event Notice” has the meaning given in Section 11.5(d) hereof.

“Change of Control Event Premium” has the meaning given in Section 9.35 hereof.

“Change of Control Put Date” means the date which is the fourteenth day after the last day of the Put Option Period.

“Clearstream” means Clearstream Banking, société anonyme.

“Closing Market Price” means, in respect of a Share on any particular Exchange Business Day, the closing market price of a Share published by the American Stock Exchange in respect of that Exchange Business Day.

 

 

 

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“Common Depositary” has the meaning given in Section 2.2 hereof.

“Consideration per Share” has the meaning given in Section 11.18(a) hereof.

“Conversion Date” has the meaning given in Section 11.2(d) hereof.

“Conversion Expenses” has the meaning given in Section 11.2(b) hereof.

“Conversion Notice” means a notice of conversion substantially in the form set forth in Exhibit B hereof or such other form as may from time to time be agreed among the Issuer, the Paying and Conversion Agent and the Trustee and notified to the Holders.

“Conversion Period” has the meaning given in Section 11.1(b) hereof.

“Conversion Price” has the meaning specified in Section 11.1(d) hereof.

“Conversion Right” means, in respect of any Note, the right of the Holder to convert the Note into Shares in accordance with this Indenture.

“Corporate Trust Office” means the principal corporate trust office of the Trustee, at which at any particular time its corporate trust business shall be administered, which office at the date of execution of this Indenture is located at The Bank of New York, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Attention: Corporate Trust Services, or such other address as the Trustee may designate from time to time by notice to the Holders and the Issuer, or the principal Corporate Trust Office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Issuer).

“Current Market Price” means, in respect of a Share at a particular date, the arithmetic average of the Volume Weighted Average Price per Share for each of the 10 consecutive Exchange Business Days ending on the Exchange Business Day immediately preceding such date (the “Relevant Period”); provided that:

 

 

 

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“Custodian” means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law.

“Default” means an event or circumstance which could, with the giving of notice, lapse of time, the issuing of a certificate and/or fulfillment of any other requirement provided for in Section 4.1 hereof become an Event of Default.

“Determined by an Expert” means determined in good faith by an Expert acting as an Expert.

“Dividend” means any dividend or distribution of any kind on the class of capital represented by the Shares, whether in cash or otherwise and however described:

“Dividend in Shares” means any issue of Shares credited as fully paid to the Shareholders by way of capitalization of profits or reserves which is to be, or may at the election of the Shareholders be, issued instead of the whole or any part of a cash Dividend which the Shareholders concerned would or could otherwise have received.

“Dolinnoe Field” means the field for exploration of hydrocarbons known as “the Dolinnoe field” located in the Tybkaragan Region of Mangystau oblast in the Republic of Kazakhstan.

“Effective Date” has:

 

 

 

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“Equity” means the aggregate market value of the Issuer’s ordinary shares based on the Volume Weighted Average Price of a Share as at the date of each quarterly report filed on Form 10-Q by the Issuer pursuant to the Exchange Act.

“Euroclear” means Euroclear S.A./N.V., as operator of the Euroclear System.

“Event of Default” has the meaning specified in Section 4.1(a) hereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Business Day” means any day that is a trading day on the American Stock Exchange other than a day on which the American Stock Exchange is scheduled to close prior to its regular weekday closing time.

“Expert” means, in relation to any matter to be Determined by an Expert, an independent investment bank and/or a firm of accountants which is, in either case, of international repute, appointed to act as an expert for the purposes of such matter in accordance with Section 12.8 hereof.

“Extraordinary Resolution” means a resolution passed at a Meeting duly convened and held in accordance with this Indenture by not less than three quarters of the votes cast.

“Fair Market Value” means:

provided, however, that in any such case:

 

 

 

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“Filing Deadline Date” has the same meaning as is ascribed to that term in the Registration Rights Agreement.

“First Put Exercise Period” has the meaning given in Section 10.2 hereof.

“Form of Proxy” means, in relation to any Meeting, a document in the English language available from the Registrar signed by a Noteholder or, in the case of a corporation, executed under its seal or signed on its behalf by a duly authorized officer and delivered to the Registrar not later than 48 Hours before the time fixed for such Meeting, appointing a named individual or individuals to vote in respect of the Notes held by such Noteholder.

“Global Note” has the meaning specified in Section 2.2 hereof.

“Group” means the Issuer and its Subsidiaries taken as a whole.

“Guarantee” means, in relation to any Indebtedness of any Person, any obligation of another person to pay such Indebtedness.

“Indebtedness” means, at any time, the outstanding principal, capital or nominal amount and any fixed or minimum premium payable on prepayment or redemption of any indebtedness for or in respect of:

 

 

 

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financial institution (excluding any given in respect of trade credit arising in the ordinary course of business);

“Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof.

“Initial Securities” has the meaning specified in the recitals.

“Initial Shelf Registration Statement” has the meaning ascribed to that term in the Registration Rights Agreement.

“Interest Payment Date” means January 13 and July 13 in each year, the first Interest Payment Date being January 13, 2008.

“Interest Record Date” means December 29 and June 28 in each year.

“Issuer” means the corporation named as the “Issuer” in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Issuer” shall mean such successor corporation.

“Issuer Order” means a written order signed in the name of the Issuer by both (1) the Chief Executive Officer, the President or a Vice President and (2) so long as not the same as the officer signing pursuant to clause (1), the Chief Financial Officer, the Treasurer, the Secretary or any Assistant Secretary of the Issuer, and delivered to the Trustee.

“Material Subsidiary” means any Subsidiary of the Issuer:

provided that in the case of a Subsidiary acquired or an entity which becomes a Subsidiary after the end of the financial period to which the then latest audited consolidated financial statements of the Issuer relate, the reference to the then latest audited consolidated financial statements for the purposes of the calculation above shall, until audited consolidated financial statements of the Issuer are published for the financial period in which the acquisition is made or, as the case may be, in which such entity becomes a Subsidiary, be deemed to be a reference to the then latest consolidated financial statements of the Issuer

 

 

 

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adjusted in such manner as the Issuer shall consider appropriate to consolidate the latest audited accounts of such Subsidiary in such accounts; and an Officers’ Certificate certifying that a Subsidiary of the Issuer is or is not or was or was not at any time or throughout any specified period a Material Subsidiary shall, in the absence of manifest or proven error, be conclusive and binding on all parties;

“Maturity Date” means July 13, 2012.

“Meeting” means a meeting of Noteholders (whether originally convened or resumed following an adjournment).

“Minimum Conversion Price” means U.S. $6.95; provided that on each occasion, if any, on which the Conversion Price is adjusted pursuant to any of Section 11.6, Section 11.7, Section 11.8, Section 11.9, Section 11.10 or Section 11.14 hereof, then the Minimum Conversion Price shall be adjusted at the same time by the same proportion.

“Net Debt” means the Group’s aggregate Indebtedness less the Group’s aggregate free cash and cash equivalents (as determined under U.S. GAAP) as of the date of each quarterly report filed on Form 10-Q by the Issuer pursuant to the Exchange Act.

“Note Certificate” means any Physical Note representing a Noteholder’s entire holding of Notes and includes any replacement Note Certificate issued pursuant to the terms of this Indenture.

“Noteholder” and (in relation to a Note) “Holder” means a person in whose name a Note is registered in the Register.

“Notes” means the notes in the denomination of U.S. $100,000 in registered form, each comprising the U.S. $60,000,000 5.0% Convertible Senior Notes due 2012 constituted in relation to this Indenture, to be represented by one or more Note Certificate(s) and/or Global Note(s), and for the time being Outstanding or, as the case may be, a specific number thereof.

“Offer” means an offer to acquire Shares, whether expressed as a legal offer, an invitation to treat, a scheme with regard to such acquisition or in any other way, in circumstances where such offer is available to all Shareholders or all Shareholders other than any Shareholder who is the person making such offer (or any associate of such person) or who is excluded from the offer by reason of being connected with one or more specific jurisdictions.

“Officer” of the Issuer means the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, any Vice President, the Secretary or any Assistant Secretary of the Issuer.

“Officers’ Certificate” means a certificate signed by both (1) the Chief Executive Officer, the President or a Vice President of the Issuer and (2) so long as not the same as the officer signing pursuant to clause (1), the Chief Financial Officer, the Treasurer, the Secretary or any Assistant Secretary of the Issuer, and delivered to the Trustee.

“Opinion of Counsel” means a written opinion of counsel, who may be counsel to the Issuer (and may include directors or employees of the Issuer) and which opinion is acceptable to the Trustee, which acceptance shall not be unreasonably withheld.

“Original Issue Date” means July 13, 2007.

“Outstanding” means, in relation to the Notes, all the Notes other than:

 

 

 

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provided that for each of the following purposes, namely:

those Notes (if any) which are for the time being held by any person (including but not limited to the Issuer or any Affiliate of the Issuer) for the benefit of the Issuer or any Affiliate of the Issuer shall (unless and until ceasing to be so held) be deemed not to remain Outstanding, except that, in determining whether the Trustee shall be protected in relying on any direction, consent or waiver given based on such calculation, only such Notes that a Responsible Officer of the Trustee knows are so held shall be so disregarded.

“Participants” has the meaning specified in Section 2.8 hereof.

“Paying and Conversion Agent” has the meaning given in Section 2.5 hereof.

“Payment Business Day” means, in respect of any place of presentation of any Note Certificate, any day on which banks are open for presentation and payment of debt securities and for dealings in foreign currencies in such place of presentation and, in the case of payment by transfer to a U.S. Dollar account as referred to in Section 2.1 hereof, in New York City.

“Person” means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality.

“Physical Notes” has the meaning specified in Section 2.2 hereof.

“Prospectus” has the meaning ascribed to that term in the Registration Rights Agreement.

“Proxy” means, in relation to any Meeting, a person appointed to vote under a Block Voting Instruction or a Form of Proxy other than:

 

 

 

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“Put Option Notice” means a put option notice substantially in the form set forth in Exhibit C hereof or such other form as may from time to time be agreed among the Issuer, the Paying and Conversion Agent and the Trustee and notified to the Holders.

“Put Option Period” means the period of 60 days starting on the day after the date on which the Issuer gives a Change of Control Event Notice in accordance with Section 11.5(d) hereof.

“Put Option Receipt” has the meaning given in Section 10.2 hereof.

“Put Settlement Date” means, in relation to the options described in Sections 10.2(a) and 10.2(b) hereof, the date that is 10 New York Business Days following the date on which the Holder validly deposits a Put Option Notice with the Paying and Conversion Agent, and, in relation to the option described in Section 10.2(c) hereof means the Third Put Date as defined in Section 10.2(c) hereof.

“Rate of Interest” means 5.0% per annum.

“Register” has the meaning given in Section 2.5 hereof.

“Registrar” has the meaning given in Section 2.5 hereof.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of July 13, 2007, between the Issuer and Bayerische Hypo- und Vereinsbank AG.

“Regulation S” means Regulation S promulgated under the Securities Act.

“Relevant Date” means, in relation to any payment in respect of a Note, whichever is the later of (1) the date on which the payment in question first becomes due and (2) if the full amount payable has not been received in New York City by the Paying and Conversion Agent or the Trustee on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders.

“Relevant Fraction” means:

provided, however, that, in the case of a Meeting which has resumed after adjournment for want of a quorum, it means:

 

 

 

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“Relevant Indebtedness” means any Indebtedness which is in the form of or represented by any bond, note, debenture, debenture stock, loan stock, certificate or other instrument which with the agreement of the Issuer or the relevant Material Subsidiary is, or is capable of being, listed, quoted or traded on any recognised stock exchange or in any securities market (including, without limitation, any recognised over-the-counter market).

“repay” shall include “redeem” and vice versa and “repaid”, “repayable”, “repayment”, “redeemed”, “redeemable” and “redemption” shall be construed accordingly.

“Reserved Matter” means any proposal:

“Responsible Officer”, when used with respect to the Trustee, means any officer in the Corporate Trust Office of the Trustee and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Restricted Period” means the applicable distribution compliance period under Regulation S.

“Restricted Notes” means the Notes defined as such in Section 2.3(a) hereof.

“Restricted Securities” has the meaning set forth in Section 2.3(a) hereof.

“Restricted Securities Legend” has the meaning set forth in Section 2.3(a) hereof.

“Restricted Shares” means the Shares defined as such in Section 2.3(a) hereof.

“Rights” means, in respect of any securities or assets, any options, warrants or other rights (other than Share-Related Securities) which by their terms of issue carry a right to subscribe for, purchase or otherwise acquire such securities or assets.

“Rule 144” means Rule 144 under the Securities Act (including any successor rule thereof), as the same may be amended from time to time.

 

 

 

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“Screen Rate” means, on any day, and, in respect of the translation or conversion of one currency into another currency, the rate of exchange between such currencies appearing on Bloomberg page FXFX1 at or about 11.00 a.m. New York time on that day, or, if that page is not available or that rate of exchange does not appear on that page at or about that time on that day, the rate of exchange between such currencies appearing on such other screen or information service, or determined in such other manner, as the Issuer shall determine, with the prior written approval of the Trustee.

“SEC” means the Securities and Exchange Commission.

“Second Put Exercise Period” has the meaning given in Section 10.2 hereof.

“Securities Act” means the Securities Act of 1933, as amended.

“Security Interest” means any mortgage, charge, pledge, lien or other security interest including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction.

“Share” means a common share of U.S. $0.001 par value of the share capital of the Issuer.

“Shareholder” means the person in whose name a Share is for the time being registered in the register of Share ownership maintained by or on behalf of the Issuer.

“Share-Related Securities” means any securities which by their original terms of issue:

“Shelf Registration Statement” has the meaning ascribed to that term in the Registration Rights Agreement.

“Shelf Registration Statement Filing Date” means the date on which the Shelf Registration Statement is filed in accordance with the Registration Rights Agreement.

“Shelf Registration Statement Effective Date” means the date on which the Shelf Registration Statement becomes effective in accordance with the Registration Rights Agreement.

“Specified Office” means, (i) in relation to the Paying and Conversion Agent: The Bank of New York, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Attention: Corporate Trust Administration, (ii) in relation to the Registrar: The Bank of New York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America, Attention: ▇▇▇▇▇▇ Sarrabo and (iii) in relation to the Transfer Agent: The Bank of New York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America, Attention: ▇▇▇▇▇▇ Sarrabo or, in each case, such other address as any such Agent may designate from time to time by notice to the Holders and the Issuer; provided, that the Specified Office of each of the Registrar and the Transfer Agent must at all times be outside of the United Kingdom.

“Subsidiary” means, in relation to the Issuer at any particular time, any other Person:

 

 

 

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(a)         whose affairs and policies the Issuer controls or has the power to control, whether by ownership of share capital, contract, the power to appoint or remove a majority of the members of the governing body of such Person or otherwise; or

(b)         whose financial statements are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the Issuer.

“Third Put Date” has the meaning given in Section 10.2 hereof.

“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb), as in effect on the date of this Indenture; provided, however, that in the event the TIA is amended after such date, “TIA” means, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended, or any successor statute.

“Transfer Agent” has the meaning given in Section 2.5 hereof.

“Trust Deed” has the meaning specified in the recitals.

“Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean such successor Trustee.

“U.S. Dollar” or “U.S. $” means a dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts.

“U.S. Person” has the meaning specified in Regulation S.

“U.S. GAAP” means accounting principles generally accepted in the United States.

“Volume Weighted Average Price” means, in respect of a Share on any Exchange Business Day, the order book volume-weighted price of a Share appearing on or derived from Bloomberg page AQR (or such other source as shall be Determined by an Expert) on such Exchange Business Day; provided that (other than for the purpose of the definition of Current Market Price):

“Voter” means, in relation to any Meeting, a Proxy or (subject to Section 8.2 hereof) a Noteholder; provided, however, that (subject to Section 8.2 hereof) any Noteholder which

 

 

 

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has appointed a Proxy under a Block Voting Instruction or Form of Proxy shall not be a “Voter” except to the extent that such appointment has been revoked and the Registrar notified in writing of such revocation at least 48 Hours before the time fixed for such Meeting.

“Written Resolution” means a resolution in writing signed by or on behalf of all Holders of Notes who for the time being are entitled to receive notice of a Meeting in accordance with the provisions of this Indenture, whether contained in one document or several documents in the same form, each signed by or on behalf of one or more such Holders of the Notes.

