Exhibit 4.1
XOMA LTD.
6.50% Convertible Senior Notes due 2012
__________________________
INDENTURE
Dated as of February 7, 2005
__________________________
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
TRUSTEE
__________________________
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.....................................................1
Section 1.02. Other Definitions...............................................7
Section 1.03. Incorporation by Reference of Trust Indenture Act...............8
Section 1.04. Rules of Construction...........................................9
Section 1.05. Acts of Holders.................................................9
ARTICLE 2
THE NOTES
Section 2.01. Designation Amount and Issue of Notes..........................10
Section 2.02. Form of Notes..................................................10
Section 2.03. Execution and Authentication...................................11
Section 2.04. Note Registrar, Paying Agent and Conversion Agent..............11
Section 2.05. Paying Agent to Hold Money and Notes in Trust..................12
Section 2.06. Noteholder Lists...............................................12
Section 2.07. Transfer and Exchange; Restrictions on Transfer; Depositary....12
Section 2.08. Replacement Notes..............................................20
Section 2.09. Outstanding Notes; Determination of Holders' Action............20
Section 2.10. Temporary Notes................................................21
Section 2.11. Cancellation...................................................21
Section 2.12. Persons Deemed Owners..........................................22
Section 2.13. CUSIP Numbers..................................................22
Section 2.14. Default Interest...............................................22
ARTICLE 3
REDEMPTION AND REPURCHASE
Section 3.01. Company's Right to Redeem.....................................22
Section 3.02. Notice of Optional Redemption; Selection of Notes.............23
Section 3.03. Payment of Notes Called for Redemption by the Company.........24
Section 3.04. Conversion Arrangement on Call for Redemption.................25
Section 3.05. Purchase of Notes at Option of the Holder Upon Fundamental
Change......................................................26
Section 3.06. Effect of Fundamental Change Purchase Notice..................31
Section 3.07. Deposit of Fundamental Change Purchase Price..................32
Section 3.08. Notes Purchased in Part.......................................33
Section 3.09. Covenant to Comply with Securities Laws Upon Purchase of
Notes.......................................................33
Section 3.10. Repayment to the Company......................................33
i
ARTICLE 4
COVENANTS
Section 4.01. Payment of Principal, Premium, Interest on the Notes..........34
Section 4.02. Reports by the Company........................................34
Section 4.03. Compliance Certificate........................................34
Section 4.04. Further Instruments and Acts..................................35
Section 4.05. Maintenance of Office or Agency...............................35
Section 4.06. Delivery of Certain Information...............................35
Section 4.07. Existence.....................................................35
Section 4.08. Maintenance of Properties.....................................35
Section 4.09. Payment of Taxes and Other Claims.............................36
Section 4.10. Liquidated Damages Notice.....................................36
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. When Company May Merge or Transfer Assets.....................36
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.............................................37
Section 6.02. Acceleration..................................................40
Section 6.03. Other Remedies................................................40
Section 6.04. Waiver of Past Defaults.......................................40
Section 6.05. Control By Majority...........................................41
Section 6.06. Limitation on Suits...........................................41
Section 6.07. Rights of Holders to Receive Payment..........................41
Section 6.08. Collection Suit by Trustee....................................41
Section 6.09. Trustee May File Proofs of Claim..............................42
Section 6.10. Priorities....................................................42
Section 6.11. Undertaking for Costs.........................................43
Section 6.12. Waiver of Stay, Extension or Usury Laws.......................43
ARTICLE 7
TRUSTEE
Section 7.01. Duties and Responsibilities of the Trustee; During Default;
Prior to Default............................................43
Section 7.02. Certain Rights of the Trustee.................................44
Section 7.03. Trustee Not Responsible for Recitals, Dispositions of Notes
or Application of Proceeds Thereof .........................46
Section 7.04. Trustee and Agents May Hold Notes; Collections, Etc...........46
Section 7.05. Moneys Held by Trustee........................................46
Section 7.06. Compensation and Indemnification of Trustee and Its Prior
Claim.......................................................46
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Section 7.07. Right of Trustee to Rely on Officers' Certificate, Etc........47
Section 7.08. Conflicting Interests.........................................48
Section 7.09. Persons Eligible for Appointment as Trustee...................48
Section 7.10. Resignation and Removal; Appointment of Successor Trustee.....48
Section 7.11. Acceptance of Appointment by Successor Trustee................49
Section 7.12. Merger, Conversion, Consolidation or Succession to Business
of Trustee..................................................50
Section 7.13. Preferential Collection of Claims Against the Company.........50
Section 7.14. Reports By The Trustee........................................50
Section 7.15. Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances.......................................51
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Discharge of Indenture........................................51
Section 8.02. [Intentionally Omitted] ......................................51
Section 8.03. Paying Agent to Repay Monies Held.............................51
Section 8.04. Return of Unclaimed Monies....................................52
ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.01. Without Consent of Holders....................................52
Section 9.02. With Consent of Holders.......................................53
Section 9.03. Compliance with Trust Indenture Act...........................54
Section 9.04. Revocation and Effect of Consents, Waivers and Actions........54
Section 9.05. Notation on or Exchange of Notes..............................54
Section 9.06. Trustee to Sign Supplemental Indentures.......................54
Section 9.07. Effect of Supplemental Indentures.............................55
ARTICLE 10
CONVERSION
Section 10.01. Conversion Right and Conversion Rate.........................55
Section 10.02. Exercise of Conversion Right.................................55
Section 10.03. Fractions of Shares..........................................56
Section 10.04. Adjustment of Conversion Rate................................56
Section 10.05. Notice of Adjustments of Conversion Rate.....................65
Section 10.06. Notice Prior to Certain Actions..............................65
Section 10.07. Company to Reserve Common Shares.............................66
Section 10.08. Taxes on Conversions.........................................66
Section 10.09. Covenant as to Common Shares.................................67
Section 10.10. Cancellation of Converted Notes..............................67
Section 10.11. Effect of Reclassification, Consolidation, Merger or Sale....67
Section 10.12. Responsibility of Trustee for Conversion Provisions..........68
Section 10.13. Shareholder Rights Plans.....................................68
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ARTICLE 11
RESERVED
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.................................69
Section 12.02. Notices......................................................69
Section 12.03. Communication by Holders with Other Holders..................70
Section 12.04. Certificate and Opinion as to Conditions Precedent...........71
Section 12.05. Statements Required in Certificate or Opinion................71
Section 12.06. Separability Clause..........................................71
Section 12.07. Rules by Trustee, Paying Agent, Conversion Agent and
Note Registrar.............................................71
Section 12.08. Legal Holidays...............................................71
Section 12.09. GOVERNING LAW................................................72
Section 12.10. No Recourse Against Others...................................72
Section 12.11. Successors...................................................72
Section 12.12. Benefits of Indenture........................................72
Section 12.13. Table of Contents, Heading, Etc..............................72
Section 12.14. Authenticating Agent.........................................72
Section 12.15. Execution In Counterparts....................................73
EXHIBITS
Exhibit A Form of Global Note
Exhibit B-1 Transfer Certificate
Schedule I Number of Additional Shares
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CROSS REFERENCE TABLE*
TIA SECTION INDENTURE SECTION
310(a)(1)..................................... 7.09
(a)(2)................................... 7.09
(a)(3)................................... N.A.
(a)(4)................................... N.A.
(a)(5)................................... 7.09
(b)...................................... 7.08; 7.09; 7.10; 7.11
(c)...................................... N.A.
311(a)........................................ 7.13
(b)...................................... 7.13
(c)...................................... N.A.
312(a)........................................ 2.06
(b)...................................... 12.03
(c)...................................... 12.03
313(a)........................................ 7.14(a)
(b)(1)................................... 7.14(a)
(b)(2)................................... 7.14(a)
(c)...................................... 12.02
(d)...................................... 7.14(b)
314(a)........................................ 4.02; 4.03; 12.02
(c)(1)................................... 12.04
(c)(2)................................... 12.04
(c)(3)................................... N.A.
(e)...................................... 12.05
(f)...................................... N.A.
315(a)........................................ 7.01
(b)...................................... 7.15; 12.02
(c)...................................... 7.01
(d)...................................... 7.01
(e)...................................... 6.11
316(a) (last sentence)........................ 2.09
(a)(1)(A)................................ 6.05
(a)(1)(B)................................ 6.04
(a)(2)................................... N.A.
