EXHIBIT 1.5
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CALPINE CORPORATION
$725,000,000 ($833,750,000 IF THE OPTION TO PURCHASE ADDITIONAL NOTES
IS EXERCISED IN FULL) PRINCIPAL AMOUNT AT MATURITY
CONTINGENT CONVERTIBLE NOTES DUE 2014
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SECOND SUPPLEMENTAL INDENTURE
Dated as of September 30, 2004
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WILMINGTON TRUST COMPANY
Trustee
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TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS
Section 1.01 Definitions ...................................................................................... 1
Section 1.02 Other Definitions ................................................................................ 5
ARTICLE 2
THE NOTES
Section 2.01 Form and Dating .................................................................................. 6
Section 2.02 Registrar, Paying Agent and Conversion Agent ..................................................... 6
Section 2.03 Transfer and Exchange ............................................................................ 7
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01 Mandatory Redemption ............................................................................. 7
Section 3.02 Optional Redemption Upon Conversion .............................................................. 7
Section 3.03 Purchase of Notes at Option of the Holder upon Change of Control ................................. 8
Section 3.04 Effect of Change of Control Purchase Notice ...................................................... 10
Section 3.05 Deposit of Change of Control Purchase Price ...................................................... 11
Section 3.06 Notes Purchased in Part .......................................................................... 12
Section 3.07 Covenant to Comply With Securities Laws Upon Purchase of Notes ................................... 12
Section 3.08 Repayment to the Company ......................................................................... 12
ARTICLE 4
COVENANTS
Section 4.01 Compliance Certificate ........................................................................... 12
Section 4.02 Taxes ............................................................................................ 13
Section 4.03 Stay, Extension and Usury Laws ................................................................... 13
Section 4.04 Corporate Existence .............................................................................. 13
Section 4.05 Issuance of Additional Notes ..................................................................... 14
Section 4.06 Calculations in Respect of Notes ................................................................. 14
ARTICLE 5
MERGER AND CONSOLIDATION OF COMPANY
Section 5.01 Lease of Properties .............................................................................. 14
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default ................................................................................ 14
ARTICLE 7
TRUSTEE
Section 7.01 Rights of Trustee ................................................................................ 15
Section 7.02 Reports by Trustee to Holders of the Notes ....................................................... 15
Section 7.03 Eligibility; Disqualification .................................................................... 15
ARTICLE 8
DEFEASANCE
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Section 8.01 No Defeasance .................................................................................... 16
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent of Holders of Notes .............................................................. 16
Section 9.02 With Consent of Holders of Notes ................................................................. 16
ARTICLE 10
CONVERSION
Section 10.01 Conversion Privilege ............................................................................. 16
Section 10.02 Conversion Procedure ............................................................................. 19
Section 10.03 Taxes on Conversion .............................................................................. 19
Section 10.04 Company to Provide Stock ......................................................................... 20
Section 10.05 Adjustment of Conversion Price ................................................................... 20
Section 10.06 Adjustment for Certain Changes of Control ........................................................ 23
Section 10.07 When No Adjustment Required ...................................................................... 24
Section 10.08 When Adjustment May Be Deferred .................................................................. 24
Section 10.09 Successive Adjustments ........................................................................... 24
Section 10.10 Notice of Adjustment ............................................................................. 24
Section 10.11 Notice of Certain Transactions ................................................................... 25
Section 10.12 Effect of Reclassification, Consolidation, Merger, Share Exchange or Sale on Conversion Privilege 25
Section 10.13 Trustee's Disclaimer ............................................................................. 26
Section 10.14 Voluntary Reduction .............................................................................. 26
Section 10.15 Conversion Value of Notes Tendered ............................................................... 26
ARTICLE 11
Subordination
Section 11.01 Agreement to Subordinate ......................................................................... 28
Section 11.02 Default On Secured Debt .......................................................................... 28
Section 11.03 Liquidation; Dissolution; Bankruptcy ............................................................. 28
Section 11.04 Subrogation ...................................................................................... 30
Section 11.05 Trustee To Effectuate Subordination .............................................................. 30
Section 11.06 Notice By The Company ............................................................................ 30
Section 11.07 Rights Of The Trustee; Holders Of Secured Debt ................................................... 31
Section 11.08 Subordination May Not Be Impaired ................................................................ 31
ARTICLE 12
MISCELLANEOUS
Section 12.01 No Adverse Interpretation of Other Agreements .................................................... 32
Section 12.02 Severability ..................................................................................... 32
Section 12.03 Table of Contents, Headings, etc ................................................................. 32
Section 12.04 Ratification Of Original Indenture ............................................................... 33
Section 12.05 Trustee Not Responsible for Recitals ............................................................. 33
Section 12.06 Performance by Trustee ........................................................................... 33
Section 12.07 Governing Law .................................................................................... 33
EXHIBITS
Exhibit A FORM OF NOTE
Schedule A Table of Additional Shares
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SECOND SUPPLEMENTAL INDENTURE (the "Supplemental Indenture") dated as of
September 30, 2004 between Calpine Corporation (the "Company"), a Delaware
corporation, and Wilmington Trust Company (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Company and the Trustee have entered into an Indenture, dated
as of August 10, 2000, as supplemented by the First Supplemental Indenture,
dated as of September 28, 2000 (as so supplemented, the "Original Indenture"
and, as further supplemented by this Supplemental Indenture, the "Indenture")
which provides, among other things, for unsecured debentures, notes or other
evidences of indebtedness to be issued by the Company from time to time in one
or more series under the Indenture;
WHEREAS, the Original Indenture provides that the Company and the Trustee
may enter into an indenture supplemental to the Original Indenture to establish
the form or terms of Securities (as defined in the Original Indenture) of any
series as provided by Sections 2.1 and 2.3 of the Original Indenture;
WHEREAS, the Board of Directors of the Company has duly adopted
resolutions authorizing the Company to execute and deliver this Supplemental
Indenture;
WHEREAS, pursuant to the terms of the Original Indenture, the Company
desires to enter into this Supplemental Indenture to provide for the
establishment of a new Series of its Securities to be known as its Contingent
Convertible Notes Due 2014 (the "Notes");
WHEREAS, the Company has requested that the Trustee execute and deliver
this Supplemental Indenture and all things necessary to make (i) this
Supplemental Indenture a valid instrument in accordance with its terms, and (ii)
the Securities, when executed by the Company and authenticated and delivered by
the Trustee, the valid obligations of the Company;
NOW THEREFORE, in consideration of the purchase and acceptance of the
Notes by the Holders thereof, and for the purpose of setting forth, as provided
in the Indenture, the form and terms of the Notes, the Company covenants and
agrees with the Trustee as follows:
ARTICLE 1.
DEFINITIONS
Section 1.01 Definitions.
(a) Unless the context requires otherwise:
(i) a term defined in the Original Indenture has the same meaning
when used in this Supplemental Indenture unless the definition of such
term is amended and supplemented pursuant to this Supplemental Indenture;
(ii) a term defined anywhere in this Supplemental Indenture has the
same meaning throughout;
(iii) the singular includes the plural and vice versa;
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(iv) a reference to a Section or Article is to a Section or Article
of this Supplemental Indenture; and
(v) headings are for convenience of reference only and do not affect
interpretation.
(b) the following terms have the meanings given to them in this Section
1.01(b):
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Note or beneficial interests therein, the rules and
procedures of the Depositary, for such Global Note, in each case to the extent
applicable to such transaction and as in effect from time to time.
"Bid Solicitation Agent" means American Stock Transfer and Trust Company
until the Company selects another bank, trust company or similar fiduciary
agent, if any, to serve as Bid Solicitation Agent.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership
interests; and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person, but excluding from
all of the foregoing any debt securities convertible into Capital
Stock, whether or not such debt securities include any right of
participation with Capital Stock.
"Change of Control" means the occurrence of any of the following:
(1) any Person, including any syndicate or group deemed to be a
"person" under Section 13(d)(3) of the Exchange Act, acquires beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of the
Company's Capital Stock entitling the Person to exercise 50% or more of
the total voting power of all shares of the Company's Capital Stock that
is entitled to vote generally in elections of directors, other than an
acquisition by the Company, of any of its Subsidiaries or any of its
employee benefit plans; or
(2) the Company merges or consolidates with or into any other
Person, any merger of another Person into the Company, or the Company
conveys, sells, transfers or leases all or substantially all of its assets
to another Person, other than any transaction:
(a) that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of the Company's Capital
Stock,
(b) pursuant to which the holders of the Company's Common
Stock immediately prior to the transaction have the entitlement to
exercise, directly or indirectly, 50% or more of the total voting power of
all shares of Capital Stock entitled to vote generally in the election of
directors of the continuing or surviving corporation immediately after the
transaction, or
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(c) which is effected solely to change the Company's
jurisdiction of incorporation and results in a reclassification,
conversion or exchange of outstanding shares of the Company's Common Stock
solely into shares of Common Stock of the surviving entity.
"Common Stock" means shares of the Company's Common Stock, $0.001 par
value per share, as they exist on the date of this Supplemental Indenture or any
other shares of Capital Stock of the Company into which the Common Stock shall
be reclassified or changed.
"Common Stock Price" on any date means the closing sale price per share
(or if no closing sale price is reported, the average of the bid and ask prices
or, if more than one in either case, the average of the average bid and the
average ask prices) on such date for the Company's Common Stock as reported in
composite transactions on the principal United States securities exchange on
which the Company's Common Stock is traded or, if its Common Stock is not listed
on a United States national or regional securities exchange, as reported by the
National Association of Securities Dealers Automated Quotation System
("NASDAQ").
"Conversion Agent" means the Agent of the Company pursuant to Section 2.02
hereof.
"Conversion Date" shall have the meaning as specified in Section 10.02
hereof.
"Conversion Price" means $3.85 per share of Common Stock, subject to the
adjustments described in Section 10.05 hereof.
"Conversion Rate" means an amount of shares of Common Stock equal to
$1,000 Principal Amount at Maturity of Notes divided by the Conversion Price,
which shall be approximately 259.7403 per $1,000 Principal Amount at Maturity of
Notes as of the date of this Supplemental Indenture, subject to the adjustments
described in Section 10.05 hereof.
"Fair Market Value" means the value that would be paid by a willing buyer
to a willing seller in a transaction not involving distress or necessity of
either party, determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive evidence of such determination (unless
otherwise provided in this Indenture).
"Global Notes" means, individually and collectively, each of the Global
Securities, substantially in the form of Exhibit A hereto.
"Market Price" means the average determined by the Company of the Common
Stock Price of the shares for the five Trading Day period immediately preceding
and including the third Trading Day prior to the applicable date fixed for the
determination of stockholders entitled to receive any distribution described in
Section 10.05, appropriately adjusted to take into account the occurrence,
during the period commencing on the first of the Trading Days during such five
Trading Day period and ending on such determination date, of any event described
in Section 10.05; subject, however, to the conditions set forth in Section 10.07
and Section 10.08 hereof. If the shares of Common Stock are not listed on The
New York Stock Exchange, then the Market Price shall be determined by the
Company by reference to the Common Stock Price as reported by NASDAQ. In the
absence of such quotations, the Company shall be entitled to determine in good
faith the Market Price by reference to the Common Stock Price on any date on the
basis of such quotations as it considers appropriate.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness (including the Notes).
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"Original Principal Amount" means, with respect to each $1,000 Principal
Amount at Maturity of Notes, $839 per Note.