“24 Hours” means a period of 24 Hours including all or part of a day (disregarding for this purpose the day upon which such Meeting is to be held) upon which banks are open for business in both the place where the relevant Meeting is to be held and in each of the places where the Paying and Conversion Agent have its Specified Office and such period shall be extended by one period or, to the extent necessary, more periods of 24 Hours until there is included as aforesaid all or part of a day upon which banks are open for business as aforesaid.

“48 Hours” means 2 consecutive periods of 24 Hours.

Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.

The following TIA terms used in this Indenture have the following meanings:

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings so assigned to them.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

 

 

 

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The Notes shall be known and designated as the “5.0% Convertible Senior Notes due 2012” of the Issuer. The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is limited to U.S. $60,000,000 except for securities authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of other Notes of the Issuer in accordance with the terms of this Indenture. The Notes shall be issuable in denominations of U.S. $100,000 or integral multiples thereof.

The Notes shall mature on July 13, 2012.

The Notes shall bear interest from the Original Issue Date at the Rate of Interest payable in arrears on each Interest Payment Date. Subject as provided in Sections 11.4(d) and 11.4(e) hereof, each Note will cease to bear interest from the due date for redemption; provided that if, upon due presentation of any Note on the due date for redemption, payment of principal is improperly withheld or refused, such Note will continue to bear interest at the Rate of Interest (both before and after judgment) until the Relevant Date.

 

 

 

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The amount of interest (excluding Additional Interest, if any) payable on each Interest Payment Date shall be U.S. $2,500 in respect of each Note of U.S. $100,000 denomination. If interest is required to be paid in respect of a Note on any other date, it shall be calculated by applying the Rate of Interest to the principal amount of such Note, multiplying the product by the relevant Day Count Fraction and rounding the resulting figure to the nearest cent (half a cent being rounded upwards), where “Day Count Fraction” means, in respect of any period, the number of days in the relevant period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with twelve 30-day months).

Each payment of interest (including Additional Interest, if any) in respect of a Note will be made to the person shown as the Holder in the Register at the opening of business in the place of the Registrar’s Specified Office on the Interest Record Date immediately preceding the relevant Interest Payment Date. Where payment in respect of a Note is to be made by cheque, the cheque will be mailed to the address shown as the address of the Holder in the Register at the opening of business on the relevant Interest Record Date.

Principal of and interest (including Additional Interest, if any) on Global Notes shall be payable to the Common Depositary for the accounts of Euroclear and Clearstream, as applicable, in immediately available funds.

Principal of and interest (including Additional Interest, if any) on Physical Notes shall be made (a) upon application by a Noteholder to the Specified Office of the Paying and Conversion Agent no later than the fifteenth day before the due date for such payment and (provided that such payment (i) if principal, is made in full or (ii) if interest, constitutes interest payable on redemption) surrender (or in the case of part payment only, endorsement) of the relevant Note Certificates at the Specified Office of the Paying and Conversion Agent outside the United States by U.S. Dollar cheque drawn on, or by transfer to a U.S. Dollar account maintained by the payee with, a bank in New York City or (b) at the Specified Office, if any, of the Paying and Conversion Agent in New York City if (i) the Issuer has appointed Paying and Conversion Agents outside the United States with the reasonable expectation that such Paying and Conversion Agents will be able to make payment of the full amount of the interest on the Notes in U.S. Dollars when due, (ii) payment of the full amount of such interest at the offices of all such Paying and Conversion Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law.

All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations in the place of payment. No commissions or expenses shall be charged to the Noteholders in respect of such payments.

If the due date for payment of any amount in respect of any Note is not a Payment Business Day in the place of presentation, the Holder shall not be entitled to payment in such place of the amount due until the next succeeding Payment Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.

If the Paying and Conversion Agent makes a partial payment in respect of any Note, the Issuer shall procure that the amount and date of such payment are noted in the Register and, in the case of partial payment upon presentation of a Note Certificate, that a statement indicating the amount and date of such payment is endorsed on the relevant Note Certificate presented to it for payment, such Paying and Conversion Agent will endorse thereon a statement indicating the amount and date of such payment.

The Notes shall be redeemable at the option of the Issuer as provided in Article 10 hereof.

 

 

 

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The Notes shall be redeemable at the option of Holders as provided in Article 10 hereof.

The Notes shall be convertible as provided in Article 11 hereof.

The Notes and the Trustee’s certificate of authentication to be borne by such Notes shall be substantially in the form annexed hereto as Exhibit A, which is incorporated in and made a part of this Indenture. The terms and provisions contained in the form of Note shall constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable, the Issuer 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 and endorsements as the Officer executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, or to conform to usage.

The Notes will be offered and sold only outside the United States in accordance with Regulation S and shall be issued initially only in the form of permanent definitive Notes (the “Physical Notes”) in registered form without interest coupons. The Physical Notes shall be substantially in the form set forth in Exhibit A annexed hereto. On the Shelf Registration Effective Date, one or more permanent global Notes (each, a “Global Note”) in global registered form without interest coupons shall be:

The Global Notes shall be substantially in the form of Note set forth in Exhibit A annexed hereto. The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on Schedule A to the relevant Global Note by the Common Depositary in accordance with the instructions given by the Holder thereof, as hereinafter provided.

The Notes shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the Officer executing such Notes, as evidenced by their execution of such Notes.

Each Note issued hereunder shall, upon issuance, bear the legend set forth in Section 2.3(b) hereof and such legend shall not be removed except as provided in Section 2.3(d) hereof. Each Note that bears or is required to bear the legend set forth in Section 2.3(b) hereof (each, a “Restricted Note”) and any Shares issued

 

 

 

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upon conversion of the Notes required to bear the legend set forth in Section 2.3(c) hereof (the “Restricted Shares” and, together with the Restricted Notes, the “Restricted Securities”) shall be subject to the restrictions on transfer set forth in this Section 2.3 (including the legend set forth in Section 2.3(b) or 2.3(c) hereof, as the case may be (collectively, the “Restricted Securities Legends”)), and the Holder of each such Restricted Security, by such Holder’s acceptance thereof, shall be deemed to have agreed to be bound by all such restrictions on transfer.

As used in this Section 2.3, the term “transfer” encompasses any sale, pledge, transfer or other disposition whatsoever of any Restricted Security.

Except as provided in Section 2.3(d) hereof, until two years after the original issuance date of any Note, any certificate evidencing such Note (and all securities issued in exchange therefor or substitution thereof, other than Shares, if any, issued upon conversion thereof, which shall bear the legend set forth in Section 2.3(c) hereof, if applicable) shall bear a Restricted Securities Legend in substantially the following form:

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) IN ACCORDANCE WITH RULE 903(B)(3)(III) (CATEGORY 3) OF REGULATION S UNDER THE SECURITIES ACT, AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF BMB MUNAI, INC. THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULES 904 AND 905 UNDER THE SECURITIES ACT AND, IF THE PROPOSED TRANSFER IS BEING MADE PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD, TO A NON-U.S. PERSON, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, (B) THE HOLDER WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS NOTE OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND (C) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESTRICTIONS REFERRED TO IN (A) AND (B) ABOVE.

Except as provided in Section 2.3(d) hereof, until two years after the original issuance date of any Note, any stock certificate representing Shares issued upon conversion of such Note shall bear a Restricted Securities Legend in substantially the following form:

THE COMMON STOCK EVIDENCED HEREBY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE

 

 

 

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“SECURITIES ACT”). THE HOLDER OF THIS CERTIFICATE AGREES FOR THE BENEFIT OF BMB MUNAI, INC. (THE “ISSUER”) THAT (A) THE COMMON STOCK EVIDENCED HEREBY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (I) PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE SECURITIES ACT WHICH IS APPLICABLE TO THIS NOTE OR (II) BY ANY HOLDER THAT WAS AN “AFFILIATE” (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE ISSUER AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE ISSUER, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (1) THROUGH (3) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, (B) THE HOLDER WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THE COMMON STOCK EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND (C) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE COMMON STOCK EVIDENCED HEREBY FROM IT OF THE RESTRICTIONS REFERRED TO IN (A) AND (B) ABOVE.

Each Note or Share issued upon conversion of such Note shall bear the Restricted Securities Legend set forth in Section 2.3(b) or 2.3(c) hereof, as the case may be, until the earlier of:

The Holder must give notice thereof to the Trustee and any transfer agent for the Shares, as applicable.

Notwithstanding the foregoing, the Restricted Securities Legend may be removed if there is delivered to the Issuer such satisfactory evidence, which may include an opinion of independent counsel, as may be reasonably required by the Issuer that neither such legend nor the restrictions on transfer set forth therein are required to ensure that transfers of such Note will not violate the registration requirements of the Securities Act. Upon provision of such satisfactory evidence, the Trustee, at the written direction of the Issuer, shall authenticate and deliver in exchange for such Notes another Note or Notes having an equal aggregate principal amount that does not bear such legend. If the Restricted Securities Legend has been removed from a Note as provided above, no other Note issued in exchange for all or any part of such Note shall bear such legend, unless the Issuer has reasonable cause to believe that such other Note is a “restricted security” within the meaning of Rule 144 and instructs the Trustee in writing to cause a Restricted Securities Legend to appear thereon.

 

 

 

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Any Note (or security issued in exchange or substitution thereof) 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 Restricted Securities Legend set forth in Section 2.3(b) hereof as set forth therein have been satisfied may, upon surrender of such Note for exchange to the Registrar in accordance with the provisions of Section 2.7 hereof, be exchanged for a new Note or Notes, of like tenor and aggregate principal amount, which shall not bear the Restricted Securities Legend required by Section 2.3(b) hereof.

Any such Shares 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 Restricted Securities Legend set forth in Section 2.3(c) hereof as set forth therein have been satisfied may, upon surrender of the certificates representing such Shares for exchange in accordance with the procedures of the transfer agent for the Shares, be exchanged for a new certificate or certificates for a like aggregate number of Shares, which shall not bear the Restricted Securities Legend required by Section 2.3(c) hereof.

Each Global Note held by the Common Depositary shall also bear the following legend on the face thereof:

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY TO BMB MUNAI, INC. (OR ITS SUCCESSOR) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF THE COMMON DEPOSITARY OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY (AND ANY PAYMENT IS MADE TO THE COMMON DEPOSITARY OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, THE COMMON DEPOSITARY OR ITS NOMINEE, HAS AN INTEREST HEREIN.

One Officer shall execute the Notes on behalf of the Issuer by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note shall be valid nevertheless.

At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Notes executed by the Issuer to the Trustee for authentication, together with a Issuer Order for the authentication and delivery of such Notes, and the Trustee in accordance with such Issuer Order shall authenticate and deliver such Notes as in this Indenture provided and not otherwise.

Each Note shall be dated the date of its authentication.

No Note shall be entitled to any benefit under this Indenture, or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by or on behalf of the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.

 

 

 

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The Trustee may appoint an authenticating agent or agents reasonably acceptable to the Issuer with respect to the Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.

The Issuer shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the “Registrar”), an office or agency where Notes may transferred or exchanged (the “Transfer Agent”) and an office or agency where Notes may be presented for payment and conversion (the “Paying and Conversion Agent”). The Registrar shall keep a register of the Notes (the “Register”) and of their transfer and exchange. The Register shall at all times be maintained outside of the United Kingdom. The Issuer may appoint one or more co-Registrars and one or more additional Paying and Conversion Agents and/or Transfer Agents for the Notes; provided, however, that the Issuer shall at no time maintain a Registrar or Transfer Agent with a Specified Office within the United Kingdom; provided, further, that the Issuer will ensure that it maintains a Paying and Conversion Agent in a member state of the European Union that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/▇▇.▇▇ or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000. The term “Paying and Conversion Agent” includes any additional Paying and Conversion Agent, the term “Transfer Agent” includes any additional Transfer Agent and the term “Registrar” includes any additional Registrar. Notice of any change in any of the Agents or in their respective Specified Offices shall promptly be given to the Noteholders.

The Issuer will cause each Paying and Conversion Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying and Conversion Agent shall agree with the Trustee, subject to the provisions of this Section 2.5, that such Paying and Conversion Agent will:

The Issuer shall give prompt written notice to the Trustee of the name and address of any Agent who is not a party to this Indenture. If the Issuer fails to appoint or maintain another entity as Registrar, Transfer Agent or Paying and Conversion Agent, the Trustee shall act as such. The Issuer or any Affiliate of the Issuer may act as Paying and Conversion Agent, Transfer Agent or Registrar; provided, however, that none of the Issuer, its Subsidiaries or the Affiliates of the foregoing shall act:

 

 

 

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The Issuer hereby initially appoints The Bank of New York as Registrar, Transfer Agent and Paying and Conversion Agent for the Notes.

Not later than 10:00 a.m. (London time) on the date that is one London Business Day prior to each due date of the principal and interest (including Additional Interest, if any) on any Notes, the Issuer shall deposit with one or more Paying and Conversion Agents money in immediately available funds sufficient to pay such principal and interest (including Additional Interest, if any) so becoming due. The Issuer at any time may require the Paying and Conversion Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying and Conversion Agent (if other than the Issuer) shall have no further liability for the money so paid over to the Trustee.

If the Issuer shall act as the Paying and Conversion Agent, it shall, prior to or on each due date of the principal of or interest (including Additional Interest, if any) on any of the Notes, segregate and hold in trust for the benefit of the Holders a sum sufficient with monies held by all other Paying and Conversion Agents, to pay the principal or interest (including Additional Interest, if any) so becoming due until such sums shall be paid to such Persons or otherwise disposed of as provided in this Indenture, and shall promptly notify the Trustee of its action or failure to act.

Neither the Trustee nor the Paying and Conversion Agent shall be under any liability for interest on any money received by any of them hereunder, except as otherwise agreed in writing with the Issuer.

The Notes are issuable only in registered form. A Holder may transfer a Note only by written application to the Registrar (or to the Transfer Agent to be forwarded to the Registrar) stating the name of the proposed transferee and otherwise complying with the terms of this Indenture. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Holder only upon, final acceptance and registration of the transfer by the Registrar in the Register.

If any Holder of a Physical Note proposes to exchange such Note for a beneficial interest in a Global Note or to transfer such Physical Note to a Person who takes delivery thereof in the form of a beneficial interest in a Global Note, then the Trustee shall cancel the Physical Note and increase or cause to be increased the aggregate principal amount of the applicable Global Note.

Furthermore, any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Note may be effected only through a book-entry system maintained by the Holder of such Global Note (or its agent) and that ownership of a beneficial interest in the Note shall be required to be reflected in a book-entry.

When Notes are presented to the Registrar or the Transfer Agent with a request to register the transfer or to exchange them for an equal aggregate principal amount of Notes of other authorized denominations, the Registrar shall, within five New York Business Days of the receipt thereof, register the transfer or make the exchange as requested and deliver any replacement Notes to each relevant Holder at its Specified Office or (as the case may be) the Specified Office of the Transfer Agent or (at the request and risk of any such relevant Holder) by uninsured first class mail (airmail if overseas) to the address specified for the purpose by such relevant Holder; provided, that the Registrar’s requirements for such

 

 

 

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transactions are met (including (i) that such Notes are duly endorsed or accompanied by a written instrument of transfer duly executed by the Holder thereof or by an attorney who is authorized in writing to act on behalf of the Holder and (ii) such evidence as the Registrar may reasonably require to prove the title of the transferor and the authority of the individuals referred to in clause (i)). Subject to Section 2.4 hereof, to permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Notes at the Registrar’s request. No service charge shall be made for any registration of transfer or exchange or redemption of the Notes, but the Registrar or the Transfer Agent may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charge payable upon exchanges pursuant to Section 2.14 hereof).

Neither the Issuer nor the Registrar shall be required to exchange or register a transfer of any Notes:

Members of, or participants in, Euroclear and Clearstream (“Participants”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Common Depositary, or under such Global Note, and Euroclear and/or Clearstream, as applicable, or their respective nominees may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner of such Global Note(s) for all purposes whatsoever. Notwithstanding the foregoing, nothing contained herein shall prevent the Issuer, the Trustee or any agent of the Issuer or Trustee from giving effect to any written certification, proxy or other authorization furnished by Euroclear or Clearstream or impair, as between Euroclear or Clearstream and the Participants, the operation of customary practices governing the exercise of the rights of a Holder of any Note.