(b)...................................... 6.07
317(a)(1)..................................... 6.08
(a)(2)................................... 6.09
(b)...................................... 2.05
318(a)........................................ 12.01
N.A. means Not Applicable
_____________________
*Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of the Indenture.
v
INDENTURE dated as of February 7, 2005 between XOMA LTD., a Bermuda company
(the "Company") and ▇▇▇▇▇ Fargo Bank, National Association, as Trustee hereunder
(the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 6.50%
Convertible Senior Notes due 2012 (herein called the "Notes") of substantially
the tenor and amount hereinafter set forth, and to provide therefor the Company
has duly authorized the execution and delivery of this Indenture.
All things necessary to make the Notes, when the Notes are executed by the
Company and authenticated and delivered hereunder, the valid and legally binding
obligations of the Company, and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done. Further, all
things necessary to duly authorize the issuance of the Common Shares of the
Company issuable upon the conversion of the Notes, and to duly reserve for
issuance the number of Common Shares issuable upon such conversion, have been
done.
This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act of 1939, as amended, that are required to be a part of
and to govern indentures qualified under the Trust Indenture Act of 1939, as
amended.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
(3) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Additional Notes" means an unlimited principal amount of Notes (other than
the Initial Notes) issued from time to time with the same terms and conditions,
except for any
1
differences in the issue price and interest accrued prior to the issue date of
the Additional Notes, and the same CUSIP number as the Initial Notes under this
Indenture in accordance with Section 2.01 hereof.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For purposes of this definition, "control"
when used with respect to any specified person means the power to direct or
cause the direction of the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Board of Directors" means either the board of directors of the Company, or
any duly authorized committee of such board.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which, certified by the Secretary or an Assistant Secretary
of the Company, to be in full force and effect on the date of such
certification, shall have been delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which the banking institutions in The City of New York or
the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close or be closed.
"Capital Stock" of any corporation means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) stock issued by that corporation.
"Closing Date" has the meaning specified in the Purchase Agreement.
"Closing Price" of any security on any date of determination means:
(1) the closing sale price (or, if no closing sale price is reported,
the last reported sale price) of such security on the NASDAQ National
Market on such date;
(2) if such security is not listed for trading on the NASDAQ National
Market on any such date, the closing sale price as reported in the
composite transactions for the principal U.S. securities exchange on which
such security is so listed;
(3) if such security is not so listed on a U.S. national or regional
securities exchange, the closing sale price as reported by the NASDAQ OTC
Bulletin Board Service (f/k/a Over-the-Counter Bulletin Board);
2
(4) if such security is not so reported, the last quoted bid price for
such security in the over-the-counter market as reported by the Pink Sheets
LLC (f/k/a National Quotation Bureau) or similar organization; or
(5) if such bid price is not available, the average of the mid-point
of the last bid and ask prices of such security on such date from at least
three nationally recognized independent investment banking firms retained
for this purpose by the Company.
"Common Shares" means the common shares, par value $.0005 per share, of the
Company.
"common shares" means any share of any class of capital stock which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the issuer.
"Company" means the party named as the "Company" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.
"Company Order" means a written order signed in the name of the Company by
any two Officers of the Company; provided that the Company Order regarding
authentication delivered to the Trustee in connection with the closing on
February 7, 2005 may be signed by one Officer, provided further that this one
Officer will be either the Chief Executive Officer or the Chief Financial
Officer of the Company.
"Conversion Agent" means any person authorized by the Company to convert
Notes in accordance with Article 10 hereof.
"Conversion Price" as of any day will equal $1,000 divided by the
Conversion Rate as of such date and rounded to the nearest cent. The Conversion
Price shall initially be approximately $1.87 per Common Share.
"Conversion Rate" has the meaning specified in Section 10.01.
"Corporate Trust Office" means the principal office of the Trustee at which
at any time its corporate trust business shall be administered, which office at
the date hereof is located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other address as the Trustee may designate from time
to time by notice to the Holders and the Company, or the principal corporate
trust office of any successor Trustee (or such other address as a successor
Trustee may designate from time to time by notice to the Holders and the
Company).
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
3
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in 2.07(d) as the Depositary
with respect to such Notes, until a successor shall have been appointed and
become such pursuant to the applicable provisions of this Indenture, and
thereafter, "Depositary" shall mean or include such successor.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Holder" or "Noteholder" as applied to any Note, or other similar terms
(but excluding the term "beneficial holder"), means any Person in whose name at
the time a particular Note is registered on the Note Registrar's books.
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof, including the provisions of the TIA
that are deemed to be a part hereof.
"Initial Notes" means Notes in an aggregate principal amount not to exceed
$60,000,000 (or $65,000,000, if the Initial Purchasers' Option is fully
exercised by the Initial Purchasers) issued under this Indenture.
"Initial Purchasers" means ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Inc., Deutsche Bank Securities, Inc., First Albany Capital Inc. and ▇▇▇▇▇▇▇▇▇ &
Company.
"Initial Purchasers' Option" means the option granted by the Company to the
Initial Purchasers to purchase up to $5,000,000 aggregate principal amount of
Notes pursuant to the Purchase Agreement.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"Issue Date" of any Note means the date on which the Note was originally
issued or deemed issued as set forth on the face of the Note.
"Liquidated Damages" has the meaning specified for "Liquidated Damages
Amount" in Section 2(e) of the Registration Rights Agreement.
"Notes" has the meaning ascribed to it in the first paragraph under the
caption "Recitals of the Company." The Initial Notes and any Additional Notes
will rank equally and ratably and shall be treated as a single class for all
purposes under this Indenture.
"Offering Memorandum" means the offering memorandum dated February 1, 2005
in connection with the sale of the Notes.
"Officer" means the Chairman of the Board, the Vice Chairman, the Chief
Executive Officer, the President, any Executive Vice President, any Senior Vice
4
President, any Vice President, the Treasurer or the Secretary or any Assistant
Treasurer or Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 12.04 and 12.05, signed in the name of the
Company by any two Officers of the Company, and delivered to the Trustee. An
Officers' Certificate given pursuant to Section 4.03 shall be signed by an
authorized financial or accounting Officer of the Company but need not contain
the information specified in Sections 12.04 and 12.05.
"Opinion of Counsel" means a written opinion containing the information
specified in Sections 12.04 and 12.05, from legal counsel. The counsel may be an
employee of, or counsel to, the Company.
"person" or "Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"Portal Market" means the Portal Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.
"principal" of a Note means the principal amount due on the Stated Maturity
as set forth on the face of the Note or the amount of any Fundamental Change
Purchase Price payable pursuant to Section 3.05(a), whichever is applicable.
"Purchase Agreement" means the Purchase Agreement dated as of February 1,
2005.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of February 7, 2005, between the Company and the Initial
Purchasers, as amended from time to time in accordance with its terms.
"Regular Record Date" means, with respect to the interest payable on any
Interest Payment Date, the close of business on January 15 or July 15 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant treasurer, trust officer or any
other officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject, and who shall have
direct responsibility for the administration of this Indenture.
5
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the United States Securities Act of 1933 (or any
successor statute), as amended from time to time.
"Share Price" means the price per Common Share paid in connection with a
Fundamental Change transaction pursuant to which Additional Shares are issuable
as set forth in Section 3.05(a) hereof, which shall be equal to (i) if holders
of Common Shares receive only cash in such Fundamental Change transaction, the
cash amount paid per Common Share and (ii) in all other cases, the average of
the Closing Prices of the Common Shares on the five Trading Days prior to, but
not including, the effective date of such Fundamental Change transaction.
"Significant Subsidiary" means any direct or indirect Subsidiary of the
Company that meets any of the following conditions:
(1) the Company's and its other Subsidiaries' investments in and
advances to such Subsidiary exceed 10% of the total assets of the Company
and its Subsidiaries consolidated as of the end of the most recently
completed fiscal year;
(2) the Company's and its other Subsidiaries' proportionate share of
the total assets (after intercompany eliminations) of such Subsidiary
exceed 10% of the total assets of the Company and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or
(3) the Company's and its other Subsidiaries' equity in the income
from continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principle of such Subsidiary
exceed 10% of such income of the Company and its Subsidiaries consolidated
for the most recently completed fiscal year.
"Stated Maturity," when used with respect to any Note or any installment of
interest thereon, means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.
"Subsidiary" means (i) a corporation, a majority of whose Capital Stock
with voting power, under ordinary circumstances, to elect directors is, at the
date of determination, directly or indirectly owned by the Company, by one or
more Subsidiaries of the Company or by the Company and one or more Subsidiaries
of the Company, (ii) a partnership in which the Company or a Subsidiary of the
Company holds a majority interest in the equity capital or profits of such
partnership, or (iii) any other person (other than a corporation) in which the
Company, a Subsidiary of the Company or the Company and one or more Subsidiaries
of the Company, directly or indirectly, at the date of
6
determination, has (x) at least a majority ownership interest or (y) the power
to elect or direct the election of a majority of the directors or other
governing body of such person.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date of
this Indenture; provided, however, that in the event the TIA is amended after
such date, TIA means, to the extent required by any such amendment, the TIA as
so amended.