"Permitted Investments" means the following investments:
(i) any direct obligations of, or obligations fully and unconditionally
guaranteed by, the United States of America, or any agency or instrumentality of
the United States of America, the obligations of which are fully and
unconditionally backed by the full faith and credit of the United States of
America;
(ii) demand and time deposits in, certificates of deposit of, bankers'
acceptances issued by, or federal funds sold by any depository institution or
trust company incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal and/or state
authorities, or incorporated under the laws of any other jurisdiction, so long
as at the time of such investment or contractual commitment providing for such
investment the unsecured commercial paper or other unsecured short-term debt
obligations of such depository institution or trust company have credit ratings
of at least P-1 (or its equivalent) or higher from ▇▇▇▇▇'▇ and A-1 (or its
equivalent) or higher from S&P;
(iii) repurchase obligations with respect to any security described in
clauses (i) or (ii) above, in each case entered into with either (A) a
depository institution or trust company (acting as principal) which in respect
of its short-term unsecured debt has credit ratings of at least P-1 (or its
equivalent) or higher from ▇▇▇▇▇'▇ and A-1 (or its equivalent) or higher from
S&P or (B) a money market fund maintained by a broker which, in respect of its
short-term unsecured debt, has credit ratings of at least P-1 (or its
equivalent) or higher from ▇▇▇▇▇'▇ and A-1 (or its equivalent) or higher from
S&P;
(iv) unsecured debt securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United States of
America or any state thereof which have, at the time of such investment, credit
ratings of at least P-1 (or its equivalent) or higher from ▇▇▇▇▇'▇ and A-1 (or
its equivalent) or higher from S&P;
(v) unsecured commercial paper which has, at the time of such investment,
credit ratings of at least P-1 (or its equivalent) or higher from ▇▇▇▇▇'▇ and
A-1 (or its equivalent) or higher from S&P; and
(vi) investments in money market funds or money market mutual funds which
have, at the time of such investment, credit ratings of at least P-1 (or its
equivalent) or higher from ▇▇▇▇▇'▇ and A-1 (or its equivalent) or higher from
S&P (including such funds for which the Trustee or any of its Affiliates is
investment manager or advisor and for which the Trustee or any of its Affiliates
may receive a fee).
"Principal Amount" means, with respect to each $1,000 Principal Amount at
Maturity of Notes, (i) prior to September 30, 2006, the Original Principal
Amount, (ii) on and following September 30, 2009, the Principal Amount at
Maturity, and (iii) on any date from and including September 30, 2006 to but
excluding September 30, 2009, the Original Principal Amount, plus $0.1469 per
calendar day from and including September 30, 2006 to but excluding such date.
All references to principal of the Securities in the Original Indenture shall be
to the Principal Amount as defined above.
"Principal Amount at Maturity" means, with respect to a Note, the
principal amount at maturity set forth on the face of such Note.
"Prospectus Supplement" means that Prospectus Supplement dated September
28, 2004 relating to the offering of the Notes.
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"S&P" means Standard & Poor's Ratings Group (or, if such entity ceases to
rate the Notes for reasons outside of the control of the Company, the equivalent
investment grade credit rating from any other "nationally recognized statistical
rating organization" (or successor concept) within the meaning of Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act (or successor provision) selected by
the Company as a replacement agency).
"Secured Debt" means any and all existing and future secured Indebtedness
of the Company and any deferrals, renewals or extensions of any such
Indebtedness.
"Subsidiary" means, as applied to any Person, any corporation, limited or
general partnership, trust, association or other business entity of which an
aggregate of at least 50% of the outstanding Voting Stock, or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned by such Person and/or one or more Subsidiaries of such Person.
"Trading Day" means any regular or abbreviated trading day of The New York
Stock Exchange.
"Trading Price" of the Notes on any date of determination means the
average of the secondary market bid quotations per $1,000 Principal Amount at
Maturity of Notes obtained by the Bid Solicitation Agent for $5,000,000
Principal Amount at Maturity of the Notes at approximately 3:30 p.m., New York
City time, on such determination date from three independent nationally
recognized securities dealers the Company selects, which may include the
Underwriter; provided that if at least three such bids cannot reasonably be
obtained by the Bid Solicitation Agent, but two such bids are obtained, then the
average of the two bids shall be used, and if only one such bid can reasonably
be obtained by the Bid Solicitation Agent, this one bid shall be used. If the
Bid Solicitation Agent cannot reasonably obtain at least one such bid or, in the
Company's reasonable judgment, the bid quotations are not indicative of the
secondary market value of the Notes, then the Trading Price of the Notes will be
determined in good faith by the Bid Solicitation Agent, taking into account in
such determination such factors as it, in its sole discretion after consultation
with the Company, deems appropriate.
"Underwriter" means Deutsche Bank Securities Inc.
"Underwriting Agreement" means the Underwriting Agreement between the
Company and the Underwriter dated as of September 28, 2004 relating to the
issuance and sale of the Notes.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the board of
directors of such Person.
Section 1.02 Other Definitions.
Defined in
Term Section
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"Additional Shares".......................................... 10.01
"Change of Control Notice"................................... 3.03
"Change of Control Notice Date".............................. 3.03
"Change of Control Purchase Date"............................ 3.03
"Change of Control Purchase Notice".......................... 3.03
"Change of Control Purchase Price"........................... 3.03
"Conversion Value"........................................... 10.15
"Determination Date"......................................... 10.15
"Effective Date"............................................. 10.06
"Ex-Dividend Date"........................................... 10.01
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Defined in
Term Section
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"Expiration Time"............................................ 10.05
"Five Day Average Closing Stock Price"....................... 10.15
"Net Shares"................................................. 10.15
"Net Share Amount"........................................... 10.15
"Payment Default"............................................ 11.02
"Pre-Dividend Sale Price".................................... 10.05
"Principal Return"........................................... 10.15
"Principal Value Conversion"................................. 10.01
"Purchased Shares"........................................... 10.05
"Quarter".................................................... 10.01
"Redemption Date"............................................ 3.02
"Redemption Price"........................................... 3.02
"Reference Date"............................................. 10.05
"Stock Price"................................................ 10.06
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
The Notes shall be in denominations of $1,000 Principal Amount at Maturity
and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Supplemental Indenture and the Company and
the Trustee, by their execution and delivery of this Supplemental Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Supplemental Indenture, the provisions of this Supplemental Indenture shall
govern and be controlling.
The Notes shall initially be issued in the form of a Global Security
attached as Exhibit A hereto deposited upon issuance with the Trustee as
Custodian for the Depositary and registered in the name of the Depositary or its
nominee. Each Global Security shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it represents the
aggregate Principal Amount at Maturity of outstanding Notes from time to time
endorsed thereon and that the aggregate Principal Amount at Maturity of
outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, repurchases, redemptions or
conversions. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the aggregate Principal Amount at Maturity of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by the Indenture.
Section 2.02 Registrar, Paying Agent and Conversion Agent.
In addition to Section 2.4 of the Original Indenture, the Company shall
maintain an office or agency where Securities may be presented for conversion
("Conversion Agent"). The term "Conversion Agent" includes any additional
conversion agent.
The Company may change any Registrar, Paying Agent or Conversion Agent for
the Notes without notice to any Holder. The Company shall notify the Trustee in
writing of the name and address
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of any Conversion Agent not a party to this Indenture. If the Company fails to
appoint or maintain another entity as Conversion Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Conversion Agent.
The Company initially appoints the Trustee to act as the Registrar, Paying
Agent and Conversion Agent with respect to the Notes.
Section 2.03 Transfer and Exchange.
In addition to Section 2.7 of the Original Indenture, beneficial interests
in a Global Security held by any beneficial owner of Notes may be exchanged by
the Holder for Notes in definitive form upon request, but only upon at least 20
days' prior written notice given to the Trustee by or on behalf of the
Depositary in accordance with Applicable Procedures.
Neither the Company nor the Trustee will be liable for any delay by the
Holder of any Global Note or the Depositary in identifying the beneficial owners
of Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Holder of any Global Note or the
Depositary for all purposes.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01 Mandatory Redemption.
The Company shall not be required to make mandatory redemption or sinking
fund payments with respect to the Notes.
Section 3.02 Optional Redemption Upon Conversion.
The Company shall have the right to redeem, at its option, any Notes
tendered for conversion pursuant to Article 10 hereof if, on the date such Notes
are tendered for conversion, the Company determines, in its sole judgment, that
its then outstanding Indebtedness would prevent it from paying the Principal
Return or delivering the Net Shares when due upon conversion as required by
Section 10.02 hereof; provided that the Company shall not so redeem any Notes
pursuant to this Section 3.02 if an Event of Default shall have occurred and be
continuing (other than an Event of Default that would be cured by such
redemption). The Company shall notify the Holder of such Notes of the Company's
election to redeem such Notes pursuant to this Section 3.02 no later than the
Determination Date in respect of such Notes tendered for conversion. Upon any
such notification of an optional redemption, the Company shall not be required
to pay or deliver, as the case may be, the Principal Return and Net Shares or
any cash in lieu of fractional shares as required by Section 10.02, and payment
or delivery of such Principal Return and Net Shares or cash in lieu of
fractional shares shall be governed by this Section 3.02.
The redemption price for any Notes so redeemed shall be an amount in cash
equal to the Principal Return and an amount of shares of Common Stock equal to
the Net Shares, together with cash in lieu of any fractional shares
(collectively, the "Redemption Price"), in each case in respect of such Notes
tendered for conversion as set forth in Section 10.15. The redemption date for
any such redemption by the Company shall be the seventh Business Day following
the Determination Date in respect of such Notes tendered for conversion (the
"Redemption Date").
No later than 10:00 a.m. (local time in the City of New York) on the
Redemption Date in respect of such Notes, the Company shall deposit with the
Conversion Agent money and shares of Common
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Stock sufficient to pay the Redemption Price on all Notes to be redeemed on that
date. Upon such deposit of the Redemption Price, cash interest will cease to
accrue on such Notes, Principal of such Notes will cease to accrete, such Notes
will cease to be outstanding and all other rights of the Holder of such Notes
will terminate. The Conversion Agent shall promptly return to the Company any
money or shares of Common Stock deposited with the Conversion Agent by the
Company in excess of the amounts necessary to pay the Redemption Price of all
Notes to be redeemed on such date.
Section 3.03 Purchase of Notes at Option of the Holder upon Change of Control.
(a) If a Change of Control occurs, a Holder of Notes will have the right,
at its option, to require the Company to repurchase all of its Notes, or any
portion of the Principal Amount at Maturity thereof at a purchase price equal to
the Principal Amount as of the date of such repurchase plus any accrued and
unpaid cash interest to, but excluding, the date of repurchase (the "Change of
Control Purchase Price"). The Company shall repurchase all such Notes on the
date that is 45 days after the date of the Change of Control Notice (as defined
below) delivered by the Company (the "Change of Control Purchase Date"), subject
to satisfaction by or on behalf of the Holder of the requirements set forth in
Section 3.03(c).
Notwithstanding the foregoing provisions of this Section 3.03, no Holder
shall have the right to require the Company to purchase its Notes upon a Change
of Control if:
(1) the Common Stock Price on The New York Stock Exchange for any
five Trading Days within the period of 10 consecutive Trading Days ending
immediately after the later of the Change of Control or the public
announcement of such event, in the case of a Change of Control relating to
an acquisition of Capital Stock, or the period of 10 consecutive Trading
Days ending immediately before such event, in the case of Change of
Control relating to a merger, consolidation or asset sale, equals or
exceeds 105% of the Conversion Price of the Notes in effect on each of
those Trading Days; or
(2) all of the consideration (excluding cash payments for fractional
shares and cash payments made pursuant to dissenters' appraisal rights) in
a merger or consolidation otherwise constituting a Change of Control above
consists of shares of common stock traded on a national securities
exchange or quoted on the Nasdaq National Market (or will be so traded or
quoted immediately following the merger or consolidation) and as a result
of the merger or consolidation the Notes become convertible into such
common stock.
For purposes of this Section 3.03,
(x) whether a person is a "beneficial owner" shall be determined in
accordance with Rule 13d-3 under the Exchange Act; and
(y) "person" includes any syndicate or group that would be deemed to
be a "person" under Section 13(d)(3) of the Exchange Act.
If the shares of Common Stock are not listed on The New York Stock
Exchange at the relevant time, closing prices and Trading Days shall be
calculated as reported by the NASDAQ.
At least three Business Days before the Change of Control Notice Date (as
defined below), the Company shall deliver an Officer's Certificate to the
Trustee specifying:
(i) the information required by Section 3.03(b); and
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(ii) whether the Company desires the Trustee to give the
Change of Control Notice required by Section 3.03(b).