 

 

 

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Euroclear and/or Clearstream, as applicable, shall surrender such Global Note or Global Notes to the Trustee for cancellation and the Issuer shall execute, and the Trustee, upon receipt of an Officers’ Certificate and Issuer Order for the authentication and delivery of Notes, shall authenticate and deliver in exchange for such Global Note or Global Notes, Physical Notes of like tenor as that of the Global Notes in an aggregate principal amount equal to the aggregate principal amount of such Global Note or Global Notes. Such Physical Notes shall be registered in such names as Euroclear and/or Clearstream shall identify in writing as the beneficial owners of the Notes represented by such Global Note or Global Notes (or any nominees thereof).

Notwithstanding the foregoing, in connection with any transfer of beneficial interests in a Global Note to beneficial owners pursuant to Section 2.8(c) hereof, the Registrar shall reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in such Global Note to be transferred.

Unless a Note is transferred after the time period referred to in Rule 144(k) under the Securities Act or otherwise is, or has been, sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be, or was, effective at the time of such sale), the following provisions shall apply:

 

 

 

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By its acceptance of any Note bearing the Restricted Securities Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and agrees that it will transfer such Note only as provided in this Indenture. The Registrar shall not register a transfer of any Note unless such transfer complies with the restrictions on transfer of such Note set forth in this Indenture. The Registrar shall be entitled to receive and rely on written instructions from the Issuer verifying that such transfer complies with such restrictions on transfer. In connection with any transfer of Notes, each Holder agrees by its acceptance of the Notes to furnish the Registrar or the Issuer such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided, however, that the Registrar shall not be required to determine (but may rely on a determination made by the Issuer with respect to) the sufficiency of any such certifications, legal opinions or other information.

The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.8 hereof or this Section 2.9. The Issuer shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with Section 312(a) of the TIA. If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee prior to or on each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders relating to such Interest Payment Date or request, as the case may be.

The Issuer, the Trustee, the Paying and Conversion Agent and any agent of the Issuer, the Trustee or the Paying and Conversion Agent may treat the registered Holder of a Global Note as the absolute owner of such Global Note for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Note be overdue, and notwithstanding any notice of ownership or writing thereon, or any notice of previous loss or theft or other interest therein. The Issuer, the Trustee, the Paying and Conversion Agent and any agent of the Issuer, the Trustee or the Paying and Conversion Agent may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payment of principal of and interest (including Additional Interest, if any) on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and notwithstanding any notice of ownership or writing thereon, or any notice of previous loss or theft or other interest therein.

 

 

 

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If any mutilated Note is surrendered to the Trustee or the Registrar, the Issuer shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note of like tenor and principal amount and bearing a number not contemporaneously Outstanding; provided that, if required by the Issuer or the Trustee, such security or indemnity as may be required by them to save each of them and any agent of either of them harmless must be supplied by the relevant Holder in connection with such replacement.

If there is delivered to the Issuer and the Trustee

then, in the absence of notice to the Issuer or the Trustee that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and, upon request, the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount and bearing a number not contemporaneously Outstanding.

Upon the issuance of any new Note under this Section 2.12, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Note issued pursuant to this Section 2.12 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and such new Note shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section 2.12 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

Pending the preparation of Notes in definitive form, the Issuer may execute and the Trustee shall, upon written request of the Issuer, authenticate and deliver temporary Notes (printed or lithographed). Temporary Notes shall be issuable in any authorized denomination, and substantially in the form of the Notes in definitive form but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Issuer. Every such temporary Note shall be executed by the Issuer and authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the Notes in definitive form. Without unreasonable delay, the Issuer will execute and deliver to the Trustee Notes in definitive form (other than in the case of Notes in global form) and thereupon any or all temporary Notes (other than any such Notes in global form) may be surrendered in exchange therefor and the Trustee shall authenticate and deliver in exchange for such temporary Notes an equal aggregate principal amount of Notes in definitive form. Such exchange shall be made by the Issuer 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 definitive form authenticated and delivered hereunder.

 

 

 

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All securities surrendered for payment, redemption, purchase, conversion, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee. All Notes so delivered shall be canceled promptly by the Trustee, and no Notes shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. Upon written instructions of the Issuer, the Trustee shall destroy canceled Notes and, after such destruction, shall deliver a certificate of such destruction to the Issuer. If the Issuer shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Notes unless the same are delivered to the Trustee for cancellation.

The Issuer in issuing the Notes may use “Common Code” and/or “ISIN” numbers (if then generally in use), and the Trustee shall use Common Code and/or ISIN numbers, as applicable, in notices of redemption or exchange as a convenience to Holders; provided, however, that any such notice shall state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any such notice 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 Issuer shall promptly notify the Trustee of any change in the Common Code and/or ISIN numbers.

When:

then this Indenture shall cease to be of further effect (except as to: (i) remaining rights of registration of transfer, substitution and exchange and conversion of Notes, (ii) rights hereunder of Holders to receive payments of principal of and interest (including Additional

 

 

 

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Interest, if any) on the Notes and the other rights, duties and obligations of Holders, as beneficiaries hereof with respect to the amounts, if any, so deposited with the Trustee, and (iii) the rights, obligations and immunities of the Trustee hereunder), and the Trustee, on demand of the Issuer accompanied by an Officers’ Certificate and an Opinion of Counsel as provided in Section 12.4 hereof and at the cost and expense of the Issuer, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture; provided, however, that the Issuer shall reimburse the Trustee for all amounts due the Trustee under Section 5.8 hereof and 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.

Subject to Section 3.3 hereof, all monies deposited with the Trustee pursuant to Section 3.1 hereof shall be held in trust and applied by it to the payment either directly or through the Paying and Conversion Agent (including the Issuer if acting as its own Paying and Conversion 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 (including Additional Interest, if any). All monies deposited with the Trustee pursuant to Section 3.1 hereof (and held by it or the Paying and Conversion Agent) for the payment of Notes subsequently converted shall be returned to the Issuer upon request of the Issuer.

The Trustee and the Paying and Conversion Agent shall pay to the Issuer any money held by them for the payment of principal or interest (including Additional Interest, if any) that remains unclaimed for two years after the date upon which such payment shall have become due. After payment to the Issuer, Holders entitled to the money must look to the Issuer for payment as general creditors unless an applicable abandoned property law designates another Person, and all liability of the Trustee and the Paying and Conversion Agent with respect to such money shall cease.

An “Event of Default” with respect to the Notes occurs when any of the following events occurs:

 

 

 

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provided that the amount of Indebtedness referred to in sub-paragraph (i) and/or sub-paragraph (ii) above and/or the amount payable under any Guarantee referred to in sub-paragraph (iii) above in the aggregate exceeds U.S. $5,000,000 (or its equivalent in any other currency or currencies as determined by the Trustee);

 

 

 

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If an Event of Default occurs (other than an Event of Default specified in Section 4.1(e), (f), (g) or (other than with respect to an underlying event referred to in Section 4.1(d) hereof)(h) hereof), then the Trustee may and, if so requested in writing by Holders of at least one quarter of the aggregate principal amount of the Outstanding Notes or if so directed by an Extraordinary Resolution, shall, provided that it has been indemnified and/or secured to its satisfaction, give written notice to the Issuer declaring the Notes to be immediately due and payable, whereupon they shall become immediately due and payable at their principal amount together with accrued but unpaid interest (including Additional Interest, if any) without further action or formality.

If an Event of Default specified in Section 4.1(e), (f), (g) or (other than with respect to an underlying event referred to in Section 4.1(d) hereof)(h) hereof occurs, all unpaid principal of and accrued but unpaid interest (including Additional Interest, if any) on the Outstanding Notes shall become and be immediately due and payable, without any declaration or other act on the part of the Trustee or the Holders.

The Holders of a majority in aggregate principal amount of the Outstanding Notes by written notice to the Trustee may rescind and annul an acceleration and its consequences if:

If an Event of Default with respect to Outstanding Notes occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes.

The Trustee may maintain a proceeding in which it may prosecute and enforce all rights of action and claims under this Indenture or the Notes, even if it does not possess any of the Notes or does not produce any of them in the proceeding.

The Holders, either (i) through the written consent of not less than a majority in aggregate principal amount of the Outstanding Notes or (ii) by Extraordinary Resolution may, on

 

 

 

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behalf of the Holders of all of the Notes, waive an existing Default or Event of Default, except a Default or Event of Default:

Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; provided, however, that no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

The Holders, either (i) through the written consent of not less than a majority in aggregate principal amount of the Outstanding Notes, or (ii) by Extraordinary Resolution, 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. However, the Trustee may refuse to follow any direction that:

The Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

No Holder of any Note shall have any right to pursue any remedy with respect to this Indenture or the Notes (including instituting any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a receiver or trustee) unless:

 

 

 

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provided, however, that no one or more of such Holders may use this Indenture to prejudice the rights of another Holder or to obtain preference or priority over another Holder.

Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest (including Additional Interest, if any) on such Note on the respective due dates expressed in such Note and to convert such Note in accordance with Article 11, and to bring suit for the enforcement of any such payment on or after such respective dates and right to convert, and such rights shall not be impaired or affected without the consent of such Holder.

The Issuer covenants that if:

the Issuer shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole amount then due and payable (as expressed therein or as a result of any acceleration effected pursuant to Section 4.2 hereof) on such Notes for principal and interest (including Additional Interest, if any) and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal at the Rate of Interest, and, in addition thereto, such further amounts as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

If the Issuer fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Issuer and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Issuer, wherever situated.

If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Notes by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Issuer or the property of the Issuer or its creditors, the Trustee (irrespective of whether

 

 

 

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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 on the Issuer for the payment of overdue principal or interest (including Additional Interest, if any)) shall be entitled and empowered, by intervention in such proceeding or otherwise, (1) to file and prove a claim for the whole amount of principal and interest (including Additional Interest, if any) owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders of Notes allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claim and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceedings is hereby authorized by each Holder of Notes to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Notes, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 5.8 hereof.

Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to or accept, or adopt on behalf of any Holder of a Note, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder of a Note in any such proceeding.

If the Trustee or any Holder of a Note has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Issuer, the Trustee and the Holders of Notes shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 2.12 hereof, no right or remedy conferred in this Indenture upon or reserved to the Trustee or to the Holders of Notes is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or any acquiescence therein. Every right and remedy given by this Article 4 or by law to the Trustee or to the Holders of Notes may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders of Notes, as the case may be.

 

 

 

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Any money and property collected by the Trustee pursuant to this Article 4 shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money and property on account of principal or interest (including Additional Interest, if any), upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee;

SECOND: To the payment of the amounts then due and unpaid for principal of and interest (including Additional Interest, if any) on the Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal and interest (including Additional Interest, if any), respectively; and

THIRD: Any remaining amounts shall be repaid to the Issuer or to such party as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 4.13.

All parties to this Indenture agree, and each Holder of any Note by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section 4.14 shall not apply to any suit instituted by the Issuer, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Notes, or to any suit instituted by any Holder of any Note for the enforcement of the payment of the principal of or interest (including Additional Interest, if any) on any Note on or after the respective due dates expressed in such Note or for the enforcement of the right to convert any Note in accordance with Article 11.

The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim to take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

 

 

 

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Subject to the provisions of Section 5.1 hereof and subject to Sections 315(a) through (d) of the TIA:

 

 

 

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Indenture (other than the remuneration herein specified) or otherwise, then the Trustee shall be entitled to make such deduction or withholding or, as the case may be, to retain out of sums received by it an amount sufficient to discharge any liability to tax which relates to sums so received or distributed or to discharge any such other liability of the Trustee to tax from the funds held by the Trustee upon the trusts of this Indenture.

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires

 

 

 

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any conflicting interest (as such term is defined in Section 310(b) of the TIA), it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee (to the extent permitted under Section 310(b) of the TIA) or resign. Any agent may do the same with like rights and duties. The Trustee is also subject to Sections 5.11 and 5.12 hereof.

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise expressly agreed with the Issuer.

The recitals contained herein and in the Notes (except for those in the certificate of authentication) shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity, sufficiency or priority of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Issuer of Notes or the proceeds thereof.

Within 90 days after the occurrence of any Default or Event of Default hereunder of which the Trustee has received written notice, the Trustee shall give notice to Holders pursuant to Section 12.2 hereof, unless such Default or Event of Default shall have been cured or waived; provided, however, that, except in the case of a Default or Event of Default in the payment of the principal of or interest (including Additional Interest, if any), or in the payment of any redemption or purchase obligation, on any Note, the Trustee shall be protected in withholding such notice if and so long as Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders.

The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required by Section 313 of the TIA at the times and in the manner provided by the TIA.

A copy of each report at the time of its mailing to Holders shall be filed with the SEC, if required, and each stock exchange, if any, on which the Notes are listed. The Issuer shall promptly notify the Trustee when the Notes become listed on any stock exchange.

The Issuer covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Issuer covenants and agrees to pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by it or on its behalf in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ), except to the extent that any such expense, disbursement or advance is due to its negligence or bad faith. The Issuer shall in addition pay to the Trustee an amount equal to the amount of any value added tax or similar tax chargeable in respect of its remuneration under this Indenture. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 4.1 hereof, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. The Issuer also covenants to indemnify the Trustee and its officers, directors, employees and agents for, and to hold such Persons harmless against, any loss, liability or expense incurred by them, arising

 

 

 

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out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder or the performance of their duties hereunder, including the costs and expenses of defending themselves against or investigating any claim of liability in the premises, except to the extent that any such loss, liability or expense was due to the negligence or willful misconduct of such Persons. The obligations of the Issuer under this Section 5.8 to compensate and indemnify the Trustee and its officers, directors, employees and agents and to pay or reimburse such Persons for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee. Such additional indebtedness shall be a senior claim 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, and the Notes are hereby subordinated to such senior claim. “Trustee” for purposes of this Section 5.8 shall include any predecessor Trustee, but the negligence or willful misconduct of any Trustee shall not affect the indemnification of any other Trustee.

A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 5.9.

The Trustee may resign and be discharged from the trust hereby created by so notifying the Issuer in writing. The Holders, either (i) through the written consent of at least a majority in aggregate principal amount of Outstanding Notes, or (ii) by Extraordinary Resolution, may remove the Trustee by so notifying the Trustee and the Issuer in writing. The Issuer must remove the Trustee if:

If the Trustee resigns or is removed or if a vacancy exists in the office of the Trustee for any reason, the Issuer shall promptly appoint a successor Trustee. The Trustee shall be entitled to payment of its fees and reimbursement of its expenses while acting as Trustee. Within one year after the successor Trustee takes office, the Holders of at least a majority in aggregate principal amount of Outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.

Any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee if the Trustee fails to comply with Section 5.11 hereof.

If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation or removal, the resigning or removed Trustee, as the case may be, may petition, at the expense of the Issuer, any court of competent jurisdiction for the appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of

 

 

 

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the Trustee under this Indenture. The Issuer shall mail a notice of the successor Trustee’s succession to the Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee. Notwithstanding replacement of the Trustee pursuant to this Section 5.9, the Issuer’s obligations under Section 5.8 hereof shall continue for the benefit of the retiring Trustee with respect to expenses, losses and liabilities incurred by it prior to such replacement.

Subject to Section 5.11 hereof, if the Trustee consolidates with, merges or converts into, or transfers or sells all or substantially all of its corporate trust business (including the administration of the trust created by this Indenture) to, another corporation or national banking association, the successor entity without any further act shall be the successor Trustee as to the Notes.

The Trustee shall at all times satisfy the requirements of Sections 310(a)(1), (2) and (5) of the TIA. The Trustee shall at all times have (or, in the case of a corporation included in a bank holding company system, the related bank holding company shall at all times have) a combined capital and surplus of at least U.S. $100,000,000 as set forth in its (or its related bank holding company’s) most recent published annual report of condition. The Trustee is subject to Section 310(b) of the TIA.

The Trustee is subject to Section 311(a) of the TIA, excluding any creditor relationship listed in Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated therein.

In the event of any:

the Issuer shall immediately notify the Noteholders and the Trustee of such event and use all reasonable endeavors to cause the corporation resulting from such consolidation, amalgamation or merger or the corporation which shall have acquired such assets, as the case may be, to execute an indenture supplemental to this Indenture providing that the Holder of each Note then Outstanding shall have the right (during the Conversion Period) to convert such Note into the class and amount of shares and other securities and property receivable upon such consolidation, amalgamation, merger, sale or transfer by a holder of the number of Shares into which such Note would have been converted had the relevant Conversion Date fallen immediately prior to such consolidation, amalgamation, merger, sale or transfer.

Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Indenture. The undertaking contained in this Section 6.2 is without prejudice to the provisions of Section 11.5 hereof and shall apply in the same way to any subsequent consolidations, amalgamations, mergers, sales or transfers.