"Trading Day" means a day during which trading in Common Shares generally
occurs on the NASDAQ National Market or, if the Common Shares are not listed on
the NASDAQ National Market, on the principal other national or regional
securities exchange on which the Common Shares are then listed or, if the Common
Shares are not listed on a national or regional securities exchange, on the
principal other market on which the Common Shares are then traded.
"Trustee" means the party named as the "Trustee" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.
"United States" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction (its "possessions" including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors of
such Person.
Section 1.02. Other Definitions.
Defined in
Term Section
---- -------
"Act"................................................... 1.05(a)
"Accepted Purchased Shares"............................. 10.04(g)(i)
"Additional Shares"..................................... 3.05(a)
"Adjustment Event"...................................... 10.04(k)
"Agent Members"......................................... 2.07(d)
"Authenticating Agent".................................. 12.14
"Bankruptcy Law"........................................ 6.01
"beneficial ownership".................................. 3.05(a)
"Certificated Notes".................................... 2.07(b)
"Change of Control"..................................... 3.05(a)
"Conversion Obligation" 10.01
"Current Market Price".................................. 10.04(h)
"Custodian"............................................. 6.01
"Determination Date".................................... 10.04(k)
"Event of Default"...................................... 6.01
"Ex-Dividend Date"...................................... 10.04(d)
7
Defined in
Term Section
---- -------
"Exchange Act".......................................... 3.05(a)
"excluded securities"................................... 10.04(d)
"Expiration Time"....................................... 10.04(f)
"Fair Market Value"..................................... 10.04(g)
"Fundamental Change" ................................... 3.05(a)
"Fundamental Change Purchase Date"...................... 3.05(a)
"Fundamental Change Purchase Notice".................... 3.05(d)
"Fundamental Change Purchase Price"..................... 3.05(a)
"Global Note"........................................... 2.07(b)
"Legal Holiday"......................................... 12.08
"Liquidated Damages Notice"............................. 4.10
"Non-Electing Share".................................... 10.11
"Note Register"......................................... 2.04
"Note Registrar"........................................ 2.04
"Notice of Default"..................................... 6.01
"Offer Expiration Time"................................. 10.04(g)
"Paying Agent".......................................... 2.04
"Principal Amount"...................................... 2.07(b)
"Public Acquirer Change of Control"..................... 3.05(c)
"Public Acquirer Common Stock".......................... 3.05(c)
"Purchased Shares"...................................... 10.04(f)
"Record Date"........................................... 10.04(g)
"Redemption Date" ...................................... 3.02
"Redemption Notice" .................................... 3.02
"Redemption Price" ..................................... 3.01
"Reference Period"...................................... 10.04(d)
"Restricted Note"....................................... 10.02
"Restricted Securities"................................. 2.07(d)
"Rule 144A Information"................................. 4.06
"Securities"............................................ 10.04(d)
"transfer".............................................. 2.07(d)
"Trigger Event"......................................... 10.04(d)
Section 1.03. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture Notes" means the Notes.
"indenture Note holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
8
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture Notes means the Company.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
Section 1.04. Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it
in accordance with generally accepted accounting principles as in effect from
time to time;
(c) "or" is not exclusive;
(d) "including" means including, without limitation; and
(e) words in the singular include the plural, and words in the plural
include the singular.
Section 1.05. Acts of Holders. Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by their agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of Holders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to such officer the execution thereof. Where such
execution is by a signer acting in a capacity other than such signer's
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of such signer's authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
The ownership of Notes shall be proved by the Note Register or by a
certificate of the Note Registrar.
9
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Note shall bind every future Holder of the same
Note and the holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Note.
If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a resolution of the Board of Directors, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for purposes of determining whether Holders of the requisite proportion
of outstanding Notes have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the outstanding Notes shall be computed as of such record date;
provided that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after the record
date.
ARTICLE 2
THE NOTES
Section 2.01. Designation Amount and Issue of Notes. The Notes shall be
designated as "6.50% Convertible Senior Notes due 2012". Except pursuant to
Sections 2.07, 2.08, 3.08 and 10.02 hereof, Initial Notes not to exceed the
aggregate principal amount of $60,000,000 (or $65,000,000 if the Initial
Purchasers' Option is fully exercised by the Initial Purchasers), upon the
execution of this Indenture, may be executed by the Company and delivered to the
Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said Initial Notes upon a Company Order, without any further action by
the Company hereunder. In addition, the Trustee shall authenticate and deliver
Additional Notes in aggregate principal amounts specified by the Company,
without the consent of the Holders.
Section 2.02. Form of Notes. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or
10
regulation of any securities exchange or automated quotation system on which the
Notes may be listed, or to conform to usage.
Any Global Note shall represent such of the outstanding Notes as shall be
specified therein and shall provide that it shall represent the aggregate amount
of outstanding Notes from time to time endorsed thereon and that the aggregate
amount of outstanding Notes represented thereby may from time to time be
increased or reduced to reflect transfers or exchanges permitted hereby. Any
endorsement of a Global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee, in such manner and upon instructions given by the holder of such Notes
in accordance with this Indenture. Payment of principal of and interest and
premium, if any, on any Global Note shall be made to the holder of such Note.
The terms and provisions contained in the form of Note attached as Exhibit
A hereto shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Section 2.03. Execution and Authentication. The Notes shall be executed on
behalf of the Company by an Officer of the Company. The signatures of such
Officer on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who were at
the time of the execution of the Notes the proper Officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Notes or did not hold such offices at the date of authentication of such Notes.
Notes shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose unless there appears on such Note a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee or an Authenticating Agent by manual signature of an authorized
officer, and such certificate upon any Note shall be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered
hereunder.
The Notes shall be issued only in registered form without coupons and only
in denominations of $1,000 in principal amount and any whole multiple thereof.
Section 2.04. Note Registrar, Paying Agent and Conversion Agent. The
Company shall maintain an office or agency where Notes may be presented for
registration of transfer or for exchange ("Note Registrar"), an office or agency
where Notes may be presented for purchase or payment ("Paying Agent") and an
office or agency where Notes may be presented for conversion ("Conversion
Agent"). The Note Registrar shall keep a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe it shall
provide for the registration and transfer of the
11
Notes. The Company may have one or more co-registrars, one or more additional
paying agents and one or more additional conversion agents. The term Paying
Agent includes any additional paying agent, including any named pursuant to
Section 4.05. The term Conversion Agent includes any additional conversion
agent, including any named pursuant to Section 4.05.
The Company shall notify the Trustee of the name and address of any such
agent. If the Company fails to maintain a Note Registrar, Paying Agent or
Conversion Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.06. The Company or any
Subsidiary or an Affiliate of either of them may act as Paying Agent, Note
Registrar, Conversion Agent or co-registrar.
The Company initially appoints the Trustee as Note Registrar, Conversion
Agent and Paying Agent in connection with the Notes.
Section 2.05. Paying Agent to Hold Money and Notes in Trust. Except as
otherwise provided herein, on or prior to each due date of payments in respect
of any Note, the Company shall deposit with the Paying Agent a sum of money (in
immediately available funds if deposited on the due date) or, to the extent
applicable, Common Shares sufficient to make such payments when so becoming due.
The Company shall require each Paying Agent (other than the Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of Noteholders
or the Trustee all money and Common Shares held by the Paying Agent for the
making of payments in respect of the Notes and shall notify the Trustee of any
default by the Company in making any such payment. At any time during the
continuance of any such default, the Paying Agent shall, upon the written
request of the Trustee, forthwith pay to the Trustee all money and Common Shares
so held in trust. If the Company, a Subsidiary or an Affiliate of the Company
acts as Paying Agent, it shall segregate the money and Common Shares held by it
as Paying Agent and hold it as a separate trust fund. The Company at any time
may require a Paying Agent to pay all money and Common Shares held by it to the
Trustee and to account for any funds and Common Shares disbursed by it. Upon
doing so, the Paying Agent shall have no further liability for the money or
Common Shares.
Section 2.06. Noteholder Lists. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Noteholders. If the Trustee is not the Note Registrar,
the Company shall cause to be furnished to the Trustee at least semiannually on
January 15 and July 15 a listing of Noteholders dated within 15 days of the date
on which the list is furnished and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Noteholders.