(b) No later than 30 days after the occurrence of a Change of Control, the
Company shall mail a written notice of the Change of Control (the "Change of
Control Notice" and the date of such mailing, the "Change of Control Notice
Date") by first-class mail to the Trustee and to each Holder (and to beneficial
owners to the extent required by applicable law). The notice shall include a
form of Change of Control Purchase Notice to be completed by the Holder that
wishes to exercise rights under this Section 3.03 and shall state:
(1) briefly, the events causing a Change of Control and the date of
such Change of Control;
(2) the date by which the Change of Control Purchase Notice pursuant
to this Section 3.03 must be given, if a Holder has the right to require
the Company to repurchase Notes pursuant to Section 3.03(a);
(3) the Change of Control Purchase Date, if a Holder has the right
to require the Company to repurchase Notes pursuant to Section 3.03(a);
(4) the Change of Control Purchase Price, if a Holder has the right
to require the Company to repurchase Notes pursuant to Section 3.03(a);
(5) the name and address of the Paying Agent and the Conversion
Agent, if a Holder has the right to require the Company to repurchase
Notes pursuant to Section 3.03(a);
(6) the Conversion Rate and any adjustments thereto;
(7) that Notes must be surrendered to the Paying Agent, at any time
on or prior to the 30th day after the Company delivers its Change of
Control Notice, to collect payment, if a Holder has the right to require
the Company to repurchase Notes pursuant to Section 3.03(a);
(8) that the Change of Control Purchase Price for any Note as to
which a Change of Control Purchase Notice has been duly given will be paid
promptly following the Change of Control Purchase Date as described in
(7), if a Holder has the right to require the Company to repurchase Notes
pursuant to Section 3.03(a);
(9) briefly, the procedures the Holder must follow to exercise
rights under this Section 3.03, if a Holder has the right to require the
Company to repurchase Notes pursuant to Section 3.03(a);
(10) briefly, the conversion rights, if any, of the Notes;
(11) that, unless the Company defaults in making payment of such
Change of Control Purchase Price, cash interest on Notes surrendered for
purchase by the Company will cease to accrue and the Principal Amount will
cease to accrete on and after the Change of Control Purchase Date, if a
Holder has the right to require the Company to repurchase Notes pursuant
to Section 3.03(a); and
(12) the CUSIP numbers of the Notes.
9
Simultaneously with the delivery of the Change of Control Notice to
Holders, the Company shall, or, if the Company has requested that Trustee
deliver the Change of Control Notice to Holders pursuant to Section 3.03(a),
shall cause the Trustee to, at the Company's expense and in the Company's name,
disseminate a press release through any of Dow ▇▇▇▇▇ & Company, Inc., Business
Wire, Bloomberg Business News or Reuters (or if such organizations are not in
existence at the time of issuance of such press release, such other news or
press organization as is reasonably calculated to broadly disseminate the
relevant information to the public) containing this information, and the Company
shall publish the information on the Company's Web site on the World Wide Web or
through such other public medium as the Company may use at that time.
(c) A Holder may exercise its rights specified in Section 3.03(a) upon
delivery of an irrevocable written notice of purchase (a "Change of Control
Purchase Notice") to the Paying Agent at any time on or prior to the 30th day
after the Company delivers its Change of Control Notice, stating:
(1) the certificate number of the Note which the Holder will deliver
to be purchased;
(2) the portion of the Principal Amount at Maturity of the Note
which the Holder will deliver to be purchased, which portion must be
$1,000 Principal Amount at Maturity or an integral multiple thereof; and
(3) that such Note shall be purchased pursuant to the terms and
conditions specified in this Section 3.03.
The delivery of such Note to the Paying Agent with the Change of Control
Purchase Notice (together with all necessary endorsements), at any time on or
prior to the 30th day after the Company delivers its Change of Control Notice,
at the offices of the Paying Agent shall be a condition to the receipt by the
Holder of the Change of Control Purchase Price therefor; provided, however, that
such Change of Control Purchase Price shall be so paid pursuant to this Section
3.03 only if the Note so delivered to the Paying Agent shall conform in all
respects to the description thereof set forth in the related Change of Control
Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.03, a portion of a Note if the Principal Amount at Maturity of such
portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Note also apply to the purchase
of such portion of such Note. Any purchase by the Company contemplated pursuant
to the provisions of this Section 3.03 shall be consummated by the delivery of
the consideration to be received by the Holder on the Change of Control Purchase
Date.
(d) The Company shall deposit cash at the time and in the manner as
provided in Section 3.05, sufficient to pay the aggregate Change of Control
Purchase Price of all Notes to be purchased pursuant to this Section 3.03.
Section 3.04 Effect of Change of Control Purchase Notice.
Upon receipt by the Paying Agent of the Change of Control Purchase Notice
and the Note specified in Section 3.03(c), the Holder of the Note in respect of
which such Change of Control Purchase Notice was given shall thereafter be
entitled to receive solely the Change of Control Purchase Price with respect to
such Note. Such Change of Control Purchase Price shall be paid to such Holder,
subject to receipts of funds by the Paying Agent, promptly following the the
Change of Control Purchase Date with respect to such Note (provided the
conditions in Section 3.03(c) have been satisfied). If the Paying Agent
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holds money sufficient to pay the Change of Control Purchase Price of the Notes
on the Business Day following the Change of Control Purchase Date, then:
(1) the Notes will cease to be outstanding;
(2) cash interest will cease to accrue and the Principal Amount will
cease to accrete; and
(3) all other rights of the Holder of the Notes will terminate.
This will be the case whether or not book-entry transfer of the Notes is made or
whether or not the Notes are delivered to the Paying Agent.
Notes in respect of which a Change of Control Purchase Notice has been
given by the Holder thereof may not be converted pursuant to the provisions
hereof on or after the date of the delivery of such Change of Control Purchase
Notice unless, such Change of Control Purchase Notice has first been validly
withdrawn as specified in the following paragraph.
A Change of Control Purchase Notice may be withdrawn by means of a written
notice of withdrawal delivered to the office of the Paying Agent in accordance
with the Change of Control Purchase Notice at any time prior to the close of
business on the last Business Day prior to the Change of Control Purchase Date,
specifying:
(1) the certificate number, if any, of the Note in respect of which
such notice of withdrawal is being submitted;
(2) the Principal Amount at Maturity of the Note with respect to
which such notice of withdrawal is being submitted; and
(3) the Principal Amount at Maturity, if any, of such Note which
remains subject to the original Purchase Notice, and which has been or
will be delivered for purchase by the Company.
There shall be no purchase of any Notes pursuant to Section 3.03 if there
has occurred (prior to, on or after the giving, by the Holders of such Notes, of
the required Change of Control Purchase Notice) and is continuing an Event of
Default (other than a default in the payment of the Change of Control Purchase
Price with respect to such Notes). The Paying Agent will promptly return to the
respective Holders thereof any Notes (x) with respect to which a Change of
Control Purchase Notice has been withdrawn in compliance with this Indenture, or
(y) held by it during the continuation of an Event of Default (other than a
default in the payment of the Change of Control Purchase Price with respect to
such Notes) in which case, upon such return, the Change of Control Purchase
Notice with respect thereto shall be deemed to have been withdrawn.
Section 3.05 Deposit of Change of Control Purchase Price.
Prior to 10:00 a.m. (local time in the City of New York) on the Change of
Control Purchase Date, the Company shall deposit with the Trustee or with the
Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of
them is acting as the Paying Agent, shall segregate and hold in trust as
provided in the Indenture) an amount of cash (in immediately available funds if
deposited on such Business Day) sufficient to pay the aggregate Change of
Control Purchase Price of all the Notes or portions thereof which are to be
purchased as of the Change of Control Purchase Date.
11
Section 3.06 Notes Purchased in Part.
Any certificated Note which is to be purchased only in part shall be
surrendered at the office of the Paying Agent (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such ▇▇▇▇▇▇'s attorney duly authorized in writing) and the Company
shall execute and the Trustee shall, upon receipt of a written order of the
Company signed by two Officers, authenticate and deliver to the Holder of such
Note, without service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to,
and in exchange for, the portion of the principal amount of the Note so
surrendered which is not purchased.
Section 3.07 Covenant to Comply With Securities Laws Upon Purchase of Notes.
When making any offers to purchase pursuant to the provisions of Section
3.03 hereof (if such offer or purchase constitutes an "issuer tender offer" for
purposes of Rule 13e-4 (which term, as used herein, includes any successor
provision thereto) under the Exchange Act at the time of such offer or
purchase), the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 (or any
successor provision) under the Exchange Act, (ii) file the related Schedule TO
(or any successor schedule, form or report) under the Exchange Act, and (iii)
otherwise comply with all Federal and state securities laws so as to permit the
rights and obligations under Section 3.03 to be exercised in the time and in the
manner specified in Section 3.03.
Section 3.08 Repayment to the Company.
The Trustee and the Paying Agent shall return to the Company any cash that
remains unclaimed, together with interest, if any, thereon held by them for the
payment of the Change of Control Purchase Price; provided, however, that to the
extent that the aggregate amount of cash deposited by the Company pursuant to
Section 3.05 exceeds the aggregate Change of Control Purchase Price of the Notes
or portions thereof which the Company is obligated to purchase as of the Change
of Control Purchase Date, then, unless otherwise agreed in writing with the
Company, promptly after the Business Day following the Change of Control
Purchase Date, the Trustee shall return any such excess to the Company together
with interest, if any, thereon. Prior to such return, any such excess funds held
by the Paying Agent shall be invested in cash or Permitted Investments as may be
directed by the Company from time to time.
ARTICLE 4.
COVENANTS
Section 4.01 Compliance Certificate.
The following shall apply in lieu of Section 3.5 of the Original
Indenture with respect to the Notes:
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officer's Certificate prescribed by the TIA stating that
a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default has occurred, describing all
such Defaults or Events of Default of which he or she may have knowledge and
what action
12
the Company is taking or proposes to take with respect thereto) and that to the
best of his or her knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal of or interest, if any, on
the Notes is prohibited or if such event has occurred, a description of the
event and what action the Company is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 hereof or Article III or IV of the Original
Indenture, if any such violation has occurred, specifying the nature and period
of existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge
of any such violation.
(c) So long as any of the Notes are outstanding, the Company shall deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officer's Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
Section 4.02 Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all stamp taxes and other duties, if any, which may be
imposed by the United States or any political subdivision thereof or taxing
authority thereof or therein with respect to the issuance of the Notes. The
Company shall not be required to make any payment with respect to any other tax,
assessment or governmental charge imposed by any government or any political
subdivision thereof or taxing authority thereof or therein.
Section 4.03 Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.04 Corporate Existence.
Subject to Article IV of the Original Indenture and Article 5 hereof, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect:
(1) its corporate existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of
the Company or any such Subsidiary; and
(2) the rights (charter and statutory), licenses and franchises of
the Company and its Subsidiaries; provided, however, that the Company
shall not be required to preserve any such right, license or franchise, or
the corporate, partnership or other existence of any of its
13
Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business
of the Company and its Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the
Notes.
Section 4.05 Issuance of Additional Notes.
Upon each exercise by the Underwriter of its over-allotment option to
purchase Option Securities (as defined in the Underwriting Agreement) in
accordance with the Underwriting Agreement, the Company shall cause to be issued
and authenticated, in accordance with the terms of the Underwriting Agreement
and Section 2.3 of the Original Indenture, additional Notes in such Principal
Amount at Maturity relating to the Option Securities; provided, however, that in
no case shall the aggregate Principal Amount at Maturity of any such additional
Notes issued upon all exercises by the Underwriter of its over-allotment option
to purchase Option Securities exceed $108.75 million.
Section 4.06 Calculations in Respect of Notes.
The Company shall provide a schedule of all calculations called for under
the Notes and this Indenture to the Trustee and the Conversion Agent, and each
of the Trustee and Conversion Agent is entitled to rely upon the accuracy of the
Company's calculations without independent verification. The Trustee and/or the
Conversion Agent shall forward the Company's calculations to any Holder of Notes
upon request of that Holder.