 

 

 

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Promptly upon execution and delivery of such supplemental indenture the Issuer shall give notice to the Trustee and to the Noteholders in accordance with Section 12.2 hereof stating the consideration into which the Notes will be convertible after the execution and delivery of such supplemental indenture.

 

 

 

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Every amendment to this Indenture or the Notes shall be set forth in a supplemental indenture that complies with the TIA as then in effect.

If an amendment, supplement or waiver changes the terms of a Note:

Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

The Trustee shall sign any amendment authorized pursuant to this Article 7 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If the amendment does adversely affect the rights, duties, liabilities or immunities of the Trustee, the Trustee may but need not sign it. In signing or refusing to sign such amendment, the Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that such amendment is authorized or permitted by this Indenture.

The Holder of a Note may require the Registrar to issue a Block Voting Instruction by arranging (to the satisfaction of the Registrar) for such Note to be blocked in the Register not later than 48 Hours before the time fixed for the relevant Meeting. The Holder of a Note may require the Registrar to issue a Block Voting Instruction by delivering to the Registrar written instructions not later than 48 Hours before the time fixed for the relevant Meeting. Any Holder of a Note may obtain an uncompleted and unexecuted Form of Proxy from the Registrar. A Block Voting Instruction and a Form of Proxy cannot be outstanding simultaneously in respect of the same Note.

The Issuer may fix a record date for the purposes of any Meeting or any resumption thereof following its adjournment for want of a quorum provided that such record date is not more than 10 days prior to the time fixed for such Meeting or (as the case may be) its resumption. The person in whose name a Note is registered in the Register on the record date at close of business in the city in which the Registrar has its Specified Office shall be deemed to be the Holder of such Note for the purposes of such Meeting and notwithstanding any subsequent transfer of such Note or entries in the Register.

 

 

 

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The Issuer or the Trustee may convene a Meeting at any time, and the Trustee shall be obliged to do so subject to its being indemnified and/or secured to its satisfaction upon the request in writing of Noteholders holding not less than one tenth of the aggregate principal amount of the Outstanding Notes. Every Meeting shall be held on a date, and at a time and place, approved by the Trustee.

At least 30 days’ notice (exclusive of the day on which the notice is given and of the day on which the relevant Meeting is to be held) specifying the date, time and place of the Meeting shall be given to the Noteholders and the Paying and Conversion Agents and the Registrar (with a copy to the Issuer) where the Meeting is convened by the Trustee or, where the Meeting is convened by the Issuer, the Trustee. The notice shall set out the full text of any resolutions to be proposed unless the Trustee agrees that the notice shall instead specify the nature of the resolutions without including the full text and shall state that Notes may be blocked in the Register for the purposes of appointing Proxies under Block Voting Instructions until 48 Hours before the time fixed for the Meeting and a Noteholder may appoint a Proxy either under a Block Voting Instruction by delivering written instructions to the Registrar or by executing and delivering a Form of Proxy to the Specified Office of the Registrar, in either case until 48 Hours before the time fixed for the Meeting.

An individual (who may, but need not, be a Noteholder) nominated in writing by the Trustee may take the chair at any Meeting but, if no such nomination is made or if the individual nominated is not present within 15 minutes after the time fixed for the Meeting, those present shall elect one of themselves to take the chair failing which, the Issuer may appoint a Chairman. The Chairman of an adjourned Meeting need not be the same person as was the Chairman of the original Meeting.

The quorum at any Meeting shall be at least two Voters representing or holding not less than the Relevant Fraction of the aggregate principal amount of the Outstanding Notes; provided, however, that, so long as at least the Relevant Fraction of the aggregate principal amount of the Outstanding Notes is represented by a single Note Certificate, a single Voter appointed in relation thereto or being the Holder of the Notes represented thereby shall be deemed to be two Voters for the purpose of forming a quorum.

If within 15 minutes after the time fixed for any Meeting a quorum is not present, then:

 

 

 

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The Chairman may, with the consent of, and shall if directed by, any Meeting adjourn such Meeting from time to time and from place to place, but no business shall be transacted at any adjourned Meeting except business which might lawfully have been transacted at the Meeting from which the adjournment took place.

Section 8.4 hereof shall apply to any Meeting which is to be resumed after adjournment for want of a quorum save that:

It shall not be necessary to give notice of the resumption of a Meeting which has been adjourned for any other reason.

The following may attend and speak at a Meeting:

Every question submitted to a Meeting shall be decided in the first instance by a show of hands. Unless a poll is validly demanded before or at the time that the result is declared, the Chairman’s declaration that on a show of hands a resolution has been passed, passed by a particular majority, rejected or rejected by a particular majority shall be conclusive, without proof of the number of votes cast for, or against, the resolution. Where there is only one Voter, this Section 8.11 shall not apply and the resolution will immediately be decided by means of a poll.

A demand for a poll shall be valid if it is made by the Chairman, the Issuer, the Trustee or one or more Voters representing or holding not less than one fiftieth of the aggregate principal amount of the Outstanding Notes. The poll may be taken immediately or after such adjournment as the Chairman directs, but any poll demanded on the election of the Chairman or on any question of adjournment shall be taken at the Meeting without adjournment. A valid demand for a poll shall not prevent the continuation of the relevant Meeting for any other business as the Chairman directs.

Every Voter shall have:

 

 

 

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Unless the terms of any Block Voting Instruction state otherwise, a Voter shall not be obliged to exercise all the votes to which he is entitled or to cast all the votes which he exercises in the same way. In the case of a voting tie the Chairman shall have a casting vote.

Any vote by a Proxy in accordance with the relevant Block Voting Instruction or Form of Proxy shall be valid even if such Block Voting Instruction or Form of Proxy or any instruction pursuant to which it was given has been amended or revoked; provided that the Registrar has not been notified in writing of such amendment or revocation by the time which is 24 Hours before the time fixed for the relevant Meeting. Unless revoked, any appointment of a Proxy under a Block Voting Instruction or Form of Proxy in relation to a Meeting shall remain in force in relation to any resumption of such Meeting following an adjournment; provided, however, that no such appointment of a Proxy in relation to a Meeting originally convened which has been adjourned for want of a quorum shall remain in force in relation to such Meeting when it is resumed. Any person appointed to vote at such a Meeting must be re-appointed under a Block Voting Instruction or Form of Proxy to vote at the Meeting when it is resumed.

Subject to Section 7.1(c) hereof, a Meeting shall have power (exercisable only by Extraordinary Resolution), without prejudice to any other powers conferred on it or any other person:

 

 

 

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An Extraordinary Resolution shall be binding upon all Noteholders, whether or not present at such Meeting, and each of the Noteholders shall be bound to give effect to it accordingly. Notice of the result of every vote on an Extraordinary Resolution shall be given to the Noteholders and the Paying and Conversion Agents and the Registrar (with a copy to the Issuer and the Trustee) within 14 days of the conclusion of the Meeting.

Minutes of all resolutions and proceedings at each Meeting shall be made. The Chairman shall sign the minutes, which shall be prima facie evidence of the proceedings recorded therein. Unless and until the contrary is proved, every such Meeting in respect of the proceedings of which minutes have been summarized and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed and transacted.

A Written Resolution shall take effect as if it were an Extraordinary Resolution.

Subject to all other provisions contained in this Indenture, the Trustee may without the consent of the Issuer or the Noteholders prescribe such further regulations regarding the holding of Meetings of Noteholders and attendance and voting at them as the Trustee may in its sole discretion determine.

The Issuer hereby covenants with the Trustee as follows:

The Issuer covenants with the Trustee that it will, as and when the Notes or any of them become due to be redeemed or any principal on the Notes or any of them becomes due to be repaid in accordance with this Indenture, unconditionally pay or procure to be paid to or to the order of the Trustee in U.S. Dollars in New York City in same day freely transferable funds the principal amount of the Notes or any of them becoming due for redemption or repayment on that date and shall (subject to the provisions of this Indenture) until all such payments (both before and after judgment or other order) are duly made unconditionally pay or procure to be paid to or to the order of the Trustee as aforesaid on the dates provided for in this Indenture interest on the principal amount of the Notes or any of them Outstanding from time to time as set out in this Indenture; provided that:

 

 

 

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full amount has been received by the Paying and Conversion Agent or the Trustee except, in the case of payment to the Paying and Conversion Agent, to the extent that there is failure in the subsequent payment to the Noteholders under this Indenture; and

The Trustee will hold the benefit of this covenant on trust for the Noteholders.

So long as any Note remains Outstanding, the Issuer shall not, and the Issuer shall procure that none of its Material Subsidiaries will, create or permit to subsist any Security Interest upon the whole or any part of their respective present or future undertaking, assets or revenues (including uncalled capital) to secure any Relevant Indebtedness or Guarantee of Relevant Indebtedness without (a) at the same time or prior thereto securing the Notes equally and ratably therewith and providing to the Trustee an Opinion of Counsel to such effect or (b) providing such other security for the Notes as the Trustee may in its absolute discretion consider to be not materially less beneficial to the interests of the Noteholders or as may be approved by an Extraordinary Resolution of Noteholders.

The Issuer shall not (whether by means of disposals of all or part of its assets or operations or otherwise) make a substantial change to the general nature of the business of the Issuer from that of hydrocarbons exploration and production, being the business carried on by the Issuer at the Original Issue Date.

Without prejudice to Section 9.5 hereof, the Issuer shall not, and shall procure that none of its Subsidiaries will, enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of more than 20% of (i) its rights in the Dolinnoe Field as at the Original Issue Date or (ii) any ownership interest that it has in any company holding rights in the Dolinnoe Field as at the Original Issue Date.

The Issuer shall ensure that the Group maintains a Net Debt to Equity ratio of no more than 3:5 provided that the Issuer shall not be required to comply with such ratio for up to a maximum of two consecutive financial quarters if the Trustee has confirmed, upon application by the Issuer accompanied by sufficient evidence, that the Issuer has certified to the reasonable satisfaction of the Trustee (upon which certification the Trustee shall be entitled to rely without need of any further enquiry) that its failure to comply with such ratio

 

 

 

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is principally attributable to an increase in the Issuer’s Indebtedness for the purpose of funding a corporate acquisition.

The Issuer shall produce and send to the Trustee and to the Paying and Conversion Agent as soon as practicable after their date of publication and, in the case of annual financial statements, in any event not more than 180 days after the end of each financial year, two copies of the Issuer’s Annual Report on Form 10-K filed by the Issuer pursuant to the Exchange Act, each of the Issuer’s quarterly reports on Form 10-Q filed by the Issuer pursuant to the Exchange Act, all other information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that the Issuer is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act and any other notice, statement or circular issued (or which under any legal or contractual obligation should be issued) to the members or holders of debentures or creditors (or any class of them) of the Issuer in their capacity as such at the time of the actual (or legally or contractually required) issue or publication thereof, and procure that the same are made available for inspection by Noteholders at the Specified Offices of the Agents (and otherwise make available to Noteholders without cost to any Noteholder) as soon as practicable thereafter.

The Issuer shall at all times keep and procure that all its Subsidiaries keep such books of account as may be necessary to comply with all applicable laws and so as to enable the financial statements of the Issuer to be prepared and allow the Trustee and any person appointed by it free access to the same at all reasonable times and to discuss the same with responsible officers of the Issuer.

The Issuer shall give notice in writing to the Trustee forthwith upon becoming aware of any Event of Default or Default under this Indenture or obligation of the Issuer to pay Additional Interest under the Registration Rights Agreement and, in each case, without waiting for the Trustee to take any further action.

The Issuer shall provide to the Trustee within 10 days of any request by the Trustee and at the time of the dispatch to the Trustee of the Issuer’s Annual Report on Form 10-K filed by the Issuer pursuant to the Exchange Act, and in any event not later than 180 days after the end of its financial year, an Officers’ Certificate, at least one of the signatories of which is the Issuer’s principal executive officer, principal financial officer or principal accounting officer, certifying that up to a specified date not earlier than seven days prior to the date of such certificate (the “Certified Date”) the Issuer has complied with its obligations under this Indenture (or, if such is not the case, giving details of the circumstances of such non-compliance) and that as at such date there did not exist nor had there existed at any time prior thereto since the Certified Date in respect of the previous such certificate (or, in the case of the first such certificate, since the date of this Indenture) any Event of Default or Default or other matter which would affect the Issuer’s ability to perform its obligations under this Indenture or (if such is not the case) specifying the same.

The Issuer shall ensure that such accounts are prepared as may be necessary to determine which subsidiaries are Material Subsidiaries and prepare and deliver to the Trustee at the time of issue of every audited consolidated balance sheet of the Issuer and at any other time

 

 

 

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upon the request of the Trustee an Officers’ Certificate specifying the Material Subsidiaries at the date of such balance sheet or request.

The Issuer shall provide to the Trustee, as soon as reasonably practicable after the acquisition or disposal of any company which thereby becomes or ceases to be a Material Subsidiary or after any transfer is made to any Subsidiary which thereby becomes a Material Subsidiary, an Officers’ Certificate to such effect.

The Issuer shall, so far as permitted by applicable law, at all times give to the Trustee such information, opinions, certificates and other evidence as it shall require and in such form as it shall require (including, without limitation, the certificates called for by the Trustee pursuant to Section 9.11 hereof) for the performance of its functions.

The Issuer shall send to the Trustee forthwith upon being so requested in writing by the Trustee an Officers’ Certificate setting out the total number of Notes which at the date of such certificate are held by or for the benefit of the Issuer or any Affiliate of the Issuer.

The Issuer shall, so far as permitted by applicable law, at all times execute all such further documents and do all such further acts and things as may be necessary at any time or times in the opinion of the Trustee to give effect to the provisions of this Indenture.

The Issuer shall use its best endeavors to procure that the Paying and Conversion Agent notifies the Trustee forthwith in the event that it does not, on or before the due date for payment in respect of the Notes or any of them, receive unconditionally the full amount in the relevant currency of the moneys payable on such due date on all such Notes.

The Issuer shall, in the event of the unconditional payment to the Paying and Conversion Agent or the Trustee of any sum due in respect of the Notes or any of them being made after the due date for payment thereof, forthwith give notice to the Noteholders that such payment has been made.

The Issuer shall, not less than the number of days specified in the relevant Section of this Indenture prior to the redemption or repayment date in respect of any Note, give to the Trustee notice in writing of the amount of such redemption or repayment pursuant to this Indenture and duly proceed to redeem or repay such Notes accordingly.

If the Issuer gives notice to the Trustee that it intends to redeem the Notes pursuant to Sections 10.3 and 10.4 hereof, the Issuer shall, prior to giving such notice to the Noteholders, provide such information to the Trustee as the Trustee requires in order to satisfy itself of the matters referred to in such Sections of this Indenture.

The Issuer shall observe and comply with its obligations and use all reasonable endeavors to procure that the Agents observe and comply with all their obligations under this Indenture and procure that the Registrar maintains the Register outside the United Kingdom at all times

 

 

 

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and notify the Trustee immediately it becomes aware of any material breach of such obligations, or failure by an Agent to comply with such obligations, in relation to the Notes.

If the Issuer shall become subject generally to the taxing jurisdiction of any territory or any political sub-division thereof or any authority therein or thereof having power to tax other than or in addition to the United States of America or the Republic of Kazakhstan or any political subdivision thereof or any authority therein or thereof having power to tax, immediately upon becoming aware thereof the Issuer shall notify the Trustee of such event and (unless the Trustee otherwise agrees) enter forthwith into a indenture supplemental hereto, giving to the Trustee an undertaking or covenant in form and manner satisfactory to the Trustee in terms corresponding to the terms of Section 10.3 hereof with the substitution for (or, as the case may be, the addition to) the references therein to the United States of America or the Republic of Kazakhstan of references to that other or additional territory to whose taxing jurisdiction, or that of a political subdivision thereof or an authority therein or thereof, the Issuer shall have become subject as aforesaid, such indenture also to modify Section 10.3 hereof so that it shall make reference to that other or additional territory.

The Issuer shall (i) procure, within 30 days after the Original Issue Date, and at all times thereafter maintain an approval for listing of the Shares to be issued upon exercise of any Conversion Right on the American Stock Exchange in accordance with its rules; (ii) upon issue of the Shares following exercise of any Conversion Right, immediately procure and maintain the listing of the relevant Shares on the American Stock Exchange in accordance with its rules; and (iii) the Issuer shall provide a copy of the approval or confirmation of listing (as applicable) to the Trustee within 5 New York Business Days of receipt of the same.