Section 2.07. Transfer and Exchange; Restrictions on Transfer; Depositary.
(a) Upon surrender for registration of transfer of any Note, together with a
written instrument of transfer satisfactory to the Note Registrar duly executed
by the Noteholder or such Noteholder's attorney duly authorized in writing, at
the office or agency of the company designated as Note Registrar or co-registrar
pursuant to Section 2.04, and satisfaction of the requirements of such transfer
set forth in this Section, the Company shall execute, and
12
the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any authorized denomination
or denominations, of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture. The Company shall not
charge a service charge for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges that may be imposed in connection with the transfer
or exchange of the Notes from the Noteholder requesting such transfer or
exchange.
At the option of the Holder, Notes may be exchanged for other Notes of any
authorized denomination or denominations, of a like aggregate principal amount,
upon surrender of the Notes to be exchanged, together with a written instrument
of transfer satisfactory to the Note Registrar duly executed by the Noteholder
or such Noteholder's attorney duly authorized in writing, at such office or
agency. Whenever any Notes are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Notes which the
Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
The Company shall not be required to make, and the Note Registrar need not
register, transfers or exchanges of any Notes in respect of which a Fundamental
Change Purchase Notice (as defined in Section 3.05(d)) has been given and not
withdrawn by the Holder thereof in accordance with the terms of this Indenture
(except, in the case of Notes to be purchased in part, the portion thereof not
to be purchased).
(b) So long as the Notes are eligible for book-entry settlement with the
Depositary, or unless otherwise required by law, all Notes that, upon initial
issuance are beneficially owned by QIBs or as a result of a sale or transfer
after initial issuance are beneficially owned by QIBs, will be represented by
one or more Notes in global form registered in the name of the Depositary or the
nominee of the Depositary (the "Global Note"), except as otherwise specified
below. The transfer and exchange of beneficial interests in any such Global Note
shall be effected through the Depositary in accordance with this Indenture and
the procedures of the Depositary therefor. The Trustee shall make appropriate
endorsements to reflect increases or decreases in the principal amounts of any
such Global Note as set forth on the face of the Note ("Principal Amount") to
reflect any such transfers. Except as provided below, beneficial owners of a
Global Note shall not be entitled to have certificates registered in their
names, will not receive or be entitled to receive physical delivery of
certificates in definitive form ("Certificated Notes") and will not be
considered holders of such Global Note.
(c) (i) So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, upon any transfer of a
Certificated Note to a QIB in accordance with Rule 144A that requests delivery
of such Note in the form of an interest in the Global Note, and upon receipt of
the Certificated Note or Notes being so
13
transferred, together with a certification, substantially in the form of Exhibit
B-1 hereto, from the transferor that the transfer is being made in compliance
with Rule 144A (or other evidence satisfactory to the Trustee), the Trustee
shall make an endorsement on the Global Note to reflect an increase in the
aggregate Principal Amount of the Notes represented by such Global Note, and the
Trustee shall cancel such Certificated Note or Notes in accordance with the
standing instructions and procedures of the Depositary.
(ii) Upon any sale or transfer of a Note to the Company or any
Subsidiary thereof (other than pursuant to a registration statement that
has been declared effective under the Securities Act or after the
expiration of the holding period applicable to sales thereof under Rule
144(k) under the Securities Act), the transferor shall, prior to such sale
or transfer, furnish to the Company and/or Trustee such certifications,
including a certification substantially in the form of Exhibit B-1 hereto,
legal opinions or other information as they may reasonably require to
confirm that the proposed transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of
the Securities Act. Upon any transfer of a beneficial interest in the
Global Note to the Company or such Subsidiary, as the case may be, the
Trustee shall make an endorsement on the Global Note to reflect a decrease
in the aggregate Principal Amount of the Notes represented by such Global
Note, and the Company shall execute a Certificated Note or Notes in
exchange therefor, and the Trustee, upon receipt of such Certificated Note
or Notes and a Company Order, shall authenticate and deliver such
Certificated Note or Notes.
(iii) Upon any sale or transfer of a Note pursuant to the exemption
from registration provided by Rule 144 under the Securities Act, the
transferor shall, prior to such sale or transfer, furnish to the Company
and/or the Trustee such certifications, including a certification
substantially in the form of Exhibit B-1 hereto, legal opinions or other
information as they may reasonably require to confirm that the proposed
transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act. Upon
any transfer of a beneficial interest in the Global Note to such
transferee, the Trustee shall make an endorsement on the Global Note to
reflect a decrease in the aggregate Principal Amount of the Notes
represented by such Global Note, and, at the request of the transferee,
either (1) the Company shall execute a Certificated Note or Notes in
exchange therefor, and the Trustee, upon receipt of such Certificated Note
or Notes and a Company Order, shall authenticate and deliver such
Certificated Note or Notes or (2) if a Global Note that does not bear the
legend set forth in Section 2.07(d) has previously been executed and
authenticated, the Trustee shall make an endorsement on such Global Note to
reflect a corresponding increase in the aggregate Principal Amount of Notes
represented by such Global Note.
Any Global Note may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the provisions
of this Indenture as may be required by the Trustee, the Depositary or by the
National Association of Securities Dealers, Inc. in order for the Notes to be
tradeable on the Portal Market or as
14
may be required for the Notes to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations of
any securities exchange or automated quotation system upon which the Notes may
be listed or traded or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular Notes
are subject.
(d) Every Note that bears or is required under this Section 2.07(d) to bear
the legend set forth in this Section 2.07(d) (together with any Common Shares
issued upon conversion of the Notes and required to bear the legend set forth in
Section 2.07(e), collectively, the "Restricted Securities") shall be subject to
the restrictions on transfer set forth in this Section 2.07(d) (including those
set forth in the legend set forth below) unless such restrictions on transfer
shall be waived by written consent of the Company, and the holder of each such
Restricted Security, by such Noteholder's acceptance thereof, agrees to be bound
by all such restrictions on transfer. As used in Sections 2.07(d) and 2.07(c),
the term "transfer" encompasses any sale, pledge, loan, transfer or other
disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Note (and all securities issued in exchange therefor
or substitution thereof, other than Common Shares, if any, issued upon
conversion thereof, which shall bear the legend set forth in Section 2.07(e), if
applicable) shall bear a legend in substantially the following form, unless such
Note has been sold pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer), or unless otherwise agreed by the Company in writing,
with written notice thereof to the Trustee:
THIS SECURITY AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY, THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES THEREOF UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) (THE
"RESALE
15
RESTRICTION PERIOD"), ONLY (A) TO XOMA LTD. (THE "COMPANY"), OR ANY
SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING UNDER
RULE 144, IF AVAILABLE, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE
PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN
ITS OR THEIR CONTROL. EACH PURCHASER ACKNOWLEDGES THAT PRIOR TO THE
EXPIRATION OF THE RESALE RESTRICTION PERIOD, THE COMPANY AND THE
TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER EXPIRATION OF THE RESALE
RESTRICTION PERIOD.
Any Note (or security issued in exchange or substitution therefor) as to
which such restrictions on transfer shall have expired in accordance with their
terms or as to conditions for removal of the foregoing legend set forth therein
have been satisfied may, upon surrender of such Note for exchange to the Note
Registrar in accordance with the provisions of this Section 2.07, be exchanged
for a new Note or Notes, of like tenor and aggregate principal amount, which
shall not bear the restrictive legend required by this Section 2.07(d).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in Section 2.07(c), with respect to transfers of beneficial
interests in a Global Note, and in this Section 2.07(d)), a Global Note may not
be transferred as a whole or in part except by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary
16
to the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary.
Neither any members of, or participants in, the Depositary (collectively,
the "Agent Members") nor any other Persons on whose behalf Agent Members may act
shall have any rights under this Indenture with respect to any Global Note
registered in the name of the Depositary or any nominee thereof, or under any
such Global Note, and the Depositary or such nominee, as the case may be, may be
treated by the Company, the Trustee and any agent of the Company or the Trustee
as the absolute owner and holder of such Global Note for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or such nominee, as the case may be, or impair, as between the
Depositary, its Agent Members and any other person on whose behalf an Agent
Member may act, the operation of customary practices of such Persons governing
the exercise of the rights of a holder of any Note.
The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Notes in global form. Initially, the Global Note
shall be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Trustee, as custodian for Cede
& Co.