ARTICLE 5.
MERGER AND CONSOLIDATION OF COMPANY
Section 5.01 Lease of Properties.
Notwithstanding anything in the Original Indenture to the contrary, the
Company shall not, directly or indirectly, lease all or substantially all of its
properties or assets, in one or more related transactions, to any other Person.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.
In addition to the Events of Default set forth in the Original Indenture,
each of the following shall constitute an Event of Default with respect to the
Notes:
(1) default in payment of accrued cash interest at maturity, when
the same becomes due and payable;
(2) default in payment of the Change of Control Purchase Price or
Redemption Price when the same becomes due and payable;
(3) default in the payment of the Principal Return (and cash in lieu
of fraction shares) or failure to deliver the Net Shares, in each case
when due, unless the Notes in respect of which such Principal Return (and
cash in lieu of fractional shares) and Net Shares were due have been
called for redemption in accordance with Section 3.02 hereof;
14
(4) default by the Company in the payment of the principal of any
bond, debenture, note or other evidence of the Company's Indebtedness, in
each case for money borrowed, or in the payment of principal under any
mortgage, indenture, agreement or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness of
the Company for money borrowed, which default for payment of principal is
individually or in an aggregate principal amount exceeding $50,000,000 (or
its equivalent in any other currency or currencies) when such indebtedness
becomes due and payable (whether at maturity, upon redemption or
acceleration or otherwise), if such default shall continue unremedied or
unwaived for more than 30 days after the expiration of any grace period or
extension of the time for payment applicable thereto.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice of any event which with the giving of notice
or the lapse of time or both would become an Event of Default under clause (c)
of Section 5.1 of the Original Indenture or clause (4) of this Section 6.01.
However, notwithstanding Section 5.1 of the Original Indenture, the Company need
not deliver such written notice within 30 days after the occurrence thereof of
any event which with the giving of notice or the lapse of time or both would
become an Event of Default under clauses (e) or (f) of Section 5.1 of the
Original Indenture.
ARTICLE 7.
TRUSTEE
Section 7.01 Rights of Trustee.
(a) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(b) In no event shall the Trustee be required to take notice of any
default or breach hereof or any Event of Default hereunder, except for Events of
Default specified in Section 6.01 hereof and/or Section 5.1(a) and/or 5.1(b) of
the Original Indenture, unless and until the Trustee shall have received from a
Holder of a Note or from the Company express written notice of the circumstances
constituting the breach, default or Event of Default and stating that said
circumstances constitute an Event of Default hereunder.
Section 7.02 Reports by Trustee to Holders of the Notes.
(a) The Trustee shall transmit by mail all reports as required by
TIA Section 313(c).
Section 7.03 Eligibility; Disqualification.
Notwithstanding Section 6.10 of the Original Indenture, the Notes shall at
all times have a Trustee that is a corporation organized and doing business
under the laws of the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $100.0 million as set forth in its most
recent published annual report of condition.
In addition to Section 6.10 of the Original Indenture, the Notes shall at
all times have a Trustee who satisfies the requirements of TIA Section
310(a)(1), (2) and (5).
15
ARTICLE 8.
DEFEASANCE
Section 8.01 No Defeasance.
Sections 7.2, 7.3 and 7.4 of the Original Indenture shall not apply to the
Notes.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent of Holders of Notes.
In addition to the purposes set forth in Section 8.1 of the Original
Indenture, the Company and the Trustee may amend this Indenture or the Notes or
enter into an indenture or indentures supplement hereto (which shall conform to
the provisions of the Trust Indenture Act as then in effect) without notice to
or the consent of any Holder of a Note:
(1) to provide for uncertificated Notes in place of certificated
Notes or to provide for bearer Notes; or
(2) to conform the text of the Indenture or the Notes to any
provisions of the Description of the Notes section of the Prospectus
Supplement to the extent that such provision of the Description of the
Notes section of the Prospectus Supplement was intended to be a verbatim
recitation of a provision of the Indenture or the Notes.
Section 9.02 With Consent of Holders of Notes.
In addition to clauses (a) through (f) of Section 8.2 of the Original
Indenture, without the consent of each Holder affected, an amendment or
supplement under Section 8.2 of the Original Indenture may not:
(1) reduce the rate of accretion of principal on any Note or method
of calculating the Principal Amount of any Note;
(2) make any change in any conversion right to the detriment of a
Holder; or
(3) make a change in the percentage of Principal Amount at Maturity
of the Notes necessary to waive compliance with any provision of the
Indenture or to make any change in Section 8.2 of the Original Indenture,
as supplemented by this provision, for modification.
ARTICLE 10.
CONVERSION
Section 10.01 Conversion Privilege.
(a) Subject to the provisions of this Article 10, a Holder of a Note may
convert such Note into cash and Common Stock equal to the Conversion Value in
accordance with Section 10.15, if any of the following conditions are satisfied
and only during the periods set forth in this Section 10.01:
16
(1) during any calendar quarter (the "Quarter") commencing after the
date of issuance of the Notes, if the Common Stock Price for at least 20
Trading Days in the period of 30 consecutive Trading Days ending on the
last Trading Day of the Quarter immediately preceding the Quarter in which
the conversion occurs (appropriately adjusted to take into account the
occurrence, during such 30 consecutive Trading Day period, of any event
requiring adjustment of the Conversion Price under this Indenture) is more
than 120% of the Conversion Price on such 30th Trading Day;
(2) at any time following September 30, 2013;
(3) (A) during the five Trading Day period immediately after a
period of five consecutive Trading Days in which the Trading Price of the
Notes for each such Trading Day in such period was less than 95% of the
product of (x) the Common Stock Price on such Trading Day multiplied by
(y) the Conversion Rate on such Trading Day.
(B) Notwithstanding the foregoing, if on the date of any
conversion pursuant to Section 10.01(a)(3)(A), the Common Stock
Price on such date is greater than the Conversion Price on such date
but less than 120% of the Conversion Price on such date, then the
Conversion Value a Holder of Notes will be entitled to receive will
be equal to the Principal Amount of the Notes held by such Holder as
of the Conversion Date plus accrued and unpaid cash interest to the
Conversion Date (such a conversion, a "Principal Value Conversion")
and the number of Net Shares (and any cash in lieu of fractional
shares) to be delivered upon a Principal Value Conversion will be
determined in accordance with Section 10.15; and provided further
that, in place of the Five Day Average Closing Stock Price, such
number of Net Shares will be calculated using an amount equal to the
greater of (i) the Conversion Price on the Conversion Date and (ii)
the Common Stock Price on the Conversion Date;
(4) during the periods set forth in Section 10.01(c) upon (i) a
distribution to all or substantially all holders of Common Stock of
rights, warrants or options entitling them to subscribe for or purchase,
for a period expiring within 60 days of the date of such distribution,
shares of Common Stock at a price less than the Common Stock Price on the
Trading Day immediately preceding the date of declaration of such
distribution or (ii) a distribution to all or substantially all holders of
Common Stock evidences of Company indebtedness, rights or warrants to
purchase or subscribe for Capital Stock or other securities of the
Company, or assets, which distribution has a per share value that exceeds
12.5% of the Common Stock Price on the Trading Day immediately preceding
the declaration date of such distribution; provided that, the Holder shall
have no right to convert any Note pursuant to Section 10.01(c) hereof if
the Holder of a Note otherwise participates in the issuance or
distribution described in this Section 10.01(a)(4) without conversion of
such Holder's Notes; or
(5) (A) during the period set forth in clause (B) below, if the
Company is party to a consolidation, merger, share exchange, sale of all
or substantially all of its assets or other similar transaction pursuant
to which the Common Stock is subject to conversion into shares of stock
(other than Common Stock), other securities or property (including cash)
subject to Section 10.12; provided that if such conversion occurs after
the effective date of such transaction, the Holder will receive on
conversion the consideration determined in accordance with Section 10.12.
(B) The Notes shall be convertible pursuant to clause (A)
above at any time from and after the date that is 15 days prior to the
date of the anticipated effective time (as publicly
17
announced by the Company) of such transaction until and including the date
that is 15 days after the actual effective date of such transaction.
(C) If (i) a Holder elects to convert its Notes pursuant to
this Article upon the occurrence of a transaction described clause (5)(A)
above, (ii) such transaction also constitutes a Change of Control
(regardless of whether a Holder has the right to require the repurchase of
Notes pursuant to Section 3.03) and (iii) 10% or more of the consideration
for the Common Stock (valued as set forth in Section 10.06 hereof)
consists of cash, other property or securities that are not traded or
scheduled to be traded or scheduled to be traded immediately following
such transaction on a United States national securities exchange or the
Nasdaq National Market, then, for purposes of determining the Conversion
Value, the Conversion Price in respect of such Notes shall be decreased
such that the Conversion Rate shall be increased by an additional number
of shares of Common Stock (the "Additional Shares") determined as set
forth in Section 10.06.
(b) In the case of any distribution described in Section 10.01(a)(3), the
Bid Solicitation Agent shall have no obligation to determine the Trading Price
of the Notes unless the Company has requested such determination in writing, and
the Company shall have no obligation to make such request unless a Holder of the
Notes provides the Company with reasonable evidence that the Trading Price of
the Notes on any date would be less than 95% of the product of (x) the Common
Stock Price on such date and (y) the Conversion Rate then in effect. Upon
receipt of such reasonable evidence, the Company shall instruct the Bid
Solicitation Agent in writing to determine the Trading Price beginning on the
next Trading Day and on each successive Trading Day until the Trading Price of
the Notes is greater than or equal to 95% of the product of the Common Stock
Price and the Conversion Rate. The Company shall make the calculations described
in Section 10.01(a)(3) hereof, using the Trading Price of the Notes provided by
the Bid Solicitation Agent and will advise the Trustee (or Conversion Agent, as
the case may be) within a reasonable time (and, in any event, no later than
three Business Days prior to the Conversion Date) of any determination of the
Trading Price of the Notes.
(c) In the case of the foregoing Section 10.01(a)(4)(i) and Section
10.01(a)(4)(ii), the Company shall cause a notice of such distribution to be
filed with the Trustee and the Conversion Agent and to be mailed to each Holder
of Notes no later than 20 days prior to the Ex-Dividend Date for such
distribution. Once the Company has given such notice, Holders may surrender
their Notes for conversion by delivering the Notes to the Conversion Agent at
any time thereafter until the earlier of the close of business on the Business
Day prior to the Ex-Dividend Date or the Company's announcement that such
distribution will not take place; provided that, the Holder shall have no right
to convert any Note pursuant to this Section 10.01(c) if the Holder of a Note
otherwise participates in the distribution described in either Section
10.01(a)(4)(i) or Section 10.01(a)(4)(ii) without conversion of such Holder's
Notes. The "Ex-Dividend Date" for any such distribution means the date
immediately prior to the commencement of "ex-dividend" trading for such
distribution on The New York Stock Exchange or such other national securities
exchange or The Nasdaq Stock Market or similar system of automated dissemination
of quotations of securities prices on which the Common Stock is then listed or
quoted.
(d) A Holder may convert a portion of a Note equal to $1,000 Principal
Amount at Maturity or any integral multiple thereof. Provisions of this
Indenture that apply to conversion of all of a Note also apply to conversion of
a portion of a Note. A Note in respect of which a Holder has delivered a Change
of Control Purchase Notice pursuant to Section 3.03 may not be converted unless
such Change of Control Purchase Notice is withdrawn pursuant to Section 3.04.
(e) A Holder of Notes is not entitled to any rights of a holder of Common
Stock until, and only to the extent that, such Holder has converted its Notes
into Common Stock.
18
Section 10.02 Conversion Procedure.