Upon the execution hereof and thereafter forthwith upon any change of the same, the Issuer shall deliver to the Trustee (with a copy to the Paying and Conversion Agent) a list of the Authorized Signatories of the Issuer, together with certified specimen signatures of the same.

The Issuer shall pay moneys payable by it to the Trustee hereunder without set off, counterclaim, deduction or withholding, unless otherwise compelled by law and in the event of any deduction or withholding compelled by law will pay such additional amount as will result in the payment to the Trustee of the amount which would otherwise have been payable by it to the Trustee hereunder.

The Issuer shall, on giving notice to redeem the Notes pursuant to Section 10.4 hereof and six weeks prior to the final expiry of the Conversion Period (assuming no earlier redemption of the Notes) give notice to the Noteholders, in accordance with this Indenture, reminding the Noteholders of the Conversion Right then arising or current and stating the then current Conversion Price.

The Issuer shall, as soon as practicable after the happening of any event as a result of which the Conversion Price will be adjusted pursuant to this Indenture, give notice to the Trustee and the Noteholders, in accordance with this Indenture, advising them of the date on which the relevant adjustment of the Conversion Price is likely to become effective and of the effect of exercising their Conversion Rights pending such date.

 

 

 

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The Issuer shall, upon the happening of an event as a result of which the Conversion Price will be adjusted pursuant to this Indenture, as soon as reasonably practicable deliver to the Trustee an Officers’ Certificate setting forth brief particulars of the event, and the adjusted Conversion Price and the date on which such adjustment takes effect and in any case setting forth such other particulars and information as the Trustee may reasonably require.

For so long as any Conversion Right remains exercisable, the Issuer shall not create or permit there to be in issue any class of equity shares carrying any rights which are more favorable than the rights attaching to the Shares with respect to voting, dividends or liquidation, where “equity shares” means any shares in the capital of the Issuer other than shares which neither as respects dividends nor as respect capital carry any right to participate beyond a specified amount in a distribution, whether in a liquidation or otherwise.

For so long as any Conversion Right remains exercisable, the Issuer shall not take any action which would have the effect, or but for the provisions of Section 11.16(c) hereof would have the effect, that exercise of the Conversion Right would require Shares to be issued in circumstances not permitted by applicable law.

For so long as any Conversion Right remains exercisable, the Issuer shall not issue or pay up any securities, in either case, by way of capitalization of profits or reserves, except:

For so long as any Conversion Right remains exercisable, the Issuer shall not reduce its issued share capital except where such reduction:

All payments of principal and interest in respect of the Notes by or on behalf of the Issuer shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of the United States or the Republic of Kazakhstan or any political subdivision thereof or any authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. In that event the Issuer shall pay such additional amounts as will result in receipt by the Noteholders of such amounts after

 

 

 

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such withholding or deduction as would have been received by them had no such withholding or deduction been required, except that no such additional amounts shall be payable in respect of any Note:

The Issuer will pay all stamp duties, registration taxes, capital duties and other similar duties or taxes (if any) payable on (a) the constitution and issue of the Notes, (b) the initial delivery of the Notes (c) any action taken by the Trustee (or any Noteholder where permitted or required under this Indenture so to do) to enforce the provisions of the Notes or this Indenture and (d) the execution of this Indenture. If the Trustee (or any Noteholder where permitted under this Indenture so to do) shall take any proceedings against the Issuer in any other jurisdiction and if for the purpose of any such proceedings this Indenture or any Note is taken into any such jurisdiction and any stamp duties or other duties or taxes become payable thereon in any such jurisdiction, the Issuer will pay (or reimburse the person making payment of) such stamp duties or other duties or taxes (including penalties).

During the period of two years after the last date of original issuance of any Notes, the Issuer shall not, and shall not permit any of its Affiliates to, resell any Notes or Shares issuable upon conversion of the Notes that constitute “restricted securities” under Rule 144 or to “U.S. persons” (as defined in Regulation S) except pursuant to an effective registration statement under the Securities Act or an applicable exemption therefrom. The Trustee shall have no responsibility or liability in respect of the Issuer’s performance of its agreement in the preceding sentence.

 

 

 

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Event Notice but on or prior to the 60th day following the date of such Change of Control Event Notice, then the Issuer shall pay to such Noteholder the following U.S. Dollar amounts per U.S. Dollar of Notes held by the Noteholder that are to be converted on such Conversion Date (the “Change of Control Event Premium”):

 

For so long as any Conversion Right remains exercisable, the Issuer shall keep available for issue free from pre-emptive or other similar rights out of its authorized but unissued share capital such number of Shares as would enable such Conversion Right to be satisfied in full.

Unless previously redeemed, converted, or purchased and cancelled, the Notes will be redeemed at a price equal to 107.2% of its principal amount on the Maturity Date, subject as provided in Section 2.1 hereof.

The Issuer shall, at the option of the Holder of any Note, redeem such Note:

 

 

 

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In order to exercise the option contained in clause (a) or (b) above, the Holder of a Note must, during the First Put Exercise Period or the Second Put Exercise Period, as applicable, deposit with the Paying and Conversion Agent such Note Certificate and a duly completed Put Option Notice.

In order to exercise the option contained in clause (c) above, the Holder of a Note must, not less than 30 nor more than 60 days before the relevant Put Settlement Date, deposit with the Paying and Conversion Agent a duly completed Put Option Notice and, in the case of a Put Option Notice relating to Notes evidenced by a Note Certificate, such Note Certificate.

The Paying and Conversion Agent with which a Note is so deposited shall deliver a duly completed receipt for such Note (a “Put Option Receipt”) to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this Section 10.2, may be withdrawn; provided, however, that if, prior to the relevant Put Settlement Date, any such Note becomes immediately due and payable or, upon due presentation of any such Note on the relevant Put Settlement Date, payment of the redemption moneys is improperly withheld or refused, the Paying and Conversion Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any Outstanding Note is held by the Paying and Conversion Agent in accordance with this Section 10.2, the depositor of such Note and not such Paying and Conversion Agent shall be deemed to be the Holder of such Note for all purposes. Should a Holder of any Note redeem such Note in accordance with this Section 10.2, the Issuer shall give notice to Noteholders in accordance with Section 12.2 hereof.

The Issuer shall give notice to the Noteholders as soon as practicable following such event of the Shelf Registration Statement Filing Date and the Shelf Registration Statement Effective Date, in accordance with Section 12.2 hereof and, in the absence of such notice, the Shelf Registration Statement Filing Date and the Shelf Registration Statement Effective Date shall be deemed not to have occurred for the purposes of this Section 10.2.

The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time, on giving not less than 45 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable), at their principal amount, together with accrued but unpaid interest to the date fixed for redemption, if:

 

 

 

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provided, however, that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts if a payment in respect of the Notes were then due.

Prior to the publication of any notice of redemption pursuant to this Section 10.3, the Issuer shall deliver to the Trustee:

(i)        an Officers’ Certificate stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred; and

(ii)       an opinion, in form and substance satisfactory to the Trustee, of independent legal advisers of internationally recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of such change or amendment.

The Trustee shall be entitled to accept such certificate and opinion as sufficient evidence of the satisfaction of the circumstances set out in (a) and (b) above without need of further enquiry and such certification and opinion (in form and substance satisfactory to the Trustee) shall be conclusive and binding on the Noteholders.

Upon the expiry of any such notice as is referred to in this Section 10.3, the Issuer shall be bound to redeem the Notes in accordance with this Section 10.3.

Notwithstanding the above, a Noteholder may elect not to accept such redemption in accordance with this Section 10.3 by giving notice to the Specified Office of the Paying and Conversion Agent within 20 days from publication of the relevant notice by the Issuer. Such Noteholder will continue to receive payments on the Notes but will not be entitled to any Excess Additional Amounts.

The Notes may be redeemed at the option of the Issuer in whole, but not in part, at 104% of their principal amount together with accrued but unpaid interest to the date fixed for redemption:

In order to exercise such option the Issuer shall give not less than 30 nor more than 60 days’ notice to the Trustee and the Noteholders (which notice shall be irrevocable and shall oblige the Issuer to redeem the Notes on the date for redemption specified in such notice). Such notice shall specify (i) the date when the relevant redemption will take place and (ii) the last day on which Conversion Rights may be exercised by a Noteholder. Should the Issuer redeem the Notes in accordance with this Section 10.4, the Issuer shall give notice to Noteholders in accordance with Section 12.2 hereof.

 

 

 

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The Issuer shall, at the option of the Holder of any Note, redeem such Note on the Change of Control Put Date at a price equal to its Applicable Rate together with accrued but unpaid interest to such date. In order to exercise the option contained in this Section 10.5, the Holder of a Note must, during the Put Option Period, deposit with the Paying and Conversion Agent a duly completed Put Option Notice and, in the case of a Put Option Notice relating to Notes evidenced by a Note Certificate, such Note Certificate. The Paying and Conversion Agent with which a Note is so deposited shall deliver a Put Option Receipt to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this Section 10.5, may be withdrawn; provided, however, that if, prior to the Change of Control Put Date, any such Note becomes immediately due and payable or, upon due presentation of any such Note on the Change of Control Put Date, payment of the redemption moneys is improperly withheld or refused, the Paying and Conversion Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any Outstanding Note is held by the Paying and Conversion Agent in accordance with this Section 10.5, the depositor of such Note and not such Paying and Conversion Agent shall be deemed to be the Holder of such Note for all purposes.

The Issuer shall not be entitled to redeem the Notes otherwise than as provided in Section 10.1, Section 10.2, Section 10.3, Section 10.4 and Section 10.5 hereof.

Neither the Issuer nor any of its Affiliates may purchase any Notes in the period of 15 days before any date fixed for redemption of the Notes. Subject thereto, the Issuer or any of its Affiliates may at any time purchase Notes in the open market or otherwise and at any price.

All Notes so redeemed or purchased by the Issuer or any of its Affiliates, and all Notes which are converted, shall be cancelled and may not be reissued or resold.

The Holder of each Note has the right to convert such Note into fully-paid Shares at any time during the Conversion Period.

The “Conversion Period” in respect of any Note shall be the period beginning on and including the first to occur of (X) the tenth New York Business Day following the Shelf Registration Statement Effective Date and (Y) July 13, 2008 and ending on and including the earlier to occur of:

 

 

 

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the Note is deposited) on the day which is 10 days before the date fixed for redemption thereof,

provided, however, that:

In any event the Conversion Period shall end on the date of any notice from the Trustee declaring the Notes to be immediately due and payable pursuant to Article 4 hereof.

Conversion Rights are not exercisable in respect of any Note deposited for redemption under Section 10.4 hereof.

The number of Shares to be issued upon exercise of the Conversion Right attaching to any Note shall be determined by dividing the principal amount of the Note by the Conversion Price in effect on the Conversion Date.

The Conversion Price in effect on the Original Issue Date is U.S. $7.2094. The Conversion Price in effect on any subsequent date shall be the Conversion Price in effect on the Original Issue Date subject to any subsequent adjustment in accordance with this Indenture and the expression “Conversion Price” shall be construed accordingly. Notwithstanding any provision of this Indenture which permits or requires an adjustment of the Conversion Price, no adjustment of the Conversion Price shall be made that would reduce the adjusted Conversion Price to a price that is less than the Minimum Conversion Price. Any such adjustment will result in the Conversion Price being set at the Minimum Conversion Price.

Conversion Rights are not exercisable in respect of any specific Shares and no Shares have been or will be charged, placed in custody or otherwise set aside to secure or satisfy the obligations of the Issuer in respect of the Conversion Rights.

Fractions of a Share will not be issued on conversion. However, if more than one Note is to be converted at any one time by the same Noteholder such that the Shares

 

 

 

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to be issued upon conversion thereof are to be registered in the same name, the number of Shares which shall be issued upon conversion thereof shall be calculated on the basis of the aggregate principal amount of the Notes so to be converted. If a fraction of a Share would otherwise fall to be issued upon conversion, the Issuer shall make or procure that there is made, on or before the seventh London Business Day after the relevant Conversion Date, a cash payment equal to such fraction of the Current Market Price per Share as at the relevant Conversion Date by U.S. Dollar cheque drawn on, or by transfer to a U.S. Dollar account maintained by the payee with, a bank in New York City in accordance with instructions given in the relevant Conversion Notice.

To exercise the Conversion Right attaching to any Note, the Noteholder must:

A Conversion Notice once deposited shall not be withdrawn without the consent in writing of the Issuer.

The Issuer will pay all stamp, issue, registration or other similar taxes and duties (if any) arising in the United States on the issue of Shares on conversion of the Notes, their transfer and delivery to or to the order of the converting Noteholder (subject as provided in Section 11.3 hereof), any expenses of obtaining a listing for such Shares on the American Stock Exchange and all charges of the Paying and Conversion Agents in connection therewith. Subject thereto, as conditions precedent to conversion, the Noteholder must pay to the Issuer (or to such person as the Issuer may direct) all stamp, issue, registration or other similar taxes and duties (if any) (“Conversion Expenses”) arising on conversion which may be payable:

as a result of the issue, transfer or delivery of Shares or any other property or cash upon conversion to or to the order of the converting Noteholder.

 

 

 

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Upon exercising the Conversion Right attaching to any Note prior to the earlier of: (i) the date that is two years after the original issuance date of such Note and (ii) the date that such Note has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which was effective at the time of such sale), the Noteholder shall be required to represent and agree in the Conversion Notice that at the time of execution and deposit of such Conversion Notice neither it nor any person who has the beneficial interest in that Note is in the United States or a U.S. person (within the meaning of Regulation S) and it, or such person, if applicable, purchased or acquired such Note, or the beneficial interest therein, in a transaction made in accordance with (i) Rule 903 or (ii) Rules 904 and 905 of Regulation S. No Shares will be issued to a Noteholder unless the Noteholder satisfies the foregoing conditions.

The conversion date in respect of a Note (the “Conversion Date”) shall be the New York Business Day following the satisfaction of the conditions specified in Section 11.2(a) hereof.

Upon exercise of Conversion Rights, a Noteholder shall in the relevant Conversion Notice, specify a U.S. Dollar account with a bank in New York City to which any cash amount payable on or in respect of the exercise of Conversion Rights by that Noteholder shall be credited and the Issuer shall pay such sum to the relevant Noteholder in accordance with any such directions.

Shares to be issued on conversion of the Notes will be issued in certificated form and a certificate in respect thereof will be dispatched by mail free of charge (but uninsured and at the risk of the person entitled thereto) to the relevant Noteholder or as it may direct in the relevant Conversion Notice within 28 days following the relevant Conversion Date.

Shares issued upon exercise of Conversion Rights will be issued fully paid, free from any liens, charges, encumbrances, pre-emptive rights or other third-party rights and, subject as provided in Sections 11.4(b) and (c) hereof:

Shares issued upon exercise of Conversion Rights will rank pari passu in respect of Dividends and other distributions declared, paid or made, or rights granted, with all other Shares in issue on the Conversion Date except that such Shares will not rank for any Dividend or other distribution declared, paid or made on, or rights granted in respect of, the Shares for which the record date precedes the Conversion Date.

 

 

 

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Shares issued upon exercise of Conversion Rights will rank pari passu in respect of voting rights with all other Shares in issue on the Conversion Date except that they will not rank for any voting rights where the entitlement to voting rights accrues to Shareholders by reference to a record date which precedes the Conversion Date.

Save as provided in Section 11.4(e) hereof, upon conversion of any Note:

and, in either case, no payment or adjustment shall be made on conversion for any such interest accrued since the Interest Payment Date immediately preceding such Conversion Date (or, if such Conversion Date falls on or before the first Interest Payment Date, since the Original Issue Date).

If:

then interest shall accrue on each Relevant Note from and including the preceding Interest Payment Date (or, if the relevant Conversion Date falls on or before the first Interest Payment Date, from and including the Original Issue Date) to but excluding the Relevant Record Date. Any such interest shall be paid not later than 14 days after the relevant Conversion Date by U.S. Dollar cheque drawn on, or by transfer to a U.S. Dollar account maintained by the payee with, a bank in New York City, in accordance with instructions given by the relevant Noteholder.

If an Offer is made in respect of the Shares, the Issuer shall give notice of such Offer to the Noteholders, with a copy to the Trustee, at the same time as any notice

 

 

 

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thereof is sent to its Shareholders (or as soon as practicable thereafter) indicating that details concerning such Offer may be obtained from the Specified Offices of the Paying and Conversion Agent.