If at any time the Depositary for a Global Note notifies the Company that
it is unwilling or unable to continue as Depositary for such Note, the Company
may appoint a successor Depositary with respect to such Note. If a successor
Depositary is not appointed by the Company within ninety (90) days after the
Company receives such notice, the Company will execute, and the Trustee, upon
receipt of an Officers' Certificate for the authentication and delivery of
Notes, will authenticate and deliver, Certificated Notes, in aggregate principal
amount equal to the principal amount of such Global Note, in exchange for such
Global Note.
If a Certificated Note is issued in exchange for any portion of a Global
Note after the close of business at the office or agency where such exchange
occurs on any Regular Record Date and before the opening of business at such
office or agency on the next succeeding Interest Payment Date, interest will not
be payable on such Interest Payment Date in respect of such Certificated Note,
but will be payable on such Interest Payment Date only to the Person to whom
interest in respect of such portion of such Global Note is payable in accordance
with the provisions of this Indenture.
Certificated Notes issued in exchange for all or a part of a Global Note
pursuant to this Section 2.07 shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. Upon
execution and authentication, the Trustee shall deliver such Certificated Notes
to the Persons in whose names such Certificated Notes are so registered.
17
At such time as all interests in a Global Note have been converted,
canceled, exchanged for Certificated Notes, or transferred to a transferee who
receives Certificated Notes thereof, such Global Note shall, upon receipt
thereof, be canceled by the Trustee in accordance with standing procedures and
instructions existing between the Depositary and the Trustee. At any time prior
to such cancellation, if any interest in a Global Note is exchanged for
Certificated Notes, converted, repurchased or canceled, or transferred to a
transferee who receives Certificated Notes therefor or any Certificated Note is
exchanged or transferred for part of a Global Note, the principal amount of such
Global Note shall, in accordance with the standing procedures and instructions
existing between the Depositary and the Trustee, be appropriately reduced or
increased, as the case may be, and an endorsement shall be made on such Global
Note, by the Trustee to reflect such reduction or increase.
(e) Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
share certificate representing Common Shares issued upon conversion of any Note
shall bear a legend in substantially the following form, unless such Common
Shares have been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer) or such Common Shares have been issued upon
conversion of Notes that have been transferred pursuant to a registration
statement that has been declared effective under the Securities Act, or unless
otherwise agreed by the Company in writing with written notice thereof to the
transfer agent:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR
THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES THEREOF UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) (THE
"RESALE RESTRICTION PERIOD"), ONLY (A) TO XOMA LTD. (THE "COMPANY"),
OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
18
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT
TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING UNDER
RULE 144, IF AVAILABLE, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE
PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN
ITS OR THEIR CONTROL. EACH PURCHASER ACKNOWLEDGES THAT PRIOR TO THE
EXPIRATION OF THE RESALE RESTRICTION PERIOD, THE COMPANY AND THE
TRANSFER AGENT RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE
COMPANY, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE EXPIRATION OF
THE RESALE RESTRICTION PERIOD.
Any such Common Shares as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for removal
of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such Common Shares for exchange in
accordance with the procedures of the transfer agent for the Common Shares, be
exchanged for a new certificate or certificates for a like number of Common
Shares, which shall not bear the restrictive legend required by this Section
2.07(e).
(f) Any Note or Common Shares issued upon the conversion or exchange of a
Note that, prior to the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
is purchased or owned by the Company or any Affiliate thereof may not be resold
by the Company or such Affiliate unless registered under the Securities Act or
resold pursuant to an exemption from the registration requirements of the
Securities Act in a transaction which results in such Notes or Common Shares, as
the case may be, no longer being "restricted securities" (as defined under Rule
144).
19
Section 2.08. Replacement Notes. If (a) any mutilated Note is surrendered
to the Trustee, or (b) the Company, the Trustee and, if applicable, the
Authenticating Agent receive evidence to their satisfaction of the destruction,
loss or theft of any Note, and there is delivered to the Company, the Trustee
and, if applicable, the Authenticating Agent such Note or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Company, the Trustee or, if applicable, the Authenticating Agent that
such Note has been acquired by a bona fide purchaser, the Company shall execute
and upon its written request the Trustee or the Authenticating Agent shall
authenticate and deliver, in exchange for any such mutilated Note or in lieu of
any such destroyed, lost or stolen Note, a new Note of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, or is about to be purchased by the Company
pursuant to Article 3 hereof, the Company in its discretion may, instead of
issuing a new Note, pay or purchase such Note, as the case may be.
Upon the issuance of any new Notes under this Section 2.08, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee and any Authenticating Agent) connected
therewith.
Every new Note issued pursuant to this Section 2.08 in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Notes duly issued hereunder.
The provisions of this Section 2.08 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.09. Outstanding Notes; Determination of Holders' Action. Notes
outstanding at any time are all the Notes authenticated by the Trustee except
for those cancelled by it or delivered to it for cancellation, those paid
pursuant to Section 2.08 and those described in this Section 2.09 as not
outstanding. A Note does not cease to be outstanding because the Company or an
Affiliate thereof holds the Note; provided, however, that in determining whether
the Holders of the requisite principal amount of the outstanding Notes have
given or concurred in any request, demand, authorization, direction, notice,
consent or waiver hereunder, Notes owned by the Company or any other obligor
upon the Notes or any Affiliate of the Company or such other obligor shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes which a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Subject to the foregoing, only Notes outstanding at the time of
such determination shall be considered in any such determination (including,
without limitation, determinations pursuant to Articles 6 and 9).
20
If a Note is replaced pursuant to Section 2.08, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is
held by a bona fide purchaser.
If the Paying Agent holds, in accordance with this Indenture, on the
Business Day following the Fundamental Change Purchase Date, or on Stated
Maturity, money or securities, if permitted hereunder, sufficient to pay Notes
payable on that date, then immediately after such Fundamental Change Purchase
Date or Stated Maturity, as the case may be, such Notes shall cease to be
outstanding and interest on such Notes shall cease to accrue.
If a Note is converted in accordance with Article 10, then from and after
the time of conversion on the conversion date, such Note shall cease to be
outstanding and interest shall cease to accrue on such Note.
Section 2.10. Temporary Notes. Pending the preparation of definitive
Notes, the Company may execute, and upon a Company Order the Trustee shall
authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Notes may determine, as conclusively
evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes to
be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 2.04, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes the
Company shall execute and the Trustee or an Authenticating Agent shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Notes of authorized denominations. Until so exchanged the temporary
Notes shall in all respects be entitled to the same benefits under this
Indenture as definitive Notes.
Section 2.11. Cancellation. All Notes surrendered for payment, purchase by
the Company pursuant to Article 3, conversion or registration of transfer or
exchange shall, if surrendered to any person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Trustee. The Company may not issue new Notes to replace Notes it has paid or
delivered to the Trustee for cancellation or that any Holder has converted
pursuant to Article 10. No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section 2.11, except as
expressly permitted by this Indenture. All cancelled Notes held by the Trustee
shall be disposed of by the Trustee in its customary manner.
21
Section 2.12. Persons Deemed Owners. Prior to due presentment of a Note for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name such Note is registered as the
owner of such Note for the purpose of receiving payment of principal of the Note
or the payment of any Fundamental Change Purchase Price in respect thereof, and
interest thereon, for the purpose of conversion and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
Section 2.13. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use). No representation is made as to the
correctness of such CUSIP numbers and reliance may be placed only on the other
identification numbers printed on the Notes. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
Section 2.14. Default Interest. If the Company defaults in a payment of
interest on the Notes, it shall pay, or shall deposit with the Paying Agent
money in immediately available funds sufficient to pay, the defaulted interest,
plus (to the extent lawful) any interest payable on the defaulted interest, to
the Persons who are Holders on a subsequent special record date. A special
record date, as used in this Section 2.14 with respect to the payment of any
defaulted interest, shall mean the 15th day next preceding the date fixed by the
Company for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special record date, the
Company shall mail to each Holder and to the Trustee a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest to be paid.