(a) To convert a Note, a Holder must satisfy the requirements of this
Article 10 and (i) complete and manually sign the irrevocable conversion notice
on the back of the Note and deliver such notice to the Conversion Agent, (ii) if
the Notes are in certificated form, deliver the Note to the Conversion Agent,
(iii) furnish appropriate endorsements and transfer documents if required by the
Registrar or the Conversion Agent, (iv) pay any transfer or other tax, if
required by Section 10.03 and/or (v) if the Note is held in book-entry form,
complete and deliver to the Depositary appropriate instructions pursuant to the
Applicable Procedures. The later of (x) the date on which the Holder satisfies
all of the foregoing requirements and (y) the Determination Date is the
"Conversion Date." As soon as practicable after the Conversion Date and in any
event within four Business Days thereof, the Company shall deliver to the Holder
through the Conversion Agent (1) cash in the amount calculated in accordance
with Section 10.15 and (2) either (A) a certificate for or (B) a book-entry
notation of the number of whole shares of Common Stock issuable upon the
conversion and cash in lieu of any fractional shares pursuant to Section 10.15.
(b) The Person in whose name the Note is registered shall be deemed to be
a stockholder of record on the Conversion Date; provided that no surrender of a
Note on any date when the stock transfer books of the Company shall be closed
shall be effective to constitute the Person or Persons entitled to receive the
shares of Common Stock upon such conversion as the record holder or holders of
such shares of Common Stock on such date, but such surrender shall be effective
to constitute the Person or Persons entitled to receive such shares of Common
Stock as the record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are open
(subject to the provisions of the next paragraph of this Section 10.02);
provided that such conversion shall be at the Conversion Price in effect on the
date that such Note shall have been surrendered for conversion, as if the stock
transfer books of the Company had not been closed. Upon conversion of a Note,
such Person shall no longer be a Holder of such Note.
(c) No payment or adjustment will be made for accrued regular cash
interest, on a converted Note or for dividends or distributions on shares of
Common Stock issued upon conversion of a Note, but if any Holder surrenders a
Note for conversion between the record date for the payment of an installment of
interest and the next interest payment date, then, notwithstanding such
conversion, the interest, payable on such interest payment date shall be paid to
the Holder of such Note on such interest payment date. In such event, such Note,
when surrendered for conversion, must be accompanied by delivery of a check
payable to the Conversion Agent in an amount equal to the interest, payable on
such interest payment date on the portion so converted. If such payment does not
accompany such Note, the Note shall not be converted; provided that no such
check shall be required if such Note is surrendered for conversion on the
interest payment date. If the Company defaults in the payment of interest,
payable on the interest payment date, the Conversion Agent shall repay such
funds to the Holder.
(d) Upon surrender of a Note that is converted in part, the Company shall
execute, and the Trustee shall, upon receipt of a written order of the Company
signed by two Officers, authenticate and deliver to the Holder, a new Note equal
in principal amount to the unconverted portion of the Note surrendered.
Section 10.03 Taxes on Conversion.
If a Holder submits a Note for conversion, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon the conversion. However, the Holder shall pay any such tax
which is due because the Holder requests the shares to be issued in a name other
than the Holder's name. The Conversion Agent may refuse to deliver the
certificates
19
representing the shares of Common Stock being issued in a name other than the
Holder's name until the Conversion Agent receives a sum sufficient to pay any
tax which will be due because the shares are to be issued in a name other than
the Holder's name. Nothing herein shall preclude any income tax withholding
required by law or regulations.
Section 10.04 Company to Provide Stock.
The Company has reserved shares of Common Stock to permit delivery of
shares of Common Stock upon conversion of the Notes up to an assumed Five Day
Average Closing Stock Price, and from time to time as may be necessary shall
reserve out of its authorized but unissued shares of Common Stock a sufficient
number of additional shares of Common Stock to permit delivery of shares of
Common Stock upon the conversion of the Notes in full.
All shares of Common Stock delivered upon conversion of the Notes shall be
newly issued shares or treasury shares, shall be duly and validly issued and
fully paid and nonassessable, shall be free from preemptive rights and free of
any lien or adverse claim, and shall have the same rights as all of the other
outstanding shares of the Company's Common Stock. The Company will endeavor
promptly to comply with all federal and state securities laws regulating the
offer and delivery of shares of Common Stock upon conversion of Notes, if any,
and will list or cause to have quoted such shares of Common Stock on each
national securities exchange or in the over-the-counter market or such other
market on which the shares of Common Stock are then listed or quoted.
Section 10.05 Adjustment of Conversion Price.
The Conversion Price shall be adjusted (without duplication) from time to
time by the Company as follows:
(a) In case the Company shall pay a dividend or make a distribution on the
Common Stock payable exclusively in Common Stock, the Conversion Price in effect
at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be decreased by dividing such Conversion Price by a fraction
of which the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
and the numerator shall be the sum of (i) such number of shares and (ii) the
total number of shares constituting such dividend or other distribution, such
decrease to become effective immediately after the opening of business on the
day following the date fixed for such determination. For the purposes of this
paragraph (a), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. In the event that
such dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not occurred.
(b) In case the Company shall pay or make a dividend or other distribution
on its Common Stock consisting exclusively of, or shall otherwise issue to all
holders of its Common Stock, rights, warrants or options, in each case entitling
the holders thereof to subscribe for or purchase shares of Common Stock at a
price per share less than the Market Price per share of the Common Stock on the
date fixed for the determination of stockholders entitled to receive such
rights, warrants or options, the Conversion Price in effect at the opening of
business on the day following the date fixed for such determination shall be
decreased by dividing such Conversion Price by a fraction of which the
denominator shall be the sum of (i)
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the number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus (ii) the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
Market Price and the numerator shall be the sum of (i) the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus (ii) the number of shares of Common Stock so offered for
subscription or purchase, such decrease to become effective immediately after
the opening of business on the day following the date fixed for such
determination; provided, however, that no adjustment shall be made if Holders of
the Notes may participate in the transaction on a basis and with notice that the
Company's Board of Directors deems to be fair and appropriate. To the extent
that rights are not so issued or shares of Common Stock are not so delivered
after the expiration of such rights, warrants or options, the Conversion Price
shall be readjusted to the Conversion Price which would then be in effect if
such date fixed for the determination of stockholders entitled to receive such
rights, warrants or options, had not been fixed. For the purposes of this
paragraph (b), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company.
(c) In case the Company shall declare a cash dividend or distribution to
all or substantially all of the holders of Common Stock, the Conversion Price
shall be decreased so that the Conversion Price shall equal the price determined
by multiplying the Conversion Price in effect immediately prior to the record
date for such dividend or distribution by a fraction,
(i) the numerator of which shall be the average of the Common Stock
Prices for the three consecutive Trading Days ending on the date
immediately preceding the Ex-Dividend Date for such dividend or
distribution (the "Pre-Dividend Sale Price"), minus the full amount of
such cash dividend or distribution, to the extent payable in cash,
applicable to one share of Common Stock, and
(ii) the denominator of which shall be the Pre-Dividend Sale Price,
such adjustment to become effective immediately after the record date for such
dividend or distribution; provided, that no adjustment to the Conversion Price
or the ability of a Holder of a Note to convert will be made pursuant to this
Section 10.05(c) if the Company provides that Holders of Notes will participate
in such cash dividend or distribution on an as-converted basis without
conversion; provided further, that if the numerator of the foregoing fraction is
less than $1.00 (including a negative amount), then in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion, in addition to the Common Stock issuable upon
such conversion (and any cash in lieu of fractional shares), the amount of cash
such Holder would have received had such Holder converted its Note on the record
date for such dividend or distribution at the Conversion Rate and for the
Conversion Value in effect on such record date. If such dividend or distribution
is not so paid or made, the Conversion Price shall be adjusted to the Conversion
Price that would then be in effect if such dividend or distribution had not been
declared.
(d) Subject to the last sentence of this paragraph (d), in case the
Company shall, by dividend or otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness, shares of any class or series of Capital
Stock, cash or assets (including securities, but excluding any rights, warrants
or options referred to in paragraph (b) of this Section 10.05 and any cash
dividend or distribution referred to in paragraph (c) of this Section 10.05),
the Conversion Price shall be decreased so that the same shall equal the price
determined by dividing the Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price decrease contemplated by this paragraph
(d) by a fraction of which the denominator shall be the Market Price per share
of the Common Stock on the date fixed for the determination of stockholders
entitled to receive such distribution (the "Reference Date") less the Fair
Market Value, on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and/or assets so distributed
applicable to one share of Common Stock and the numerator shall be such Market
Price per share of the Common Stock, such decrease to become effective
immediately prior to the opening of business on the day following the Reference
Date; provided that if the Fair Market Value of the portion of the evidences of
indebtedness, shares of capital stock, cash and/or assets so
21
distributed applicable to one share of Common Stock shall be greater than the
Market Price per share of Common Stock, then in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion, in addition to the Common Stock issuable upon
such conversion (and any cash in lieu of fractional shares), the amount of
evidences of indebtedness, shares of capital stock, cash and/or assets so
distributed that such Holder would have received had such Holder converted its
Note on the record date for such dividend or distribution at the Conversion Rate
and for the Conversion Value in effect on such record date; and provided,
further, that no adjustment shall be made if all Holders of Notes are entitled
to participate in such transactions. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not occurred. For purposes of this paragraph (d),
any dividend or distribution that includes shares of Common Stock or rights,
warrants or options to subscribe for or purchase shares of Common Stock shall be
deemed instead to be (i) a dividend or distribution of the evidences of
indebtedness, shares of Capital Stock, cash and/or assets other than such shares
of Common Stock or such rights or warrants (making any Conversion Price decrease
required by this paragraph (d)) immediately followed by (ii) a dividend or
distribution of such shares of Common Stock or such rights, warrants or options
(making any further Conversion Price decrease required by paragraph (a) or (b)
of this Section 10.05), except any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the meaning of
paragraph (a) of this Section 10.05.
(e) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the Business Day following the day upon which such
subdivision becomes effective shall be proportionately decreased and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such increase
or decrease, as the case may be, to become effective immediately after the
opening of business on the Business Day following the day upon which such
subdivision or combination becomes effective.
(f) In case the Company pays to holders of Common Stock in respect of a
tender or exchange offer, other than an odd-lot offer, by the Company or any of
its Subsidiaries for Common Stock to the extent that the offer involves
aggregate consideration that, together with (1) any cash and the Fair Market
Value of any other consideration payable in respect of any tender offer by the
Company or any of its Subsidiaries for shares of Common Stock consummated within
the preceding 12 months not triggering a Conversion Price adjustment and (2)
all-cash distributions to all or substantially all holders of the Company's
Common Stock made within the preceding 12 months not triggering a Conversion
Price adjustment, exceeds an amount equal to 12.5% of the market capitalization
of Common Stock on the expiration date of the tender offer, the Conversion Price
shall be decreased so that the same shall equal the price determined by dividing
the Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price decrease contemplated by this Section 10.05(f) by a fraction of
which the denominator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the last time tenders of
exchanges may be made pursuant to such tender or exchange offer (the "Expiration
Time") multiplied by the Market Price per share of the Common Stock on the
Trading Day next succeeding the Expiration Time and the numerator shall be the
sum of (x) the Fair Market Value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock outstanding
(less any Purchased Shares) at the Expiration Time and the Market Price per
share of the Common Stock on the Trading Day next succeeding the Expiration
22
Time, such decrease to become effective immediately prior to the opening of
business on the Business Day following the Expiration Time.
In any case in which this Section 10.05 shall require that an adjustment
be made immediately following a record date established for purposes of this
Section 10.05, the Company may elect to defer (but only until five Business Days
following the filing by the Company with the Trustee of the certificate
described in Section 10.10) issuing to the holder of any Note converted after
such record date the shares of Common Stock issuable upon such conversion over
and above the shares of Common Stock issuable upon such conversion only on the
basis of the Conversion Price prior to adjustment; and, in lieu of the shares
the issuance of which is so deferred, the Company shall issue or cause its
transfer agents to issue due bills or other appropriate evidence of the right to
receive such shares.
Section 10.06 Adjustment for Certain Changes of Control.