Where an Offer in respect of the Shares has been recommended by the board of directors of the Issuer, or where such an Offer has become or been declared unconditional in all respects, the Issuer shall use its reasonable endeavors to procure that the Offer is extended to the holders of any Shares issued during the period in which such Offer is open for acceptance (as determined in accordance with any relevant laws, rules, regulations and voluntary codes applicable to such Offer) as a result of the exercise of Conversion Rights.

A “Change of Control Event” occurs if an Offer in respect of the Shares, for which the consideration is or can be received wholly or substantially in cash, has become or been declared unconditional in all respects and the Issuer becomes aware that the right to cast more than 50% of the votes which may ordinarily be cast on a poll at a general meeting of the Shareholders has or will become unconditionally vested in the offeror and/or any associates(s) of the offeror, or an event occurs which has a like or similar effect.

If and whenever a Change of Control Event shall occur the Issuer shall forthwith give notice to the Noteholders (a “Change of Control Event Notice”), with a copy to the Trustee, of such event and, in relation to each Note for which the Conversion Date occurs after the date of such Change of Control Event Notice but on or prior to the 60th day following the date of such Change of Control Event Notice, the Conversion Price shall be the product of (1) the Conversion Price that would otherwise apply on such Conversion Date in the absence of a Change of Control Event and (2) the percentage determined in accordance with the following table:

provided, however, that, if as a result of the application of the foregoing provisions of this paragraph (d), the Conversion Price would be adjusted to a price below the Minimum Conversion Price, then the Conversion Price shall be the Minimum Conversion Price.

 

 

 

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Any Change of Control Event Notice shall inform Noteholders of their entitlement to exercise the Conversion Right in accordance with this Indenture and shall specify:

If and whenever the Issuer shall distribute any Dividend to the Shareholders, the Conversion Price shall be subject to adjustment in accordance with this Section 11.6.

For the purposes of this Section 11.6, the “Effective Date” means the date on which the relevant Dividend is actually distributed.

If and whenever the Issuer shall distribute any Dividend to the Shareholders, in relation to each Note for which the Conversion Date has not occurred prior to the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to the Effective Date by the following fraction:

where:

“A” is the Current Market Price of one Share (expressed in U.S. Dollars) on the Exchange Business Day immediately preceding the date of the first public announcement of the terms of such Dividend; and

“B” is the Fair Market Value on the date of such announcement of the portion of the Dividend attributable to one Share.

The Conversion Price as adjusted pursuant to this Section 11.6 shall apply, with effect from and including the Effective Date, to each Note for which the Conversion Date has not occurred prior to the Effective Date. Any such adjustment shall be subject to any subsequent adjustment pursuant to the terms of this Indenture.

 

 

 

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If and whenever the Issuer shall make any Bonus Issue, the Conversion Price shall be subject to adjustment in accordance with this Section 11.7.

For the purposes of this Section 11.7, the “Effective Date” means the date of issue of the relevant Shares.

In relation to each Note for which the Conversion Date has not occurred prior to the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the Effective Date by the following fraction:

where:

“A” is the number of Shares in issue immediately before the issue of such Shares; and

“B” is the number of Shares in issue immediately after the issue of such Shares.

The Conversion Price as adjusted pursuant to this Section 11.7 shall apply, with effect from and including the Effective Date, to each Note for which the Conversion Date has not occurred prior to the Effective Date. Any such adjustment shall be subject to any subsequent adjustment pursuant to this Indenture.

If and whenever there shall be any consolidation or subdivision of the Shares, the Conversion Price shall be subject to adjustment in accordance with this Section 11.8.

For the purposes of this Section 11.8, the “Effective Date” means the date on which such subdivision or consolidation becomes effective.

In relation to each Note for which the Conversion Date has not occurred prior to the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the Effective Date by the following fraction:

 

 

 

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where:

“A” is the number of Shares in issue immediately before such alteration; and

“B” is the number of Shares in issue immediately after such alteration.

The Conversion Price as adjusted pursuant to this Section 11.8 shall apply, with effect from and including the Effective Date, to each Note for which the Conversion Date has not occurred prior to the Effective Date. Any such adjustment shall be subject to any subsequent adjustment pursuant to this Indenture.

If and whenever the Issuer shall issue, grant or offer Shares, Share-Related Securities, Rights in respect of Shares or Rights in respect of Share-Related Securities to all or substantially all of the Shareholders as a class by way of rights as a result of which, in each case, Shareholders have the right to acquire Shares at a Consideration per Share which is less than the Current Market Price of the Shares on the Exchange Business Day immediately preceding the date of the first public announcement of such issue, grant or offer, the Conversion Price shall be subject to adjustment in accordance with this Section 11.9.

For the purposes of this Section 11.9, the “Effective Date” means the first date on which the Shares are traded ex-rights, ex-warrants or ex-options on the American Stock Exchange.

In relation to each Note for which the Conversion Date has not occurred prior to the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the Effective Date by the following fraction:

where:

“A” is the number of Shares in issue on the Exchange Business Day immediately preceding the date of such announcement;

“B” is the number of Shares which the Aggregate Consideration would purchase at such Current Market Price; and

“C” is (1) in the case of an issue, grant or offer of Shares, the number of Shares comprised in the issue, grant or offer; or (2) in the case of an issue, grant or offer of

 

 

 

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Share-Related Securities or Rights, the maximum number of Shares which could be issued upon exercise in full of the rights to subscribe for, purchase or otherwise acquire Shares pursuant to the terms of such Share-Related Securities or Rights at the initial price or rate.

If on the date (the “Specified Date”) of issue, grant or offer of the relevant Share-Related Securities, Rights in respect of Shares or Rights in respect of Share Related Securities to all or substantially all of the Shareholders as a class by way of rights the maximum number of Shares which could be issued upon exercise in full of the rights to subscribe for, purchase or otherwise acquire Shares pursuant to the terms of such Share Related Securities or Rights is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some subsequent time then, for the purposes of this Section 11.9, “C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or had occurred as at the Specified Date and as if such subscription, purchase or acquisition had taken place on the Specified Date.

The Conversion Price as adjusted pursuant to this Section 11.9 shall apply, with effect from and including the Effective Date, to each Note for which the Conversion Date has not occurred prior to the Effective Date. Any such adjustment shall be subject to any subsequent adjustment pursuant to this Indenture.

If and whenever the Issuer shall issue any securities (other than Shares, Share-Related Securities, Rights in respect of Shares or Rights in respect of Share-Related Securities) to all or substantially all of the Shareholders as a class by way of rights or the Issuer shall issue or grant any Rights in respect of any securities (other than Shares, Share-Related Securities, Rights in respect of Shares or Rights in respect of Share-Related Securities) or assets to all or substantially all of the Shareholders as a class, the Conversion Price shall be subject to adjustment in accordance with this Section 11.10.

For the purposes of this Section 11.10, “Effective Date” means the first date on which the Shares are traded ex-rights, ex-warrants or ex-options on the American Stock Exchange.

In relation to each Note for which the Conversion Date has not occurred prior to the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the Effective Date by the following fraction:

 

 

 

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where:

“A” is the Current Market Price of one Share on the Exchange Business Day immediately preceding the date of the first public announcement of the terms of such issue or grant; and

“B” is the Fair Market Value on the date of such announcement of the portion of the rights attributable to one Share.

The Conversion Price as adjusted pursuant to this Section 11.10 shall apply, with effect from and including the Effective Date, to each Note for which the Conversion Date has not occurred prior to the Effective Date. Any such adjustment shall be subject to any subsequent adjustment pursuant to this Indenture.

If and whenever the Issuer shall issue, wholly for cash, any Shares or the Issuer shall issue or grant, wholly for cash or for no consideration, Rights in respect of Shares or Rights in respect of Share-Related Securities as a result of which, in each case, persons to whom the Shares or Rights are issued or granted have the right to acquire Shares at a Consideration per Share which is less than the Current Market Price of the Shares on the Exchange Business Day immediately preceding the date of the first public announcement of such issue or grant, the Conversion Price shall be subject to adjustment in accordance with this Section 11.11. However, if any such issue or grant also falls within the terms of Section 11.9 hereof or constitutes an issue of Shares consequent upon the exercise of Conversion Rights or on the exercise of any other rights of conversion into, or exchange or subscription for, Shares, the Conversion Price shall not be subject to adjustment in accordance with this Section 11.11.

For the purposes of this Section 11.11, the “Effective Date” means the date of issue of such Shares or, as the case may be, the issue or grant of such Rights.

In relation to each Note for which the Conversion Date has not occurred prior to the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the Effective Date by the following fraction:

where:

“A” is the number of Shares in issue on the Exchange Business Day immediately preceding the date of such announcement;

 

 

 

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“B” is the number of Shares which the Aggregate Consideration would purchase at such Current Market Price; and

“C” is (1) in the case of an issue of Shares, the number of Shares issued; or (2) in the case of an issue or grant of Rights, the maximum number of Shares which could be issued upon exercise in full of the rights to subscribe for, purchase or otherwise acquire Shares and, if applicable, Share-Related Securities pursuant to the terms of such Rights and, if applicable, Share-Related Securities at the initial price or rate;

provided, however, that if any such adjustment would otherwise result in the Conversion Price being less than the Minimum Conversion Price, then the Conversion Price as adjusted pursuant to this Section 11.11 shall be the Minimum Conversion Price.

If on the date (the “Specified Date”) of issue or grant of the relevant Rights in respect of Shares or Rights in respect of Share-Related Securities the maximum number of Shares which could be issued upon exercise in full of the rights to subscribe for, purchase or otherwise acquire Shares and, if applicable, Share-Related Securities pursuant to the terms of such Rights and, if applicable, Share-Related Securities is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some subsequent time then, for the purposes of this Section 11.11, “C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or had occurred as at the Specified Date and as if such subscription, purchase or acquisition had taken place on the Specified Date.

The Conversion Price as adjusted pursuant to this Section 11.11 shall apply, with effect from and including the Effective Date, to each Note for which the Conversion Date has not occurred prior to the Effective Date. Any such adjustment shall be subject to any subsequent adjustment pursuant to this Indenture.

If and whenever the Issuer or (pursuant to arrangements with the Issuer) any other person or entity shall issue, wholly for cash or for no consideration, any Share-Related Securities or shall grant to any existing securities so issued such rights as to make such securities Share-Related Securities as a result of which, in each case, persons to whom the Share-Related Securities or such rights are issued or granted have the right to acquire Shares at a Consideration per Share which is less than the Current Market Price of the Shares on the Exchange Business Day immediately preceding the date of the first public announcement of the terms of issue of such Share-Related Securities or the terms of such grant, the Conversion Price shall be subject to adjustment in accordance with this Section 11.12. However, if any such issue or grant also falls within the terms of Sections 11.9, 11.10 or 11.11 hereof, the Conversion Price shall not be subject to adjustment in accordance with this Section 11.12.

 

 

 

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For the purposes of this Section 11.12, the “Effective Date” means the date of issue of the Share-Related Securities or the grant of the relevant rights.

In relation to each Note for which the Conversion Date has not occurred prior to the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the Effective Date by the following fraction:

where:

“A” is the number of Shares in issue on the Exchange Business Day immediately preceding the date of such announcement;

“B” is the number of Shares which the Aggregate Consideration would purchase at such Current Market Price; and

“C” is the maximum number of Shares which could be issued upon exercise in full of the rights to subscribe for, purchase or otherwise acquire Shares pursuant to the terms of such Share-Related Securities at the initial price or rate;

provided, however, that, if any such adjustment would otherwise result in the Conversion Price being less than the Minimum Conversion Price, then the Conversion Price as adjusted pursuant to this Section 11.12 shall be the Minimum Conversion Price.

If on the date (the “Specified Date”) of issue of the relevant Share-Related Securities or date of grant of such rights the maximum number of Shares which could be issued upon exercise in full of the rights to subscribe for, purchase or otherwise acquire Shares pursuant to the terms of such Share-Related Securities is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some subsequent time then, for the purposes of this Section 11.12, “C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or had occurred as at the Specified Date and as if such subscription, purchase or acquisition had taken place on the Specified Date.

The Conversion Price as adjusted pursuant to this Section 11.12 shall apply, with effect from and including the Effective Date, to each Note for which the Conversion Date has not occurred prior to the Effective Date. Any such adjustment shall be subject to any subsequent adjustment pursuant to this Indenture.

 

 

 

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If and whenever the rights to subscribe for, purchase or otherwise acquire Shares pursuant to the terms of any Rights or Share-Related Securities are amended (other than in accordance with their terms of issue (including terms as to adjustment of such rights)) so that following such amendment the Consideration per Share is (1) reduced and (2) less than the Current Market Price of the Shares on the Exchange Business Day immediately preceding the date of the first public announcement of the proposals for such amendment, the Conversion Price shall be subject to adjustment in accordance with this Section 11.13.

For the purposes of this Section 11.13, “Effective Date” means the date of amendment of such rights.

In relation to each Note for which the Conversion Date has not occurred prior to the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the Effective Date by the following fraction:

where:

“A” is the number of Shares in issue on the Exchange Business Day immediately preceding the date of such announcement;

“B” is the number of Shares which the Aggregate Consideration (calculated taking account of the amended rights) would purchase at such Current Market Price; and

“C” is the maximum number of Shares which could be issued upon exercise in full of the rights to subscribe for, purchase or otherwise acquire Shares pursuant to the terms of such Rights or Share-Related Securities at the amended subscription, purchase or acquisition price or rate (but giving credit in such manner as shall be Determined by an Expert to be appropriate for any previous adjustment under Section 11.9 or Section 11.12 hereof or this Section 11.13);

provided, however, that, if any such adjustment would otherwise result in the Conversion Price being less than the Minimum Conversion Price, then the Conversion Price as adjusted pursuant to this Section 11.13 shall be the Minimum Conversion Price.

If on the date (the “Specified Date”) of such amendment the maximum number of Shares which could be issued upon exercise in full of the rights to subscribe for, purchase or otherwise acquire Shares pursuant to the terms of such Rights or Share-Related Securities is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some subsequent time then, for the purposes of this Section 11.13, “C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or

 

 

 

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had occurred as at the Specified Date and as if such subscription, purchase or acquisition had taken place on the Specified Date.

The Conversion Price as adjusted pursuant to this Section 11.13 shall apply, with effect from and including the Effective Date, to each Note for which the Conversion Date has not occurred prior to the Effective Date. Any such adjustment shall be subject to any subsequent adjustment pursuant to this Indenture.

If and whenever the Issuer or (pursuant to arrangements with the Issuer) any other person or entity shall offer any securities in connection with which offer Shareholders as a class are entitled to participate in arrangements whereby such securities may be acquired by them, the Conversion Price shall be subject to adjustment in accordance with this Section 11.14. However, if any such offer also causes the Conversion Price to be adjusted within the terms of Sections 11.9 or 11.10 hereof, the Conversion Price shall not be subject to adjustment in accordance with this Section 11.14.

For the purposes of this Section 11.14, the “Effective Date” means the first date on which the Shares are traded ex-rights on the American Stock Exchange.

In relation to each Note for which the Conversion Date has not occurred prior to the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the Effective Date by the following fraction:

where:

“A” is the Current Market Price of one Share on the Exchange Business Day immediately preceding the date of the first public announcement of such offer; and

“B” is the Fair Market Value on the date of such announcement of the portion of the relevant offer attributable to one Share.

The Conversion Price as adjusted pursuant to this Section 11.14 shall apply, with effect from and including the Effective Date, to each Note for which the Conversion Date has not occurred prior to the Effective Date. Any such adjustment shall be subject to any subsequent adjustment pursuant to this Indenture.

 

 

 

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If the Issuer (after consultation with the Trustee) or the Trustee (after consultation with the Issuer) determines that:

the Issuer shall, at its own expense, use all reasonable endeavors to procure that such adjustment (if any) to the Conversion Price as is fair and reasonable to take account thereof and the date on which such adjustment should take effect shall be Determined by an Expert.

Upon such determination, the Issuer shall procure that such adjustment (if any) shall be made and shall take effect in accordance with such determination, provided, however, that an adjustment shall only be made pursuant to this Section 11.15 if the relevant Expert is requested to make such a determination not more than 60 days after the date on which the relevant event occurs or circumstances exist.

If any doubt shall arise as to any appropriate adjustment to the Conversion Price, the Issuer shall use all reasonable endeavors to procure that the appropriate adjustment shall be Determined by an Expert and a certificate from the relevant Expert as to the appropriate adjustment to the Conversion Price shall, in the absence of manifest error, be conclusive and binding on all concerned.