ARTICLE 3
REDEMPTION AND REPURCHASE
Section 3.01. Company's Right to Redeem. Prior to February 6, 2008, the
Notes shall not be redeemable at the Company's option. At any time on or after
February 6, 2008 and prior to Stated Maturity, the Company, at its option, may
redeem the Notes, in whole or in part, in accordance with the provisions of
Section 3.02, Section 3.03 and Section 3.04 on the Redemption Date for a
redemption price (the "Redemption Price") in cash equal to 100% of the principal
amount of the Notes plus any accrued and unpaid interest and Liquidated Damages,
if any, on the Notes redeemed to but excluding the Redemption Date if the
Closing Price of the Common Shares has exceeded 150% of the Conversion Price
then in effect for at least 20 Trading Days in any consecutive 30 Trading Day
period. In addition, if on any Interest Payment Date occurring after February 6,
2008, the aggregate principal amount of the Notes outstanding is less than 15%
of the aggregate principal amount of Notes outstanding after the Issue Date, the
Company, at its option, may redeem the Notes, in whole but not in part, in
accordance with the provisions of Section 3.02, Section 3.03 and Section 3.04 on
the Redemption Date for a Redemption Price in cash equal to 100% of the
principal amount of the Notes plus any accrued and unpaid Interest and
Liquidated Damages, if any, on the Notes to but not including the Redemption
Date. The Company will make an additional payment
22
equal to the total value of the aggregate amount of the interest otherwise
payable on the Notes from the last day through which interest was paid on the
Notes through the Redemption Date.
Section 3.02. Notice of Optional Redemption; Selection of Notes.
(a) In case the Company shall desire to exercise the right to redeem all
or, as the case may be, any part of the Notes pursuant to Section 3.01, it shall
fix a date for redemption (the "Redemption Date") and it or, at its written
request (which request must include the information listed in Section 3.02(b)
and be received by the Trustee not fewer than thirty-five (35) days prior (or
such shorter period of time as may be acceptable to the Trustee) to the
Redemption Date), the Trustee in the name of and at the expense of the Company,
shall mail or cause to be mailed a notice of such redemption (a "Redemption
Notice") not fewer than twenty (20) nor more than sixty (60) days prior to the
Redemption Date to each holder of Notes so to be redeemed as a whole or in part
at its last address as the same appears on the Note Register; provided that if
the Company shall give such notice, it shall also give written notice of the
Redemption Date to the Trustee. Such mailing shall be by first class mail. The
notice, if mailed in the manner herein provided, shall be conclusively presumed
to have been duly given, whether or not the holder receives such notice. In any
case, failure to give such notice by mail or any defect in the notice to the
holder of any Note designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any other Note.
Concurrently with the mailing of any such Redemption Notice, the Company shall
issue a press release announcing such redemption, the form and content of which
press release shall be determined by the Company in its sole discretion. The
failure to issue any such press release or any defect therein shall not affect
the validity of the Redemption Notice or any of the proceedings for the
redemption of any Note called for redemption.
(b) Each such Redemption Notice shall specify the aggregate principal
amount of Notes to be redeemed, the CUSIP, ISIN or similar number or numbers of
the Notes being redeemed, the Redemption Date (which shall be a Business Day),
the Redemption Price at which Notes are to be redeemed, the place or places of
payment, that payment will be made upon presentation and surrender of such
Notes, that Interest accrued and unpaid up to but not including the Redemption
Date will be paid as specified in said notice, and that on and after said date
Interest thereon or on the portion thereof to be redeemed will cease to accrue.
Such notice shall also state the current Conversion Rate and the date on which
the right to convert such Notes or portions thereof into Common Shares will
expire. If fewer than all the Notes are to be redeemed, the Redemption Notice
shall identify the Notes to be redeemed (including CUSIP, ISIN or similar number
or numbers, if any). In case any Note is to be redeemed in part only, the
Redemption Notice shall state the portion of the principal amount thereof to be
redeemed and shall state that, on and after the Redemption Date, upon surrender
of such Note, a new Note or Notes in principal amount equal to the unredeemed
portion thereof will be issued.
(c) On or prior to the Redemption Date specified in the Redemption Notice
given as provided in this Section 3.02, the Company will deposit with the
Trustee or with one or more Paying Agents an amount of money in immediately
available funds
23
sufficient to redeem on the Redemption Date all the Notes (or portions thereof)
so called for redemption (other than those theretofore surrendered for
conversion into Common Shares) at the appropriate Redemption Price; provided
that if such payment is made on the Redemption Date it must be received by the
Trustee or Paying Agent, as the case may be, by 10:00 a.m., New York City time,
on such date. The Company shall be entitled to retain any interest, yield or
gain on amounts deposited with the Trustee or any Paying Agent pursuant to this
Section 3.02(c) in excess of amounts required hereunder to pay the Redemption
Price. Subject to the last sentence of Section 7.05, if any Note called for
redemption is converted pursuant hereto prior to such Redemption Date, any money
deposited with the Trustee or any Paying Agent or so segregated and held in
trust for the redemption of such Note shall be paid to the Company upon its
written request, or, if then held by the Company, shall be discharged from such
trust. Whenever any Notes are to be redeemed, the Company will give the Trustee
written notice in the form of an Officers' Certificate not fewer than
thirty-five (35) days (or such shorter period of time as may be acceptable to
the Trustee) prior to the Redemption Date as to the aggregate principal amount
of Notes to be redeemed.
(d) If the Company opts to redeem less than all of the Outstanding Notes,
the Trustee shall select or cause to be selected the Notes or portions thereof
of the Global Note or the Notes in certificated form to be redeemed (in
principal amounts of $1,000 or whole multiples thereof) by lot, on a pro rata
basis or by another method the Trustee deems fair and appropriate. If any Note
selected for partial redemption is submitted for conversion in part after such
selection, the portion of such Note submitted for conversion shall be deemed (so
far as may be possible) to be from the portion selected for redemption. The
Notes (or portions thereof) so selected shall be deemed duly selected for
redemption for all purposes hereof, notwithstanding that any such Note is
submitted for conversion in part before the mailing of the Redemption Notice.
Upon any redemption of less than all of the Outstanding Notes, the Company
and the Trustee may (but need not), solely for purposes of determining the pro
rata allocation among such Notes as are unconverted and Outstanding at the time
of redemption, treat as Outstanding any Notes surrendered for conversion during
the period of fifteen (15) days next preceding the mailing of a Redemption
Notice and may (but need not) treat as Outstanding any Note authenticated and
delivered during such period in exchange for the unconverted portion of any Note
converted in part during such period.
Section 3.03. Payment of Notes Called for Redemption by the Company. If
notice of redemption has been given as provided in Section 3.02(a), the Notes or
portion of Notes with respect to which such notice has been given shall, unless
converted into Common Shares pursuant to the terms hereof, become due and
payable on the Redemption Date and at the place or places stated in such notice
at the applicable Redemption Price, unless the Company shall default in the
payment of the Redemption Price. Interest on the Notes or portion of Notes so
called for redemption shall cease to accrue and after the close of business on
the second Business Day immediately preceding the Redemption Date (unless the
Company shall default in the payment of the Redemption Price), such Notes shall
cease to be convertible into Common Shares and, except as provided in Section
7.05, to be entitled to any benefit or security under this
24
Indenture, and the holders thereof shall have no right in respect of such Notes
except the right to receive the Redemption Price thereof. On presentation and
surrender of such Notes at a place of payment in said notice specified, the said
Notes or the specified portions thereof shall be paid and redeemed by the
Company at the applicable Redemption Price; provided that if the applicable
Redemption Date is an Interest Payment Date, the Interest payable on such
Interest Payment Date shall be paid on such Interest Payment Date to the holders
of record of such Notes on the applicable record date instead of the holders
surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Note or Notes so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any Notes or
mail any Redemption Notices during the continuance of a default in payment of
Interest on the Notes. If any Note called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid or duly
provided for, continue to bear interest at the rate borne by the Note, and such
Note shall remain convertible into Common Shares, cash or a combination of cash
and Common Shares until the principal and Interest shall have been paid or duly
provided for. The Company will notify all of the holders if the Company redeems
any of the Notes.
Section 3.04. Conversion Arrangement on Call for Redemption. In connection
with any redemption of Notes, the Company may arrange for the purchase and
conversion of any Notes by an agreement with one or more investment banks or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with Interest accrued and unpaid
to, but excluding, the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained in this Article 3, the obligation of the
Company to pay the redemption price of such Notes, together with Interest
accrued and unpaid to, but excluding, the date fixed for redemption, shall be
deemed to be satisfied and discharged to the extent such amount is so paid by
such purchasers. If such an agreement is entered into, a copy of which will be
filed with the Trustee prior to the date fixed for redemption, any Notes not
duly surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and surrendered by such purchasers for conversion,
all as of immediately prior to the close of business on the date fixed for
redemption (and the right to convert any such Notes shall be extended through
such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Notes. Without the Trustee's prior written
consent, no arrangement between the Company and such purchasers for the purchase
and conversion of any Notes shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture.