The number of Additional Shares in connection with an adjustment of the
Conversion Price as set forth in Section 10.01(a)(5)(C) shall be determined by
reference to the table attached as Schedule A hereto, based on the date on which
the corporate transaction becomes effective (the "Effective Date") and the stock
price paid per share of Common Stock (valued as set forth in the next paragraph)
in the corporate transaction (the "Stock Price"); provided that if the Stock
Price is between two Stock Price amounts in the table or the Effective Date is
between two Effective Dates in the table, the number of Additional Shares will
be determined by a straight-line interpolation between the number of Additional
Shares set forth for the higher and lower Stock Price amounts and the two dates,
as applicable, based on a 365-day year.
The Stock Price per share of Common Stock shall be valued as follows:
(i) if holders of the Common Stock receive only cash in the
corporate transaction, the Stock Price shall be the cash amount paid per
share of the Common Stock, and
(ii) in all other cases, the Stock Price shall be the average of the
Common Stock Price on the five Trading Days prior to but not including the
Effective Date.
Notwithstanding the foregoing, (i) if the Stock Price is equal to or
greater than $20 or less than $2.75 (subject in each case to adjustment as
described below), the number of Additional Shares shall be zero and (ii) in no
event may the total number of shares of Common Stock issuable upon conversion
exceed approximately 305.0909 per $1,000 Principal Amount at Maturity of Notes,
subject to adjustments in the same manner as the Conversion Price as set forth
in Section 10.05. The maximum amount of Additional Shares payable shall be 45.4
per $1,000 Principal Amount at Maturity of Notes, subject to adjustments on the
same basis.
The Stock Prices set forth in the first row of the table (i.e., column
headers) in Schedule A hereto and set forth in the proviso at the first sentence
of the first paragraph of this Section will be adjusted as of any date on which
the Conversion Price of the Notes is adjusted pursuant to Section 10.05. The
adjusted Stock Prices will equal the Stock Prices applicable immediately prior
to such adjustment, multiplied by a fraction, the numerator of which is the
Conversion Price immediately prior to the adjustment giving rise to the Stock
Price adjustment and the denominator of which is the Conversion Price as so
adjusted. The number of Additional Shares will be adjusted in the same manner as
the Conversion Price as set forth in Section 10.05.
23
Section 10.07 When No Adjustment Required.
No adjustment of the Conversion Price shall be made:
(a) upon the issuance of any shares of Common Stock pursuant to any
present or future plan providing for the reinvestment of dividends or interest
payable on securities of the Company and the investment of additional optional
amounts in shares of Common Stock under any plan,
(b) upon the issuance of any shares of Common Stock or options or rights
to purchase those shares pursuant to any present or future employee, director or
consultant benefit plan or program of the Company,
(c) upon the issuance of any shares of Common Stock pursuant to any
option, warrant, right or exercisable, exchangeable or convertible security
outstanding as of the date the Notes were first issued,
(d) upon the issuance of any rights, any distribution of separate
certificates representing the rights, any exercise or redemption of any rights
or any termination or invalidation of the rights, pursuant to the Company's
stockholders rights plan, or
(e) for a change in the par value or no par value of the shares of Common
Stock.
There shall also be no adjustment of the Conversion Price in case of
the issuance of any Common Stock (or securities convertible into or exchangeable
for Common Stock), except as specifically described above.
Section 10.08 When Adjustment May Be Deferred.
No adjustment in the Conversion Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Conversion Price
(other than an adjustment described in Section 10.05(f)). Any adjustments that
are not made under this Section 10.08 shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article 10
shall be made to the nearest cent, with one-half cent rounded up, or to the
nearest 1/1,000th of a share, with 1/500th of a share being rounded up, as the
case may be.
Section 10.09 Successive Adjustments.
After an adjustment to the Conversion Price under this Article 10, any
subsequent event requiring an adjustment under this Article 10 shall cause an
adjustment to the Conversion Price as so adjusted.
Section 10.10 Notice of Adjustment.
Whenever the Conversion Price is adjusted, the Company shall promptly mail
to Holders of Notes a notice of the adjustment and concurrently file with the
Trustee and the Conversion Agent such notice and a certificate from the
Company's independent public accountants briefly stating the facts requiring the
adjustment and the manner of computing such adjustment. The certificate shall be
conclusive evidence that such adjustment is correct. Neither the Trustee nor any
Conversion Agent shall be under any duty or responsibility with respect to any
such notice and certificate (or the receipt of such notice and certificate or
with the knowledge of any adjustment absent such notice and certificate) except
to exhibit the same to any Holder desiring inspection thereof.
24
Section 10.11 Notice of Certain Transactions.
The Company shall mail to Holders of Notes and file with the Trustee
and/or the Conversion Agent a notice stating the proposed record date for a
dividend or distribution or the proposed effective date of a subdivision,
combination, reclassification, consolidation, merger, binding share exchange,
transfer, liquidation or dissolution, if any of the following occur:
(a) the Company takes any action that would require an adjustment in the
Conversion Price pursuant to Section 10.05 (unless no adjustment is to occur
pursuant to Section 10.06); or
(b) the Company takes any action that would require a supplemental
indenture pursuant to Section 10.12; or
(c) there is a liquidation or dissolution of the Company.
The Company shall file and mail such notice at least 15 days before the
applicable date of any such transaction. Failure to file or mail the notice or
any defect in it shall not affect the validity of the transaction.
Section 10.12 Effect of Reclassification, Consolidation, Merger, Share Exchange
or Sale on Conversion Privilege.
If any of the following shall occur: (i) any reclassification or change of
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination); (ii) any consolidation, combination, merger or
share exchange to which the Company is a party other than a merger in which the
Company is the continuing corporation and which does not result in any
reclassification of, or change (other than a change in name, or par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination) in, outstanding shares of Common Stock;
or (iii) any sale or conveyance of all or substantially all of the assets of the
Company; then the Company, or such successor or purchasing corporation, as the
case may be, shall, as a condition precedent to such reclassification, change,
consolidation, merger, share exchange, sale or conveyance, execute and deliver
to the Trustee a supplemental indenture providing that the Holder of each Note
then outstanding shall have the right to convert such Note into the kind and
amount of shares of Capital Stock and other securities and property (including
cash) receivable upon such reclassification, change, consolidation, merger,
share exchange, sale or conveyance by a holder of the number of shares of Common
Stock deliverable upon conversion of such Note immediately prior to such
reclassification, change, consolidation, merger, share exchange, sale or
conveyance. Such supplemental indenture shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article 10. If, in
the case of any such consolidation, merger, share exchange, sale or conveyance,
the stock or other securities and property (including cash) receivable thereupon
by a holder of Common Stock includes shares of Capital Stock or other securities
and property of a corporation other than the successor or purchasing
corporation, as the case may be, in such consolidation, merger, share exchange,
sale or conveyance, then such supplemental indenture shall also be executed by
such other corporation and shall contain such additional provisions to protect
the interests of the Holders of the Notes as the Board of Directors of the
Company shall reasonably consider necessary by reason of the foregoing. The
provision of this Section 10.12 shall similarly apply to successive
consolidations, mergers, share exchanges, sales or conveyances. Notwithstanding
the foregoing, a distribution by the Company to all or substantially all holders
of its Common Stock for which an adjustment to the Conversion Price or provision
for conversion of the Notes may be made pursuant to Section 10.05 shall
25
not be deemed to be a sale or conveyance of all or substantially all of the
assets of the Company for purposes of this Section 10.12.
In the event the Company shall execute a supplemental indenture pursuant
to this Section 10.12, the Company shall promptly file with the Trustee an
Opinion of Counsel stating that such supplemental indenture is authorized or
permitted by this Indenture and an Officer's Certificate briefly stating (a) the
reasons therefor, (b) the kind or amount of shares of stock or securities or
property (including cash) receivable by Holders of the Notes upon the conversion
of their Notes after any such reclassification, change, consolidation, merger,
share exchange, sale or conveyance, (c) any adjustment to be made with respect
thereto and (d) that all conditions precedent have been complied with.
Section 10.13 Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under this Article
10 should be made, how it should be made or what such adjustment should be made,
but may accept as conclusive evidence of the correctness thereof, and shall be
protected in relying upon, the Officer's Certificate with respect thereto, which
the Company is obligated to file with the Trustee pursuant to Section 10.10. The
Trustee shall not be accountable for and makes no representation as to the
validity or value of any securities or assets issued upon conversion of Notes,
and the Trustee shall not be responsible for the Company's failure to comply
with any provisions of this Article 10. Each Conversion Agent (other than the
Company or an Affiliate of the Company) shall have the same protection under
this Section 10.13 as the Trustee.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 10.12, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officer's
Certificate with respect thereto, which the Company is obligated to file with
the Trustee pursuant to Section 10.12 of this Indenture.
Section 10.14 Voluntary Reduction.
The Company from time to time may decrease the Conversion Price by any
amount at any time for at least 20 days, so long as the decrease is irrevocable
during such 20-day period. Whenever the Conversion Price is decreased, the
Company shall mail to Holders of Notes and file with the Trustee and the
Conversion Agent a notice of the decrease. The Company shall mail the notice at
least 15 days before the date the decreased Conversion Price takes effect. The
notice shall state the decreased Conversion Price and the period during which it
will be in effect. A voluntary decrease of the Conversion Price does not change
or adjust the Conversion Price otherwise in effect for purposes of Section
10.15.
Section 10.15 Conversion Value of Notes Tendered.
(a) Subject to certain exceptions described in Sections 10.01(a)(3) and
10.01(a)(4), Holders tendering the Notes for conversion shall be entitled to
receive, upon conversion of such Notes, cash and shares of Common Stock, the
value of which (the "Conversion Value") shall be equal to the product of:
(1) (A) the aggregate Principal Amount at Maturity of Notes to be
converted divided by 1,000 multiplied by (B) the Conversion Rate
(including Additional Shares, if any); and
(2) the average of the Common Stock Price for the five consecutive
Trading Days (appropriately adjusted to take into account the occurrence
during such period of stock splits and similar events) including and
immediately following the second Trading Day following the day the Notes
are tendered for conversion (the "Five Day Average Closing Stock Price").
26
(b) Subject to certain exceptions described below and under Sections
10.01(a)(3) and 10.01(a)(4), the Company shall deliver the Conversion Value to
converting holders as follows:
(1) an amount in cash (the "Principal Return") equal to the lesser
of (a) the aggregate Conversion Value of the Notes to be converted and (b)
the aggregate Principal Amount of Notes to be converted as of the date
tendered for conversion;
(2) if the aggregate Conversion Value of the Notes to be converted
is greater than the aggregate Principal Return of the Notes to be
converted, an amount in shares (the "Net Shares"), determined as set forth
below, equal to the difference between such aggregate Conversion Value and
such aggregate Principal Return (the "Net Share Amount"); and
(3) an amount paid in cash, determined as set forth below, for any
fractional shares of Common Stock.
The number of Net Shares to be paid shall be determined by dividing the
Net Share Amount by the Five Day Average Closing Stock Price. Holders of Notes
will not receive a fractional share upon conversion of a Note. Instead, the
Holder will receive cash for the value of the fractional share. The cash payment
for fractional shares shall be based on the Five Day Average Closing Stock
Price.
The Conversion Value, Principal Return, number of Net Shares and Net Share
Amount shall be determined by the Company at the end of the fifth consecutive
Trading Day including and immediately following the second Trading Day after the
day the Notes are tendered for conversion (the "Determination Date").
(c) The Company shall pay the Principal Return and cash for fractional
shares and deliver the Net Shares, if any, as promptly as practicable after the
Conversion Date, but in no event later than four Business Days thereafter,
subject to Section 3.02. Delivery of the Principal Return, Net Shares and cash
in lieu of fractional shares shall be deemed to satisfy the Company's obligation
to pay the Principal Amount at Maturity of the Notes, as well as accrued cash
interest payable on the Notes, except as described below. Accrued cash interest
shall be deemed paid in full rather than canceled, extinguished or forfeited.
The Company shall not adjust the Conversion Price to account for the accrued
cash interest. Except as described in the following sentence, upon conversion of
any Notes on a date that is not an interest payment date, Holders will not be
entitled to receive any additional cash payment representing accrued and unpaid
cash interest for the period from the immediately preceding interest payment
date to the Conversion Date with respect to the converted Notes and such cash
interest will be deemed paid in full. Nonetheless, if Notes are converted after
a regular record date and prior to the opening of business on the next interest
payment date, including the date of maturity, Holders of such Notes, at the
close of business on the next regular record date shall receive the interest
payable on such Notes on the corresponding interest payment date notwithstanding
the conversion.