On any adjustment of the Conversion Price, the resultant Conversion Price, if not an integral multiple of one cent, shall be rounded down to the nearest whole cent. No adjustment shall be made to the Conversion Price where such adjustment (rounded down if applicable) would be less than 1% of the Conversion Price then in effect. Any adjustment not required to be made, and any amount by which the Conversion Price has been rounded down, shall be carried forward and taken into account in any subsequent adjustment but such subsequent adjustment shall be made on the basis that the adjustment not required to be made had been made at the relevant time.

 

 

 

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No adjustment shall be made to the Conversion Price where Shares or other securities (including rights, warrants or options) are issued, offered, exercised, allotted, appropriated, modified or granted to or for the benefit of employees or former employees (including directors holding or formerly holding executive office) pursuant to any employees’ share scheme or plan or consultants of the Issuer or any Subsidiary or any associated company of the Issuer pursuant to any other share scheme or plan (including a dividend reinvestment plan).

The Conversion Price may not be adjusted so that exercise of the Conversion Right would require Shares to be issued in circumstances not permitted by applicable law.

If and whenever the Conversion Price is to be adjusted pursuant to any of Sections 11.6 to 11.14 hereof and the Conversion Date in relation to any Note is either:

the Conversion Right attaching to the relevant Note shall be subject to adjustment in accordance with this Section 11.17.

Upon the relevant adjustment becoming effective under the relevant Section of this Indenture, the Issuer shall procure that there shall be issued to the converting Noteholder or in accordance with the instructions contained in the relevant Conversion Notice (subject to any applicable exchange control or other laws or other regulations) such additional number of Shares as, together with the Shares issued or to be issued on conversion of the relevant Note, is equal to the number of Shares which would have been required to be issued on conversion of such Note if the relevant adjustment to the Conversion Price had in fact been made and become effective immediately before the relevant Conversion Date.

A certificate in respect of such additional Shares will be dispatched by mail free of charge (but uninsured and at the risk of the person entitled thereto) to the relevant Noteholder or as it may direct in the relevant Conversion Notice within 28 days following the relevant Conversion Date or the date of issue of the relevant Shares, if adjustment results from the issue of Shares, whichever is the later.

 

 

 

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For the purpose of calculating any adjustment to the Conversion Price pursuant to this Article 11, in the case of any:

the “Aggregate Consideration” and the “Number of Shares” shall be calculated or determined (if necessary) in accordance with the following provisions of this Section 11.18 and the “Consideration per Share” shall, in each case, be the relevant Aggregate Consideration divided by the relevant Number of Shares.

In the case of an issue, grant or offer of Shares for cash:

In the case of the issue, grant or offer of Shares for a consideration in whole or in part other than cash:

In the case of the issue, grant or offer of Share-Related Securities or Rights in respect of Share-Related Securities or the grant to any securities issued of such rights as to make such securities Share-Related Securities:

 

 

 

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the consideration in each case to be determined in the same manner as provided in paragraphs (b) and (c) of this Section 11.18; and

In the case of the amendment of the terms of any Share-Related Securities and/or Rights in respect of Share-Related Securities (in either case, other than in accordance with their terms of issue):

the consideration in each case to be determined in the same manner as provided in paragraphs (b) and (c) of this Section 11.18; and

 

 

 

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otherwise acquire Share-Related Securities pursuant to the terms of such Rights at the initial price or rate or (in the case of an amendment to the terms of such Rights) the amended price or rate.

In the case of the issue, grant or offer of Rights in respect of Shares or the amendment of the terms of any Rights in respect of Shares (other than in accordance with their terms of issue):

the consideration in each case to be determined in the same manner as provided in paragraphs (b) and (c) of this Section 11.18; and

If any of the consideration referred to in any of the preceding paragraphs of this Section 11.18 is receivable in a currency other than U.S. Dollars, such consideration shall be translated into U.S. Dollars for the purposes of this Section 11.18:

The Issuer shall give notice to the Trustee and to the Noteholders in accordance with Section 12.2 hereof of any adjustment of the Conversion Price or the Minimum Conversion Price as soon as is practicable following the determination thereof.

The Trustee, subject to the provisions of Section 5.1 hereof, and the Paying and Conversion Agent shall not at any time be under any duty or responsibility to any Holder of Notes to

 

 

 

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determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or intent of any such adjustments when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee, subject to the provisions of Section 5.1 hereof, nor the Paying and Conversion Agent shall be accountable with respect to the validity or value (of the kind or amount) of any Shares, or of any other securities or property, which may at any time be issued or delivered upon the conversion of any Note; and it or they do not make any representation with respect thereto. Neither the Trustee, subject to the provisions of Section 5.1 hereof, nor the Paying and Conversion Agent shall be responsible for any failure of the Issuer to make any cash payment or to issue, transfer or deliver any shares of stock or share certificates or other securities or property upon the surrender of any Note for the purpose of conversion; and the Trustee, subject to the provisions of Section 5.1 hereof, and the Paying and Conversion Agent shall not be responsible or liable for any failure of the Issuer to comply with any of the covenants of the Issuer contained in this Article 11.

This Indenture is subject to the provisions of the TIA which are required to be part of this Indenture, and shall, to the extent applicable, be governed by such provisions.

Any notice or communication to the Issuer or the Trustee is duly given if in writing and delivered in person or mailed by first-class mail or sent by facsimile transmission addressed as follows:

BMB Munai, Inc.

▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇

▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ “Forum”

050051, Almaty

Kazakhstan

Fax: ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇

Attention: Askar Tashtitov

 

and

 

BMB Munai, Inc.

▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇

▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇▇▇▇ of America

Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇

Attention: ▇▇▇▇ ▇▇▇▇

 

The Bank of New York

▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇ ▇▇▇

▇▇▇▇▇▇ ▇▇▇▇▇▇▇

Fax: ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇

Attention: Corporate Trust Services

 

 

 

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The Issuer or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication to a Holder shall be mailed by first-class mail to his address shown on the Register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in such notice or communication shall not affect its sufficiency with respect to other Holders.

If a notice or communication is mailed or sent in the manner provided above within the time prescribed, it shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; four calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed; provided that notice to the Trustee shall only be effective upon receipt thereof by the Trustee.

If the Issuer mails a notice or communication to Holders, it shall mail a copy to the Trustee at the same time.

Holders may communicate pursuant to Section 312(b) of the TIA with other Holders with respect to their rights under the Notes or this Indenture. The Issuer, the Trustee, the Registrar and anyone else shall have the protection of Section 312(c) of the TIA.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless such officer knows, or in the exercise of reasonable care should know, that the Opinion of Counsel with respect to the matters upon which such certificate or opinion is based is erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or representations by, an officer or officers of the Issuer stating that the information with respect to such factual matters is in the possession of the Issuer, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

Upon any application or request by the Issuer to the Trustee to take any action under any provision of this Indenture, the Issuer 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, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.

 

 

 

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Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

All covenants and agreements in this Indenture by the Issuer shall bind its successors and assigns, whether so expressed or not.

In relation to any matter required by this Indenture to be Determined by an Expert, the Issuer shall promptly appoint an Expert.

In case any provision in this Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Nothing contained in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders of Notes, any benefit or legal or equitable right, remedy or claim under this Indenture.

This Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the state of New York.

The Issuer agrees that any suit, action or proceeding against the Issuer brought by any Holder or the Trustee arising out of or based upon this Indenture or the Notes may be instituted in any state or Federal court in the Borough of Manhattan, New York, and any appellate court from any thereof, and each of them irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding. The Issuer irrevocably waives, to the fullest extent permitted by law, any objection to any suit, action, or proceeding that may be brought in connection with this Indenture or the Notes, including such actions, suits or proceedings relating to securities laws of the United States of America or any state thereof,

 

 

 

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in such courts whether on the grounds of venue, residence or domicile or on the ground that any such suit, action or proceeding has been brought in an inconvenient forum. The Issuer agrees that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon the Issuer and may be enforced in any court to the jurisdiction of which the Issuer is subject by a suit upon such judgment; provided that service of process is effected upon the Issuer in the manner provided by this Indenture. The Issuer has appointed CT Corporation System, with offices on the date hereof at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America, or any successor, as its authorized agent (the “Authorized Agent”), upon whom process may be served in any suit, action or proceeding arising out of or based upon this Indenture or the Notes or the transactions contemplated herein that may be instituted in any state or Federal court in the Borough of Manhattan, New York, by any Holder or the Trustee, and expressly accepts the non-exclusive jurisdiction of any such court in respect of any such suit, action or proceeding. The Issuer hereby represents and warrants that the Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and the Issuer agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such respective appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent shall be deemed, in every respect, effective service of process upon the Issuer. Notwithstanding the foregoing, any action involving the Issuer arising out of or based upon this Indenture or the Notes may be instituted by any Holder or the Trustee in any other court of competent jurisdiction.

This instrument may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original but all such counterparts shall together constitute but one and the same instrument.

No recourse for the payment of the principal of or interest (including Additional Interest, if any) on any Note, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer or director, as such, past, present or future, of the Issuer or of 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 the acceptance thereof and as part of the consideration for the issue thereof, expressly waived and released.

 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the day and year first above written.

 

BMB MUNAI, INC., as Issuer

 

 

 

 

Signature Page to Indenture

 

 

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THE BANK OF NEW YORK, as Trustee

 

 

 

Signature Page to Indenture

 

 

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EXHIBIT A

 

[FORM OF FACE OF NOTE]

 

[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY TO BMB MUNAI, INC. (OR ITS SUCCESSOR) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF THE COMMON DEPOSITARY OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY (AND ANY PAYMENT IS MADE TO THE COMMON DEPOSITARY OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, THE COMMON DEPOSITARY OR ITS NOMINEE, HAS AN INTEREST HEREIN.]

 

[THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) IN ACCORDANCE WITH RULE 903(B)(3)(III) (CATEGORY 3) OF REGULATION S UNDER THE SECURITIES ACT, AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF BMB MUNAI, INC. THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULES 904 AND 905 UNDER THE SECURITIES ACT AND, IF THE PROPOSED TRANSFER IS BEING MADE PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD, TO A NON-U.S. PERSON, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, (B) THE HOLDER WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS NOTE OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND (C) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESTRICTIONS REFERRED TO IN (A) AND (B) ABOVE.]

 

 

 

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Common Code: [ ]

 

 

 

 

BMB MUNAI, INC.

5.0% CONVERTIBLE SENIOR NOTE DUE 2012

 

BMB Munai, Inc., a Nevada corporation (the “Issuer”, which term shall include any successor corporation under the Indenture referred to on the reverse hereof), promises to pay to [ ], or registered assigns, the principal sum of [ ] (U.S. $[ ]) on July 13, 2012[, or such greater or lesser amount as is indicated on the Schedule of Principal Amount on the other side of this Note].

 

Interest Payment Dates: January 13 and July 13, commencing January 13, 2008.

 

Record Dates: December 29 and June 28.

 

This Note is convertible as specified on the other side of this Note. Additional provisions of this Note are set forth on the other side of this Note.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed.

 

 

 

BMB MUNAI, INC., as Issuer

 

 

 

 

 

 

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TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

THE BANK OF NEW YORK,

as Trustee

 

Authorized Signatory

 

 

 

 

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[FORM OF REVERSE SIDE OF NOTE]

 

BMB MUNAI, INC.

5.0% CONVERTIBLE SENIOR NOTE DUE 2012

 

Capitalized terms used but not defined herein shall have the respective means ascribed thereto in the Indenture referred to below.

 

 

BMB Munai, Inc., a Nevada corporation (the “Issuer”, which term shall include any successor corporation under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Note at the rate of 5.0% per annum (the “Rate of Interest”). The Issuer shall pay interest semiannually on January 13 and July 13 of each year (each, an “Interest Payment Date”), commencing on January 13, 2008. The Notes shall bear interest from July 13, 2007 (the “Original Issue Date”) at the Rate of Interest payable in arrears on each Interest Payment Date. Subject as provided in Sections 11.4(d) and 11.4(e) of the Indenture, each Note will cease to bear interest from the due date for redemption; provided that if, upon due presentation of any Note on the due date for redemption, payment of principal is improperly withheld or refused, such Note will continue to bear interest at the Rate of Interest (both before and after judgment) until the Relevant Date.

 

The amount of interest (excluding Additional Interest, if any) payable on each Interest Payment Date shall be U.S. $2,500 in respect of each Note of U.S. $100,000 denomination. If interest is required to be paid in respect of a Note on any other date, it shall be calculated by applying the Rate of Interest to the principal amount of such Note, multiplying the product by the relevant Day Count Fraction and rounding the resulting figure to the nearest cent (half a cent being rounded upwards), where “Day Count Fraction” means, in respect of any period, the number of days in the relevant period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with twelve 30-day months).

 

 

Each payment of interest (including Additional Interest, if any) in respect of a Note will be made to the person shown as the Holder in the Register at the opening of business in the place of the Registrar’s Specified Office on the Interest Record Date immediately preceding the relevant Interest Payment Date. Where payment in respect of a Note is to be made by cheque, the cheque will be mailed to the address shown as the address of the Holder in the Register at the opening of business on the relevant Interest Record Date.

 

Principal of and interest (including Additional Interest, if any) on Global Notes shall be payable to the Common Depositary for the accounts of Euroclear and Clearstream, as applicable, in immediately available funds.

 

Principal of and interest (including Additional Interest, if any) on Physical Notes shall be made (a) upon application by a Noteholder to the Specified Office of the Paying and Conversion Agent no later than the fifteenth day before the due date for such payment and (provided that such payment (i) if principal, is made in full or (ii) if interest, constitutes interest payable on redemption) surrender (or in the case of part payment only, endorsement) of the relevant Note Certificates at the Specified Office of the Paying and Conversion Agent outside the United States by U.S. Dollar cheque drawn on, or by transfer to a U.S. Dollar account maintained by the payee with, a bank in New York City or (b) at the Specified Office, if any, of the Paying and Conversion Agent in New York City if (i) the Issuer has appointed Paying and Conversion Agents outside the United States with the

 

 

 

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reasonable expectation that such Paying and Conversion Agents will be able to make payment of the full amount of the interest on the Notes in U.S. Dollars when due, (ii) payment of the full amount of such interest at the offices of all such Paying and Conversion Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law.

 

 

Initially, The Bank of New York will act as Registrar, Transfer Agent and Paying and Conversion Agent for the Notes. Notice of any change in any of the Agents or in their respective Specified Offices shall promptly be given to the Noteholders. The Issuer or any Affiliate of the Issuer may, subject to certain limitations set forth in the Indenture, act as Paying and Conversion Agent, Transfer Agent or Registrar.

 

 

This Note is one of a duly authorized issue of Notes of the Issuer designated as its 5.0% Convertible Senior Notes due 2012 (the “Notes”), issued under an Indenture, dated as of September 19, 2007 (as it may from time to time be supplemented or amended by one or more indentures supplemental thereto entered into pursuant to the applicable provisions thereof, the “Indenture”), between the Issuer and The Bank of New York (the “Trustee”). The terms of this Note include those stated in the Indenture and those required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “TIA”), as in effect on the date of the Indenture. This Note is subject to all such terms, and the Holder of this Note is referred to the Indenture and the TIA for a statement of them. In the case of any conflict between the provisions of this Note and the Indenture, the provisions of the Indenture shall control.

 

 

Unless previously redeemed, converted, or purchased and cancelled, the Notes will be redeemed at a price equal to 107.2% of its principal amount on the Maturity Date, subject as provided in Section 2.1 of the Indenture.

 

 

The Notes may be redeemed at the option of the Issuer in whole, but not in part, at 104% of their principal amount together with accrued but unpaid interest to the date fixed for redemption:

In order to exercise such option the Issuer shall give not less than 30 nor more than 60 days’ notice to the Trustee and the Noteholders (which notice shall be irrevocable and shall oblige the Issuer to redeem the Notes on the date for redemption specified in such notice). Such notice shall specify (i)

 

 

 

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the date when the relevant redemption will take place and (ii) the last day on which Conversion Rights may be exercised by a Noteholder. Should the Issuer redeem the Notes in accordance with this paragraph 6, the Issuer shall give notice to Noteholders in accordance with Section 12.2 of the Indenture.

 

 

The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time, on giving not less than 45 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable), at their principal amount, together with accrued but unpaid interest to the date fixed for redemption, if:

provided, however, that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts if a payment in respect of the Notes were then due.

Prior to the publication of any notice of redemption pursuant to this paragraph 7, the Issuer shall deliver to the Trustee:

The Trustee shall be entitled to accept such certificate and opinion as sufficient evidence of the satisfaction of the circumstances set out in (a) and (b) above without need of further enquiry and such certification and opinion (in form and substance satisfactory to the Trustee) shall be conclusive and binding on the Noteholders.