25
Section 3.05. Purchase of Notes at Option of the Holder Upon Fundamental
Change. If there shall have occurred a Fundamental Change, all or any portion of
the Notes of any Holder equal to $1,000 or a whole multiple of $1,000, shall be
repurchased by the Company, at the option of such Holder, at a repurchase price
equal to 100% of the aggregate principal amount of the Notes to be repurchased,
together with accrued and unpaid interest and Liquidated Damages, if any, to,
but excluding, the purchase date (the "Fundamental Change Purchase Price"), on
the date (the "Fundamental Change Purchase Date") that is 45 days after the date
the Company delivered the notice required under Section 3.05(c) (or if such 45th
day is not a Business Day, the next succeeding Business Day); provided, however,
that if the Fundamental Change Purchase Date is after a Regular Record Date but
on or prior to the corresponding Interest Payment Date, the accrued and unpaid
interest becoming due on such Interest Payment Date shall be payable to the
Holders of such Notes, or one or more predecessor Notes, registered as such on
the relevant Regular Record Date according to their terms.
If and only to the extent a Holder timely elects to convert Notes in
connection with a Fundamental Change transaction pursuant to clause (ii) of the
Change of Control definition set forth in this Section 3.05(a) that occurs on or
prior to February 1, 2012, pursuant to which 5% or more of the consideration for
Common Shares (excluding cash payments for fractional shares and cash payments
made in respect of dissenters' appraisal rights) in such Fundamental Change
transaction consists of cash or securities (or other property) that are not
traded or scheduled to be traded immediately following such transaction on a
U.S. national securities exchange or the NASDAQ National Market, then except as
set forth in Section 3.05(b), such holder will be entitled to receive, in
addition to a number of Common Shares equal to the Conversion Rate per $1,000
principal amount of Notes, an additional number of Common Shares (the
"Additional Shares") as described below; provided that if the Share Price paid
in connection with such transaction is greater than $6.75 or less than $1.63
(subject in each case to adjustment as described below), no Additional Shares
shall be issuable. No Additional Shares shall be issuable under this Section
3.05(a) unless the Holder elects to convert the Securities in connection with
such Fundamental Change transaction. Notwithstanding this Section 3.05(a), if
the Company elects to adjust the Conversion Rate pursuant to Section 3.05(b),
the provisions of Section 3.05(b) will apply in lieu of the provisions of this
Section 3.05(a).
The number of Additional Shares issuable in connection with the conversion
of Notes as described in the immediately preceding paragraph will be determined
by reference to the table attached as Schedule I hereto, based on the effective
date of such Fundamental Change transaction and the Share Price paid in
connection with such transaction; provided that if the Share Price is between
two Share Price amounts in the table or such 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 Share Price amounts and the two dates, as
applicable, based on a 365-day year. The "effective date" with respect to a
Fundamental Change transaction means the date that a Fundamental Change becomes
effective.
26
The Share Prices set forth in the first column of the table in Schedule I
hereto will be adjusted as of any date on which the Conversion Rate of the Notes
is adjusted pursuant to Section 10.04. The adjusted Share Prices will equal the
Share Prices applicable immediately prior to such adjustment, multiplied by a
fraction, the numerator of which is the Conversion Rate immediately prior to the
adjustment giving rise to the Share Price adjustment and the denominator of
which is the Conversion Rate as so adjusted. The number of Additional Shares
will be adjusted in the same manner as the Conversion Rate as set forth in
Section 10.04.
Notwithstanding the foregoing, in no event will the total number of Common
Shares issuable upon conversion per $1,000 principal amount of Notes exceed
583.4756, subject to adjustments in the same manner as the Conversion Rate as
set forth in Section 10.04.
A "Fundamental Change" will be deemed to have occurred upon a Change of
Control or a Termination of Trading.
A "Change of Control" of the Company shall be deemed to have occurred at
such time after the original issuance of the Notes as any of the following
events shall occur:
(i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), acquires the beneficial ownership (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that such Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, through a purchase,
amalgamation, merger or other acquisition transaction, of 50% or more of
the total voting power of the total outstanding Voting Stock of the Company
other than an acquisition by the Company, any of its Subsidiaries or any
employee benefit plans of the Company; or
(ii) the Company consolidates with, or amalgamates or merges with or
into, another Person or conveys, transfers, leases or otherwise disposes of
all or substantially all of its assets to any Person, or any Person
consolidates with, or amalgamates or merges with or into, the Company other
than:
(A) any transaction (1) that does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of the Capital Stock of the Company and (2) pursuant to which
holders of the Capital Stock of the Company immediately prior to the
transaction are entitled to exercise, directly or indirectly, 50% or
more of the total voting power of the Capital Stock of the Company
entitled to vote generally in the election of directors of the
continuing or surviving person immediately after the transaction;
27
(B) any amalgamation or merger for the purpose of changing the
Company's jurisdiction of organization and resulting in a
reclassification, conversion or exchange of outstanding Common Shares
solely into shares of common equity of the surviving or continuing
entity; or
(C) any transaction in which at least 95% of the consideration
for the Common Shares (excluding cash payments for fractional shares
and cash payments made in respect of dissenters' appraisal rights) in
the transaction or transactions otherwise constituting the Change of
Control consists of shares of common equity traded on a United States
national securities exchange or quoted on the NASDAQ National Market,
or which will be so traded or quoted when issued or exchanged in
connection with the Change of Control, and as a result of such
transaction or transactions the Notes become convertible solely into
such shares of common equity, or
(iii) during any consecutive two-year period, individuals who at the
beginning of that two-year period constituted the Board of Directors
(together with any new directors whose election to the Board of Directors,
or whose nomination for election by the shareholders of the Company, was
approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election were previously so approved) cease for any reason
to constitute a majority of the Board of Directors then in office; or
(iv) the shareholders of the Company pass a special resolution
approving a liquidation or dissolution and no additional approvals of the
Company's shareholders are required under applicable law to cause a
liquidation or dissolution.
(v) Beneficial ownership will be determined in accordance with Rule
13d-3 promulgated by the SEC under the Exchange Act. The term "person"
includes any syndicate or group that would be deemed a "person" under
Section 13(d)(3) of the Exchange Act. A "termination in trading" will be
deemed to have occurred any time the common shares (or other common shares
into which the notes are then convertible) are neither listed for trading
on a United States national or regional securities exchanges nor approved
for trading on the NASDAQ National Market, NASDAQ SmallCap Market or any
other established United States system of automated dissemination of
quotations of securities prices.
(b) Notwithstanding the foregoing, in the case of a Public Acquirer Change
of Control (as defined below), the Company may, in lieu of increasing the
Conversion Rate by Additional Shares as described in Section 3.05(a), elect to
adjust the Conversion Rate
28
and the related Conversion Obligation (as defined in Section 10.01) such that
from and after the effective date of such Public Acquirer Change of Control,
Holders of the Notes will be entitled to convert the Notes into a number of
shares of Public Acquirer Common Stock (as defined below) by multiplying the
Conversion Rate in effect immediately before the Public Acquirer Change of
Control by a fraction:
(i) the numerator of which will be (i) in the case of a consolidation,
amalgamation, merger or binding share exchange, pursuant to which the
Common Shares are converted into cash, securities or other property, the
average value of all cash and any other consideration (as determined by the
Board of Directors) paid or payable per Common Share or (ii) in the case of
any other Public Acquirer Change of Control, the average of the last
reported sale price of the Common Shares for the five consecutive trading
days prior to but excluding the effective date of such Public Acquirer
Change of Control, and
(ii) the denominator of which will be the average of the last reported
sale prices of the Public Acquirer Common Stock for the five consecutive
trading days commencing on the Trading Day next succeeding the effective
date of such Public Acquirer Change of Control.
A "Public Acquirer Change of Control" means any event constituting a Change
of Control that would otherwise obligate the Company to increase the Conversion
Rate as described in Section 3.05(a) and the acquirer (or any entity that is a
directly or indirectly wholly-owned Subsidiary of the acquirer or of which the
acquirer is a directly or indirectly wholly-owned Subsidiary) has a class of
common stock traded on a national securities exchange or quoted on the NASDAQ
National Market or which will be so traded or quoted when issued or exchanged in
connection with such event (the "Public Acquirer Common Stock").
After the adjustment of the Conversion Rate in connection with a Public
Acquirer Change of Control, the Conversion Rate will be subject to further
similar adjustments in the event that any of the events described in Section
10.01 occur thereafter.
Upon a Public Acquirer Change of Control, if the Company so elects, Holders
may convert the Notes at the adjusted Conversion Rate described in the third
preceding paragraph but will not be entitled to the increased Conversion Rate
described under Section 3.05(a). The Company is required to notify Holders of
its election in writing of such transaction. In addition, the Holder can also,
subject to certain conditions, require the Company to repurchase all or a
portion of its Notes as described under Section 3.05(a).