(d) If an Event of Default has occurred and is continuing (other than a
Default in a cash payment upon conversion of the Notes), the Company may not pay
cash upon conversion of any Notes (other than cash in lieu of fractional shares)
and instead will make payment only through the delivery of shares of Common
Stock. The number of shares of Common Stock to be delivered will be equal to (A)
the aggregate Principal Amount at Maturity of Notes to be converted divided by
1,000 multiplied by (B) the Conversion Rate.
(e) Neither the Trustee nor the Conversion Agent has any duty to determine
or calculate the Conversion Value, Principal Return, number of Net Shares, the
Net Share Amount of any other computation required under this Article 10, all of
which shall be determined by the Company (or the Bid
27
Solicitation Agent, as the case may be) in accordance with the provisions of
this Indenture and the Trustee and Conversion Agent shall not be under any
responsibility to determine the correctness of any such determinations and/or
calculations and may conclusively rely on the correctness thereof.
ARTICLE 11.
SUBORDINATION
Section 11.01 Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Notes by such
▇▇▇▇▇▇'s acceptance thereof likewise covenants and agrees, that all Notes shall
be issued subject to the provisions of this Article 11; and each Holder of a
Note, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions. The payment by the Company of
the principal of, premium, if any, interest and other Obligations with respect
to all Notes issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated and junior in right of payment to the prior payment
in full in cash of principal of (and premium, if any), interest and all other
Obligations with respect to all Secured Debt, whether outstanding at the date of
this Supplemental Indenture or thereafter incurred; provided, however, that no
provision of this Article 11 shall prevent the occurrence of any Default or
Event of Default hereunder.
Section 11.02 Default On Secured Debt.
In the event and during the continuation of any default by the Company in
the payment of principal, premium, if any, interest on or any other Obligation
relating to, any Secured Debt when the same becomes due and payable (a "Payment
Default"), whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, and such Payment Default continues
beyond the period of grace, if any, specified in the instrument evidencing such
Secured Debt, then unless and until such Payment Default shall have been cured
or waived or shall have ceased to exist or all Secured Debt and all Obligations
relating thereto have been paid in full in cash (and in the event that the
maturity of any Secured Debt has been accelerated because of a default, the
holders of all Secured Debt outstanding have been paid in full in cash), then no
direct or indirect payment or distribution (in cash, property, securities, by
set-off or otherwise) shall be made or agreed to be made with respect to the
principal of (including redemption payments), premium, if any, or interest on,
or any other Obligation relating to, the Notes or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the Notes.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 11.02, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to the holders of Secured Debt,
or their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Secured Debt may have been issued, as
their respective interests may appear, but only to the extent that the holders
of the Secured Debt (or their representative or representatives or a trustee)
notify the Trustee in writing within 180 days of such payment of the amounts
then due and owing to the holders of such Secured Debt and only the amounts
specified in such notice to the Trustee shall be paid to the holders of such
Secured Debt.
Section 11.03 Liquidation; Dissolution; Bankruptcy.
Upon any direct or indirect payment by or on behalf of the Company or
direct or indirect distribution of assets of the Company of any kind or
character, whether in cash, property or securities, by set-off or otherwise, to
creditors upon any dissolution or winding up or liquidation or reorganization of
28
the Company or assignment for the benefit of creditors or marshaling of assets,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all amounts (including principal, premium, if any, and
interest) due or to become due upon all Secured Debt shall first be paid in full
in cash, or such payment thereof provided for in money in accordance with its
terms, before any payment or distribution is made on account of the principal
(and premium, if any), interest or any other Obligation relating to the Notes;
and upon any such dissolution or winding up or liquidation or reorganization,
any direct or indirect payment by the Company, or direct or indirect payment or
distribution (in cash, property, securities, by set-off or otherwise) to which
the Holders of the Notes or the Trustee would be entitled, except for the
provisions of this Article 11, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Holders of the Notes or by the Trustee under
this Indenture if received by them or it, directly to the holders of Secured
Debt (pro rata to such holders on the basis of the respective amounts of Secured
Debt held by such holders, as calculated by the Company) or their representative
or representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing such Secured Debt may have been issued, as
their respective interests may appear, to the extent necessary to pay such
Secured Debt in full, in cash, after giving effect to any concurrent payment or
distribution to or for the holders of such Secured Debt, before any such payment
or distribution is made to the Holders of Notes or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, by set-off or otherwise, prohibited by the foregoing,
shall be received by the Trustee or the Holders of the Notes before all Secured
Debt is paid in full in cash, or provision is made for such payment in cash in
accordance with its terms, such payment or distribution shall be held in trust
for the benefit of and shall be paid over or delivered to the holders of Secured
Debt or their representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing such Secured
Debt may have been issued, and their respective interests may appear, as
calculated by the Company, for application to the payment of all Secured Debt
remaining unpaid to the extent necessary to pay such Secured Debt in full in
cash in accordance with its terms, after giving effect to any concurrent payment
or distribution to or for the holders of such Secured Debt.
For purposes of this Article 11, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article 11 with respect to
the Notes to the payment of all Secured Debt which may at the time be
outstanding; provided that (i) such Secured Debt is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Secured Debt are not, without the consent
of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company with or into,
another Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an entirety
to another Person upon the terms and conditions provided for in Article IV of
the Original Indenture and subject to Section 5.01 shall not be deemed a
dissolution, winding up, liquidation or reorganization for the purposes of this
Section 11.03 if such other Person shall, as a part of such consolidation,
merger, conveyance, or transfer, comply with the conditions stated in Article IV
of the Original Indenture. Nothing in Section 11.02 or this Section 11.03 shall
apply to claims of, or payments to, the Trustee under or pursuant to Section 6.7
of the Original Indenture.
29
Section 11.04 Subrogation.
Subject to the payment in full in cash of all Secured Debt, the rights of
the Holders of the Notes shall be subrogated to the rights of the holders of
such Secured Debt to receive payments or distributions of cash, property or
securities of the Company, as the case may be, applicable to such Secured Debt
until the principal of (and premium, if any) and interest on the Notes shall be
paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Secured Debt of any cash, property or
securities to which the Holders of the Notes or the Trustee would be entitled
except for the provisions of this Article 11, and no payment over pursuant to
the provisions of this Article 11, to or for the benefit of the holders of such
Secured Debt by Holders of the Notes or the Trustee, shall, as between the
Company, its creditors other than holders of Secured Debt, and the Holders of
the Notes, be deemed to be a payment by the Company to or on account of such
Secured Debt. It is understood that the provisions of this Article 11 are and
are intended solely for the purposes of defining the relative rights of the
Holders of the Notes, on the one hand, and the holders of such Secured Debt on
the other hand.
Nothing contained in this Article 11 or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as between the Company, its creditors
other than the holders of Secured Debt, and the Holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Notes the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Holders of
the Notes and creditors of the Company, as the case may be, other than the
holders of Secured Debt, nor shall anything herein or therein prevent the
Trustee or the Holder of any Note from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article 11 of the holders of such Secured Debt in
respect of cash, property or securities of the Company, as the case may be,
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article 11, the Trustee, subject to the provisions of Section 6.2 of the
Original Indenture, and the Holders of the Notes, shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Notes, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders of the Secured
Debt and other indebtedness of the Company, as the case may be, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 11; provided that such
court, trustee, receiver, agent or other Person has been apprised of, or the
order, decree or certificate makes reference to, the provisions of this Article.
Section 11.05 Trustee To Effectuate Subordination.
Each Holder of Notes by such ▇▇▇▇▇▇'s acceptance thereof authorizes and
directs the Trustee on such ▇▇▇▇▇▇'s behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article 11 and appoints the Trustee as such ▇▇▇▇▇▇'s attorney-in-fact for any
and all such purposes.
Section 11.06 Notice By The Company.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment of monies to
or by the Trustee in respect of the Notes pursuant to the provisions of this
Article 11. Notwithstanding the provisions of this Article 11 or any
30
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment of monies to or by the Trustee in respect of the Notes pursuant to the
provisions of this Article 11, unless and until the Trustee shall have received
written notice thereof at the Corporate Trust Office of the Trustee from the
Company or a holder or holders of Secured Debt or from any trustee therefor or
representative thereof; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 6.2 of the Original Indenture,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section 11.06 at least two Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of (and premium, if any) or
interest on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purposes for which they were received, and
shall not be affected by any notice to the contrary which may be received by it
within two Business Days prior to such date.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Secured Debt (or a
trustee or representative on behalf of such holder) to establish that such
notice has been given by a holder of such Secured Debt or a trustee or
representative on behalf of any such holder or holders. In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Secured Debt to participate in any
payment or distribution pursuant to this Article 11, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Secured Debt held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the right of such Person under this Article 11, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment or distribution.
Section 11.07 Rights Of The Trustee; Holders Of Secured Debt.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article 11 in respect of any Secured Debt at any time held by
it, to the same extent as any other holder of Secured Debt, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder. With
respect to the holders of Secured Debt of the Company, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are set
forth in this Article 11, and no implied covenants or obligations with respect
to the holders of such Secured Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of such Secured Debt and, subject to the provisions of Section 6.2 of
the Original Indenture, the Trustee shall not be liable to any holder of such
Secured Debt if it shall pay over or deliver to Holders of Notes, the Company or
any other Person money or assets to which any holder of such Secured Debt shall
be entitled by virtue of this Article 11 or otherwise.
Section 11.08 Subordination May Not Be Impaired.
(a) No right of any present or future holder of any Secured Debt to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
(b) Without in any way limiting the generality of the foregoing paragraph,
the holders of Secured Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or
31
the Holders of the Notes, without incurring responsibility to the Holders of the
Notes and without impairing or releasing the subordination provided in this
Article 11 or the obligations hereunder of the Holders of the Notes to the
holders of Secured Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Secured Debt, or otherwise amend or supplement in any manner such
Secured Debt or any instrument evidencing the same or any agreement under which
such Secured Debt is outstanding; (ii) sell, exchange, release or otherwise deal
with any property pledged, mortgaged or otherwise securing such Secured Debt;
(iii) release any Person liable in any manner for the collection of such Secured
Debt; and (iv) exercise or refrain from exercising any rights against the
Company and any other Person.
(c) The subordination provisions of this Article 11 shall continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Secured Debt is, pursuant to applicable law, avoided,
recovered, or rescinded or must otherwise be restored or returned by any holder
of Secured Debt, whether as a "voidable preference," "fraudulent conveyance,"
"fraudulent transfer," or otherwise, all as though such payment or performance
had not been made.
(d) If, upon any proceeding referred to in Section 11.03, the Trustee does
not file a claim in such proceeding prior to fifteen Business Days before the
expiration of the time to file such claim, the holders of Secured Debt or their
agent may file such claim on behalf of the Holders of the Notes.
(e) The subordination provisions contained herein are solely for the
benefit of the holders from time to time of Secured Debt and their
representatives, assignees and beneficiaries and may not be rescinded, canceled,
amended or modified in any way other than, as to any holder of Secured Debt,
pursuant to an amendment or modification that is permitted by the documentation
relating to the Secured Debt applicable to such holder.
ARTICLE 12.
MISCELLANEOUS
Section 12.01 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.02 Severability.
In case any provision in this Supplemental Indenture or in the Notes is
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 12.03 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
32
Section 12.04 Ratification Of Original Indenture.
The Original Indenture, as supplemented by this Supplemental Indenture, is
in all respects ratified and confirmed, and this Supplemental Indenture shall be
deemed part of the Original Indenture in the manner and to the extent herein and
therein provided.
Section 12.05 Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
Supplemental Indenture.
Section 12.06 Performance by Trustee.