Upon the expiry of any such notice as is referred to in this paragraph 7, the Issuer shall be bound to redeem the Notes in accordance with this paragraph 7.

Notwithstanding the above, a Noteholder may elect not to accept such redemption in accordance with this paragraph 7 by giving notice to the Specified Office of the Paying and Conversion Agent within 20 days from publication of the relevant notice by the Issuer. Such Noteholder will continue to receive payments on the Notes but will not be entitled to any Excess Additional Amounts.

 

 

 

 

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The Issuer shall, at the option of the Holder of any Note, redeem such Note:

In order to exercise the option contained in clauses (a) or (b) above, the Holder of a Note must, during the First Put Exercise Period or the Second Put Exercise Period, as applicable, deposit with the Paying and Conversion Agent such Note Certificate and a duly completed Put Option Notice.

In order to exercise the option contained in clause (c) above, the Holder of a Note must, not less than 30 nor more than 60 days before the relevant Put Settlement Date, deposit with the Paying and Conversion Agent a duly completed Put Option Notice and, in the case of a Put Option Notice relating to Notes evidenced by a Note Certificate, such Note Certificate.

The Paying and Conversion Agent with which a Note is so deposited shall deliver a duly completed receipt for such Note (a “Put Option Receipt”) to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this paragraph 8, may be withdrawn; provided, however, that if, prior to the relevant Put Settlement Date, any such Note becomes immediately due and payable or, upon due presentation of any such Note on the relevant Put Settlement Date, payment of the redemption moneys is improperly withheld or refused, the Paying and Conversion Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any Outstanding Note is held by the Paying and Conversion Agent in accordance with this paragraph 8, the depositor of such Note and not such Paying and Conversion Agent shall be deemed to be the Holder of such Note for all purposes. Should a Holder of any Note redeem such Note in accordance with this paragraph 8, the Issuer shall give notice to Noteholders in accordance with paragraph 8.

The Issuer shall give notice to the Noteholders as soon as practicable following such event of the Shelf Registration Statement Filing Date and the Shelf Registration Statement Effective Date, in accordance with Section 12.2 of the Indenture and, in the absence of such notice, the Shelf Registration Statement Filing Date and the Shelf Registration Statement Effective Date shall be deemed not to have occurred for the purposes of this paragraph 8.

 

 

 

 

 

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The Issuer shall, at the option of the Holder of any Note, redeem such Note on the Change of Control Put Date at a price equal to its Applicable Rate together with accrued but unpaid interest to such date. In order to exercise the option contained in this paragraph 9, the Holder of a Note must, during the Put Option Period, deposit with the Paying and Conversion Agent a duly completed Put Option Notice and, in the case of a Put Option Notice relating to Notes evidenced by a Note Certificate, such Note Certificate. The Paying and Conversion Agent with which a Note is so deposited shall deliver a Put Option Receipt to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this paragraph 9, may be withdrawn; provided, however, that if, prior to the Change of Control Put Date, any such Note becomes immediately due and payable or, upon due presentation of any such Note on the Change of Control Put Date, payment of the redemption moneys is improperly withheld or refused, the Paying and Conversion Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any Outstanding Note is held by the Paying and Conversion Agent in accordance with this paragraph 9, the depositor of such Note and not such Paying and Conversion Agent shall be deemed to be the Holder of such Note for all purposes.

 

 

The Holder of each Note has the right to convert such Note into fully-paid Shares at any time during the Conversion Period.

The “Conversion Period” in respect of any Note shall be the period beginning on and including the first to occur of (X) the tenth New York Business Day following the Shelf Registration Statement Effective Date and (Y) July 13, 2008 and ending on and including the earlier to occur of:

provided, however, that:

In any event the Conversion Period shall end on the date of any notice from the Trustee declaring the Notes to be immediately due and payable pursuant to Article 4 of the Indenture.

 

 

 

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Conversion Rights are not exercisable in respect of any Note deposited for redemption under Section 10.4 of the Indenture.

The number of Shares to be issued upon exercise of the Conversion Right attaching to any Note shall be determined by dividing the principal amount of the Note by the Conversion Price in effect on the Conversion Date.

The Conversion Price in effect on the Original Issue Date is U.S. $7.2094. The Conversion Price in effect on any subsequent date shall be the Conversion Price in effect on the Original Issue Date subject to any subsequent adjustment in accordance with the Indenture and the expression “Conversion Price” shall be construed accordingly. Notwithstanding any provision of the Indenture which permits or requires an adjustment of the Conversion Price, no adjustment of the Conversion Price shall be made that would reduce the adjusted Conversion Price to a price that is less than the Minimum Conversion Price. Any such adjustment will result in the Conversion Price being set at the Minimum Conversion Price.

Conversion Rights are not exercisable in respect of any specific Shares and no Shares have been or will be charged, placed in custody or otherwise set aside to secure or satisfy the obligations of the Issuer in respect of the Conversion Rights.

Fractions of a Share will not be issued on conversion. However, if more than one Note is to be converted at any one time by the same Noteholder such that the Shares to be issued upon conversion thereof are to be registered in the same name, the number of Shares which shall be issued upon conversion thereof shall be calculated on the basis of the aggregate principal amount of the Notes so to be converted. If a fraction of a Share would otherwise fall to be issued upon conversion, the Issuer shall make or procure that there is made, on or before the seventh London Business Day after the relevant Conversion Date, a cash payment equal to such fraction of the Current Market Price per Share as at the relevant Conversion Date by U.S. Dollar cheque drawn on, or by transfer to a U.S. Dollar account maintained by the payee with, a bank in New York City in accordance with instructions given in the relevant Conversion Notice.

 

To convert a Note, a Holder must follow the procedures set forth in the Indenture.

 

 

The Notes are in registered form, without coupons, in denominations of U.S. $100,000 or integral multiples thereof. A Holder may register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Indenture.

 

 

The Issuer, the Trustee, the Paying and Conversion Agent and any agent of the Issuer, the Trustee or the Paying and Conversion Agent may treat the registered Holder of a Global Note as the absolute owner of such Global Note for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Note be overdue, and notwithstanding any notice of ownership or writing thereon, or any notice of previous loss or theft or other interest therein. The Issuer, the Trustee, the Paying and Conversion Agent and any agent of the Issuer, the Trustee or the Paying and Conversion Agent may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payment of principal of and interest (including Additional Interest, if any) on such Note and for all other purposes

 

 

 

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whatsoever, whether or not such Note be overdue, and notwithstanding any notice of ownership or writing thereon, or any notice of previous loss or theft or other interest therein.

 

 

The Trustee and the Paying and Conversion Agent shall pay to the Issuer any money held by them for the payment of principal or interest (including Additional Interest, if any) that remains unclaimed for two years after the date upon which such payment shall have become due. After payment to the Issuer, Holders entitled to the money must look to the Issuer for payment as general creditors unless an applicable abandoned property law designates another Person, and all liability of the Trustee and the Paying and Conversion Agent with respect to such money shall cease.

 

 

The Indenture or the Notes may be amended or supplemented, and non-compliance by the Issuer in any particular instance with any provision of the Indenture or the Notes may be waived, as provided in the Indenture

 

 

The Events of Default with respect to the Notes are defined in Section 4.1(a) of the Indenture.

 

If an Event of Default occurs (other than as a result of certain events of bankruptcy, insolvency or reorganization of the Issuer), then the Trustee may and, if so requested in writing by Holders of at least one quarter of the aggregate principal amount of the Outstanding Notes or if so directed by an Extraordinary Resolution, shall, provided that it has been indemnified and/or secured to its satisfaction, give written notice to the Issuer declaring the Notes to be immediately due and payable, whereupon they shall become immediately due and payable at their principal amount together with accrued but unpaid interest (including Additional Interest, if any) without further action or formality, all as and to the extent provided in the Indenture.

 

If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization of the Issuer, all unpaid principal of and accrued but unpaid interest (including Additional Interest, if any) on the Outstanding Notes shall become and be immediately due and payable, without any declaration or other act on the part of the Trustee or the Holders, all as and to the extent provided in the Indenture.

 

Holders may not enforce the Indenture or the Notes except as provided in the Indenture.

 

The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes.

 

Subject to certain limitations, the Holders, either (a) through the written consent of not less than a majority in aggregate principal amount of the Outstanding Notes, or (b) by Extraordinary Resolution, 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.

 

The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests.

 

The Issuer is required to give notice in writing to the Trustee forthwith upon becoming aware of any Event of Default or Default under the Indenture or obligation of the Issuer to pay Additional Interest

 

 

 

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under the Registration Rights Agreement and, in each case, without waiting for the Trustee to take any further action.

 

 

In addition to the rights provided to Holders under the Indenture, Holders of Restricted Notes shall have all the rights set forth in the Registration Rights Agreement, dated as of July 13, 2007 (the “Registration Rights Agreement”), between the Issuer and Bayerische Hypo- und Vereinsbank AG, including the right to receive Additional Interest.

 

 

This Note shall not be valid until the Trustee or an authenticating agent manually signs the certificate of authentication on the other side of this Note.

 

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

The Issuer will furnish to any Holder, upon written request and without charge, a copy of the Indenture and/or the Registration Rights Agreement.

 

Requests may be made to the Issuer at the following address:

 

BMB Munai, Inc.

324 South 400 West, Suite ▇▇▇

▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇▇▇▇ of America

Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇

Attention: ▇▇▇▇ ▇▇▇▇

 

 

 

 

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ASSIGNMENT FORM

 

To assign and transfer this Note, fill in the form below:

 

(I) or (we) assign and transfer this Note to: ______________________________________

 

_________________________________________________________________________

(Insert assignee’s social security or tax I.D. no.)

 

_________________________________________________________________________

 

_________________________________________________________________________

(Print or type assignee’s name, address and postal code)

 

and irrevocably appoint ___________________________________________ as agent to transfer this Note on the books of the Issuer. The agent may substitute another to act for him.

 

Date: ____________________

 

Your Signature: _______________________________________________________________

(Sign exactly as your name appears on the face of this Note)

 

Signature Guarantee*:_________________________________

 

*Participant in a recognized signature guarantee medallion program (or other signature guarantor acceptable to the Trustee).

 

 

 

 

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FORM OF TRANSFER CERTIFICATE

 

Reference is made to the Indenture, dated as of September 19, 2007 (as it may from time to time be supplemented or amended by one or more indentures supplemental thereto entered into pursuant to the applicable provisions thereof, the “Indenture”), between BMB Munai, Inc. and The Bank of New York (the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

In connection with any transfer of this Note occurring prior to the end of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that without utilizing any general solicitation or general advertising:

 

[Check One]

 

[ ] (a) this Note is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Regulation S thereunder.

 

or

 

[ ] (b) this Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture.

 

If none of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Note in the name of any Person other than the Holder hereof unless the conditions to any such transfer of registration set forth herein and in Sections 2.7, 2.8 and 2.9 of the Indenture shall have been satisfied; provided, however, that if box (a) is checked, by executing this form, the transferor is deemed to have certified that the transfer is being effected pursuant to and in accordance with Rules 904 and 905 under the Securities Act and, accordingly, (A) the transfer is not being made to a person in the United States and (1) at the time the buy order was originated, the transferee was outside the United States or such transferor and any Person acting on its behalf reasonably believed and believes that the transferee was outside the United States or (2) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States; (B) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act; (C) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (D) if the proposed transfer is not being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person.

 

 

Signature of Transferor: _________________________________________________________

 

Signature Guarantee*:_________________________________

 

*Participant in a recognized signature guarantee medallion program (or other signature guarantor acceptable to the Trustee).

 

 

 

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SCHEDULE A

 

SCHEDULE OF PRINCIPAL AMOUNT*

The initial outstanding principal amount of this Global Note is U.S. $[ ]. The following decreases/increases in the principal amount of this Note have been made:

 

 

*This schedule should be included only if the Note is a Global Note.

 

 

 

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EXHIBIT B

 

[FORM OF CONVERSION NOTICE]

 

BMB MUNAI, INC.

5.0% CONVERTIBLE SENIOR NOTE DUE 2012

CONVERSION NOTICE

Reference is made to the Indenture, dated as of September 19, 2007 (as it may from time to time be supplemented or amended by one or more indentures supplemental thereto entered into pursuant to the applicable provisions thereof, the “Indenture”), between BMB Munai, Inc. and The Bank of New York (the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

I/We, being the holders of the Note(s) specified below, hereby elect to convert the principal amount of such Notes as specified below of which I/We are the holders(s) or in which I/we have an interest (as specified below) for such number of Shares as is calculated by dividing the principal amount of the Notes by the Conversion Price in effect on the Conversion Date in accordance with the Indenture.

Total principal amount and the serial numbers of Notes to which this notice applies:

I/we hereby request that:

the certificate(s) for the Shares which are to be delivered as a result of this Conversion Notice be dispatched (at my/our risk and, if sent at my/our request otherwise than by ordinary mail, at my/our expense) to the person whose name and address is given below and in the manner specified below or any other cash amounts payable as a result of this Conversion Notice be made in the manner specified below:

Accounts for other cash amounts payable as a result of this Conversion Notice, if any:

 

 

 

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[I/We hereby certify that at the time of execution and deposit of this Conversion Notice, neither I/we nor any person who has the beneficial interest in the Notes specified above is/are in the United States or a U.S. person (within the meaning of Regulation S (“Regulation S”) under the US Securities Act of 1933, as amended) and that I/we, or such person, if applicable, purchased such Notes, or the beneficial interest therein, in a transaction made in accordance with (i) Rule 903 or (ii) Rules 904 and 905 of Regulation S.]

Date: ____________________

 

Your Name: _______________________________________________________________

(Print your name exactly as it appears on the face of the Note)

 

Social Security or other Taxpayer Identification Number:_____________________________

 

Your Signature: _______________________________________________________________

(Sign exactly as your name appears on the face of the Note)

 

Signature Guarantee*:_________________________________

 

*Participant in a recognized signature guarantee medallion program (or other signature guarantor acceptable to the Trustee).

 

 

 

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The following to be completed by the Paying and Conversion Agent:

(F)       Amount of any other cash payments in respect of Conversion Rights, pursuant to the Indenture: [ ]

 

 

 

 

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EXHIBIT C

 

[FORM OF PUT OPTION NOTICE]

BMB MUNAI, INC.

5.0% CONVERTIBLE SENIOR NOTE DUE 2012

PUT OPTION NOTICE

Reference is made to the Indenture, dated as of September 19, 2007 (as it may from time to time be supplemented or amended by one or more indentures supplemental thereto entered into pursuant to the applicable provisions thereof, the “Indenture”), between BMB Munai, Inc. and The Bank of New York (the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

By depositing this duly completed Notice with the above Paying and Conversion Agent for the above Notes (the “Notes”) in accordance with [Section 10.2] [Section 10.5] of the Indenture, the undersigned Holder of the principal amount of Notes specified below [and evidenced by the Note Certificate(s) referred to below] exercises its option to have such principal amount of Notes redeemed in accordance with [Section 10.2] [Section 10.5] of the Indenture on [relevant Put Settlement Date].

Total principal amount and the serial numbers of Notes to which this notice applies:

Payment should be made by:

[U.S. Dollars cheque drawn on a bank in New York City or London and in favor of [name of payee] and mailed at the payee’s risk by uninsured airmail post to [name of addressee] at [addressee’s address].]

OR

[transfer to [details of the relevant account maintained by the payee] with [name and address of the relevant bank].]

If the Note Certificates referred to above are to be returned to the undersigned in accordance with the Indenture, they should be returned by post to:

The undersigned acknowledges that any Note Certificates so returned will be sent by uninsured airmail post at the risk of the registered Holder.

Date: ____________________

 

Your Name: _______________________________________________________________

 

 

 

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(Print your name exactly as it appears on the face of the Note)

 

Social Security or other Taxpayer Identification Number:_____________________________

 

Your Signature: _______________________________________________________________

(Sign exactly as your name appears on the face of the Note)

 

Signature Guarantee*:_________________________________

 

*Participant in a recognized signature guarantee medallion program (or other signature guarantor acceptable to the Trustee).

[To be completed by Paying and Conversion Agent:]

 

 

[Signature and stamp of Paying and Conversion Agent:]

 

 

 

THIS NOTICE WILL NOT BE VALID UNLESS ALL OF THE PARAGRAPHS REQUIRING COMPLETION HAVE BEEN DULY COMPLETED.