The Trustee, for itself and its successors accepts the trusts under the
Original Indenture as amended by this Supplemental Indenture, and agrees to
perform the same, but only upon the terms and conditions set forth in the
Original Indenture, including, without limitation, the terms and provisions
defining and limiting the liability and responsibility of the Trustee.
Section 12.07 Governing Law.
This Supplemental Indenture and each Note shall be governed by and
construed in accordance with the laws of the State of New York.
[Signatures on following page]
33
SIGNATURES
Dated as of September 30, 2004
CALPINE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
WILMINGTON TRUST COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Authorized Signer
34
EXHIBIT A
[Face of Note]
THIS NOTE IS ISSUED IN GLOBAL FORM AND REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") OR A NOMINEE THEREOF.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO THE
COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE REGISTERED FORM IN ACCORDANCE WITH THE TERMS HEREOF AND OF THE
INDENTURE (AS DEFINED BELOW), THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF
DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.
A-1
CALPINE CORPORATION
$[ ] PRINCIPAL AMOUNT AT MATURITY OF
CONTINGENT CONVERTIBLE NOTES DUE 2014
No. ___ Principal Amount at Maturity $_________
CUSIP: ▇▇▇▇▇▇▇▇▇
ISIN: US131347BM73
Calpine Corporation, a Delaware corporation, promises to pay to Cede & Co., or
registered assigns, the Principal Amount (as defined in the Indenture referred
to on the reverse side of this Note) in Dollars on September 30, 2014.
Interest Payment Dates: March 30 and September 30, except that no interest will
be paid on or accrue for the interest periods corresponding to the March 30 and
September 30, 2007, 2008 and 2009 Interest Payment Dates.
Record Dates: March 15 and September 15
Additional provisions of this Note are set forth on the reverse hereof.
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IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by
facsimile by its duly authorized officers.
Date: September 30, 2004
CALPINE CORPORATION
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Dated: September 30, 2004
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
Wilmington Trust Company, as Trustee, certifies that this is one of the Notes
referred to in the Indenture.
By: Dated:
----------------------------------------- --------------------
Authorized Officer
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[Back of Note]
$[ ] Principal Amount at Maturity of Contingent Convertible Notes due 2014
Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
(1) INTEREST. Calpine Corporation, a Delaware corporation (such
corporation and its successors and assigns under the Indenture referred to
below, being herein called the "Company"), promises to pay cash interest
on the Principal Amount at Maturity of this Note at 6% per annum from
September 30, 2004 until maturity, except that no cash interest will be
paid on or accrue for the interest periods corresponding to the March 30
and September 30, 2007, 2008, and 2009 Interest Payment Dates. Instead,
the principal amount of the Notes shall increase as set forth in the
Indenture. The Company shall pay cash interest semi-annually in arrears on
March 30 and September 30 of each year, commencing March 30, 2005, or if
any such day is not a Business Day, on the next succeeding Business Day
(each, an "Interest Payment Date"), except as set forth in this paragraph.
Cash interest on the Notes shall accrue (except as set forth in this
paragraph) from the most recent date to which cash interest has been paid
or, if no cash interest has been paid, from the date of issuance; provided
that if there is no existing Default in the payment of cash interest, and
if this Note is authenticated between a record date referred to on the
face hereof and the next succeeding Interest Payment Date, cash interest
shall accrue from such next succeeding Interest Payment Date. The Company
shall pay cash interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time on demand at a rate that is 1% per annum in excess
of the rate then in effect; it shall pay cash interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of cash interest (without regard to any applicable
grace periods) from time to time on demand at the same rate to the extent
lawful. Cash interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
(2) METHOD OF PAYMENT. The Company shall pay cash interest on the
Notes (except defaulted interest) to the Persons who are registered
Holders of Notes at the close of business on the March 15 or September 15
next preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date, except
as provided in Section 2.13 of the Original Indenture with respect to
defaulted interest. Holders must surrender Notes to a Paying Agent to
collect principal payments. The Notes shall be payable as to principal,
premium, if any, and cash interest at the office or agency of the Company
maintained for such purpose within or without the City and State of New
York, or, at the option of the Company, payment of cash interest may be
made by check mailed to the Holders at their addresses set forth in the
register of Holders; provided that payment by wire transfer of immediately
available funds shall be required with respect to principal of and cash
interest, premium on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
(3) PAYING AGENT, CONVERSION AGENT AND REGISTRAR. Initially,
Wilmington Trust Company, the Trustee under the Indenture, shall act as
Paying Agent, Conversion Agent and Registrar. The Company may change any
Paying Agent, Conversion Agent or Registrar without prior notice to any
Holder. The Company or any of its Subsidiaries may act in any such
capacity.
A-4
(4) INDENTURE. The Company issued the Notes under an Indenture dated
as of August 10, 2000, as supplemented by the First Supplemental Indenture
dated as of September 28, 2000, and as further supplemented by the Second
Supplemental Indenture dated as of September 30, 2004 (as so supplemented,
the "Indenture") between the Company and the Trustee. The Notes are
unsecured general obligations of the Company. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code
Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern
and be controlling.
(6) MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
(7) REPURCHASE AT OPTION OF HOLDER. If a Change of Control occurs,
each Holder of Notes shall have the right to require the Company to
repurchase all or any part (equal to $1,000 Principal Amount at Maturity
or an integral multiple of $1,000) of that ▇▇▇▇▇▇'s Notes pursuant to the
terms set forth in the Indenture. The Company shall deliver to each
holder, that has delivered to the Paying Agent an irrevocable written
notice of purchase and the Notes to be repurchased, a payment in cash
equal the Change of Control Purchase Price as set forth in the Indenture.
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder as required by the Indenture.
(8) CONVERSION. Upon satisfaction of the conditions set forth in
Section 10.01(a) of the Indenture, a Holder of a Note may convert any
portion of the Principal Amount at Maturity of any Note that is an
integral multiple of $1,000 into cash and fully paid and non-assessable
shares (calculated as to each conversion to the nearest 1/1,000th of a
share) of Common Stock in accordance with the provisions of Section 10.15
of the Indenture. Such conversion right shall commence on the initial
issuance date of the Notes and expire at the close of business on the
Business Day immediately preceding the date of Maturity, subject, in the
case of conversion of any Global Note, to any Applicable Procedures. The
Conversion Price shall, as of the date of the Indenture, initially be
$3.85. The Conversion Rate shall, as of the date of the Indenture,
initially be approximately 259.7403 per $1,000 Principal Amount at
Maturity of Notes. The Conversion Rate will be adjusted under the
circumstances specified in the Indenture.
(9) SUBORDINATION. The Notes shall be subordinated to Secured Debt
to the extent and in the manner provided for in the Indenture.
(10) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 Principal Amount at
Maturity and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company
may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Notes during the period between a record date and the
corresponding Interest Payment Date.
(11) DEFEASANCE. The Company may not terminate some or all of its
obligations under the Notes and the Indenture.
A-5
(12) PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes, except that cash interest (other
than defaulted interest) will be paid to the person that was the
registered Holder on the relevant record date for such payment of cash
interest.
(13) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes voting as a single class, and any existing
default or compliance with any provision of the Indenture or the Notes may
be waived with the consent of the Holders of a majority in Principal
Amount at Maturity of the then outstanding Notes voting as a single class.
Without the consent of any Holder of a Note, the Indenture or the Notes
may be amended or supplemented as set forth in the Indenture.
(14) DEFAULTS AND REMEDIES. Events of Default shall be as set forth
in the Indenture. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in Principal Amount at Maturity of
the then outstanding Notes may declare all the Notes to be due and
payable. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding
Notes shall become due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in
the Indenture.
(15) TRUSTEE DEALINGS WITH COMPANY. Subject to the provisions of the
Trust Indenture Act, the Trustee, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.
(16) NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, of the Company as such, shall not have any liability for any
obligations of the Company under the Notes, the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
(17) AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
(18) ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
(19) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use
CUSIP numbers in notices of repurchase as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed
thereon.
A-6
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
Calpine Corporation
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Attention: Investor Relations
A-7
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
-----------------------------------
(Insert assignee's legal name)
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. 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).
A-8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 3.03 of the Indenture, state the amount you elect to
have purchased:
$_______________ Principal Amount at Maturity
Date:
------------
Your Signature:
------------------------------------
(Sign exactly as your name
appears on the face of this Note)
Tax Identification No.:
---------------------------
Signature Guarantee*:
----------------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-9
FORM OF CONVERSION NOTICE
TO: CALPINE CORPORATION
WILMINGTON TRUST COMPANY
The undersigned registered owner of the attached Note hereby irrevocably
exercises the option to convert the attached Note, or the portion thereof below
designated, into the Conversion Value in accordance with the terms of the
Indenture referred to in the attached Note. Capitalized terms used herein but
not defined herein shall have the meanings ascribed to such terms in the
Indenture.
PLEASE NOTE: You may only convert the attached Note upon satisfaction of
one of the conditions set forth in Section 10.01 of the Indenture. If you are
converting the attached Note upon satisfaction of the condition set forth in
Section 10.01(a)(3), please provide, with this Conversion Notice, reasonable
evidence that the Trading Price of the Note is less than 95% of the product of
(x) the Common Stock Price and (y) the Conversion Rate in effect.
Upon conversion of your Note, you will receive the Conversion Value in
cash and Common Stock of the Company in accordance with Article 10 of the
Indenture.
To convert only part of the attached Note, state the Principal Amount at
Maturity to be converted (which must be $1,000 or an integral multiple of
$1,000):
$
----------------------------------
If you want the stock certificate (if any) made out in another person's
name, fill in the form below:
--------------------------------------------------------------------------------
(Insert other person's social security or tax ID no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type other person's name, address and zip code)
Date: Signed:
-------------------- ----------------------
(Sign exactly as your name appears on the other side of this
Security. The Signature(s) must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Note registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended)
Signature Guarantee:
---------------------------
A-10
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
Principal Amount at
Maturity of
Amount of decrease in Amount of increase in this Global Note
Principal Amount at Principal Amount at following such Signature of authorized
Maturity of Maturity of decrease officer of Trustee or
Date of Exchange this Global Note this Global Note (or increase) Custodian
---------------- ---------------- ---------------- ------------- ---------
* This schedule should be included only if the Note is issued in global form.
A-11
Schedule A
Table of Additional Shares
STOCK PRICE
EFFECTIVE DATE $2.75 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $10.00 $15.00 $20.00
-------------------- ----- ----- ------ ----- ----- ------ ----- ------ ----- ----- ----- ------ ------ ------
September 30, 2004.. 45.4 41.9 31.8 24.7 19.6 15.7 12.7 10.3 8.4 6.9 5.6 1.9 0.0 0.0
September 30, 2005.. 38.6 32.7 24.0 18.1 13.8 10.7 8.4 6.6 5.3 4.2 3.3 0.8 0.0 0.0
September 30, 2006.. 26.3 21.3 14.0 9.1 5.7 3.4 1.9 0.9 0.3 0.0 0.0 0.0 0.0 0.0
September 30, 2007.. 35.5 29.6 20.9 14.8 10.4 7.2 4.9 3.2 1.9 1.1 0.5 0.0 0.0 0.0
September 30, 2008.. 45.4 40.2 30.0 22.8 17.4 13.3 10.2 7.7 5.8 4.3 3.1 0.2 0.0 0.0
September 30, 2009.. 45.4 45.4 41.1 32.7 26.4 21.6 17.8 14.8 12.3 10.3 8.6 3.4 0.1 0.0
September 30, 2010.. 45.4 45.4 35.9 28.5 23.0 18.7 15.4 12.7 10.6 8.8 7.3 2.8 0.0 0.0
September 30, 2011.. 44.0 38.3 29.6 23.4 18.8 15.2 12.5 10.3 8.5 7.0 5.8 2.1 0.0 0.0
September 30, 2012.. 32.8 28.3 21.7 17.0 13.6 11.0 8.9 7.3 6.0 4.9 4.0 1.3 0.0 0.0
September 30, 2013.. 18.9 16.1 12.0 9.3 7.4 5.9 4.8 3.9 3.2 2.6 2.1 0.5 0.0 0.0
September 30, 2014.. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
a-1