(c) Prior to or on the 30th day after the occurrence of a Fundamental
Change, the Company, or, at the written request and expense of the Company prior
to or on the 30th day after such occurrence, the Trustee, shall give to all
Holders, in the manner provided in Section 12.02 hereof, notice of the
occurrence of the Fundamental Change and of the purchase right set forth herein
arising as a result thereof. The Company shall also deliver a copy of such
notice of a purchase right to the Trustee. The notice shall
29
include a form of Fundamental Change Purchase Notice (as defined in Section
3.05(d)) to be completed by the Holder and shall state:
(1) briefly, the events causing a Fundamental Change and the date
of such Fundamental Change;
(2) the date by which the Fundamental Change Purchase Notice
pursuant to this Section 3.05 must be given;
(3) the Fundamental Change Purchase Date;
(4) the Fundamental Change Purchase Price;
(5) the name and address of the Paying Agent and the Conversion
Agent;
(6) that Notes as to which a Fundamental Change Purchase Notice
has been given may be converted pursuant to Article 10 hereof only if
the Fundamental Change Purchase Notice has been withdrawn in
accordance with the terms of this Indenture;
(7) that Notes must be surrendered to the Paying Agent to collect
payment;
(8) that the Fundamental Change Purchase Price for any Note as to
which a Fundamental Change Purchase Notice has been duly given and not
withdrawn will be paid promptly following the later of the Fundamental
Change Purchase Date and the time of surrender of such Note as
described in (7) above;
(9) briefly, the procedures the Holder must follow to exercise
rights under this Section 3.05;
(10) briefly, the conversion rights of the Notes, including the
Conversion Rate and any adjustments thereto;
(11) the procedures for withdrawing a Fundamental Change Purchase
Notice;
(12) the CUSIP number of the Notes;
(d) A Holder may exercise its rights specified in this Section 3.05 upon
delivery of a written notice of purchase ("Fundamental Change Purchase Notice")
to the Paying Agent prior to the Fundamental Change Purchase Date, stating:
30
(1) the certificate number of the Note, if any, which the Holder
will deliver to be purchased or the appropriate Depositary procedures
if the Notes are not in certificated form;
(2) the portion of the principal amount of the Note which the
Holder will deliver to be purchased, which portion must be $1,000 or
any whole multiple thereof; and
(3) that such Note shall be purchased pursuant to the terms and
conditions specified in paragraph 5 on the reverse side of the Notes
and in this Indenture.
If the Notes are not in certificated form, a Holder's Fundamental Change
Purchase Notice must comply with the appropriate DTC procedures.
The delivery or book-entry transfer of such Note to the Paying Agent prior
to the Fundamental Change Purchase Date (together with all necessary
endorsements) at the offices of the Paying Agent shall be a condition to the
receipt by the Holder of the Fundamental Change Purchase Price therefor;
provided, however, that such Fundamental Change Purchase Price shall be so paid
pursuant to this Section 3.05 only if the Note so delivered to the Paying Agent
shall conform in all respects to the description thereof set forth in the
related Fundamental Change Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.05, a portion of a Note so delivered for purchase if the principal
amount of such portion is $1,000 or a whole 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 3.05 shall be consummated by the delivery of the consideration to be
received by the Holder promptly following the later of the Fundamental Change
Purchase Date and the time of delivery or book-entry transfer of the Note to the
Paying Agent in accordance with this Section 3.05.
Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Fundamental Change Purchase Notice contemplated by this
Section 3.05 shall have the right to withdraw such Fundamental Change Purchase
Notice at any time prior to the close of business on the Business Day prior to
the Fundamental Change Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.06.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Fundamental Change Purchase Notice or written withdrawal thereof.
Section 3.06. Effect of Fundamental Change Purchase Notice. Upon receipt by
the Paying Agent of the Fundamental Change Purchase Notice specified in Section
3.05(d), the Holder of the Note in respect of which such Fundamental Change
Purchase Notice was given shall (unless such Fundamental Change Purchase Notice
is withdrawn
31
as specified in the following two paragraphs) thereafter be entitled to receive
solely the Fundamental Change Purchase Price with respect to such Note. Such
Purchase Price shall be paid to such Holder, subject to receipt of consideration
for the Notes by the Paying Agent, promptly following the later of (x) the
Fundamental Change Purchase Date with respect to such Note (provided the
conditions in Section 3.05(d), as the case may be, have been satisfied) or (y)
the time of delivery or book-entry transfer of such Note to the Paying Agent by
the Holder thereof in the manner required by Section 3.05(d), as the case may
be. Notes in respect of which a Fundamental Change Purchase Notice has been
given by the Holder thereof may not be converted pursuant to Article 10 hereof
on or after the date of the delivery of such Fundamental Change Purchase Notice
unless such Fundamental Change Purchase Notice has first been validly withdrawn
as specified in the following two paragraphs.
A Fundamental Change 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 Fundamental Change Purchase Notice at any time prior to the close of
business on the Business Day immediately preceding the Fundamental Change
Purchase Date specifying:
(1) the certificate number of the Note in respect of which such
notice of withdrawal is being submitted or, if not in certificated
form, the applicable Depositary procedures,
(2) the principal amount of the Note with respect to which such
notice of withdrawal is being submitted, and
(3) the principal amount, if any, of such Note which remains
subject to the original Fundamental Change 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 3.05 if there
has occurred (prior to, on or after, as the case may be, the giving, by the
Holders of such Notes, of the required Fundamental Change Purchase Notice) and
is continuing an Event of Default (other than a default in the payment of the
Fundamental Change 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 Fundamental Change Purchase Notice has been withdrawn in
compliance with this Indenture, or (y) held by it during the continuance of an
Event of Default (other than a default in the payment of the Fundamental Change
Purchase Price with respect to such Notes) in which case, upon such return, the
Fundamental Change Purchase Notice with respect thereto shall be deemed to have
been withdrawn.
Section 3.07. Deposit of Fundamental Change Purchase Price. Prior to 10:00
a.m. (New York City time) on the Fundamental Change 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 Section 2.05) an amount of cash
(in immediately
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available funds if deposited on such Business Day) sufficient to pay the
aggregate Fundamental Change Purchase Price of all the Notes or portions thereof
which are to be purchased as of the Fundamental Change Purchase Date.
If the Trustee or other Paying Agent appointed by the Company, or the
Company or an Affiliate of the Company, if it or such Affiliate is acting as the
Paying Agent, holds cash sufficient to pay the aggregate Fundamental Change
Purchase Price of all the Notes or portions thereof that are to be purchased as
of the Fundamental Change Purchase Date (i) such Notes will cease to be
outstanding, (ii) interest on such Notes will cease to accrue and (iii) all
other rights of the holders of such Notes will terminate other than the right to
receive the Fundamental Change Purchase Price upon delivery of the Notes,
whether or not book-entry transfer of the Notes has been made or the Notes have
been delivered to the Trustee or Paying Agent.
Section 3.08. Notes Purchased in Part. Any 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 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 3.09. Covenant to Comply with Securities Laws Upon Purchase of
Notes. In connection with any offer to purchase or purchase of Notes under
Section 3.05 hereof (provided that 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, Rule 14e-1 and
any other tender offer rules under the Exchange Act which may then be
applicable, (ii) file the related Schedule TO (or any successor schedule, form
or report) or any other schedule required 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 3.05 to be exercised in the time and in the
manner specified in Section 3.05.
Section 3.10. Repayment to the Company. The Trustee and the Paying Agent
shall return to the Company any cash or Common Shares that remain unclaimed as
provided in paragraph 12 of the Notes, together with interest or dividends, if
any, thereon, held by them for the payment of the Fundamental Change Purchase
Price; provided, however, that to the extent that the aggregate amount of cash
deposited by the Company pursuant to Section 3.07 exceeds the aggregate
Fundamental Change Purchase Price of the Notes or portions thereof which the
Company is obligated to purchase as of the Fundamental Change Purchase Date then
promptly after the Business Day following the Fundamental Change Purchase Date
the Trustee shall return any such excess to the Company together with interest,
if any, thereon.
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ARTICLE 4
COVENANTS
Section 4.01. Payment of Principal, Premium, Interest on the Notes. The
Company will duly and punctually pay the principal of and premium, if any, and
interest (including Liquidated Damages, if any) in respect of the Notes in
accordance with the terms of the Notes and this Indenture. The Company will
deposit or cause to be deposited with the Trustee as directed by the Trustee, no
later than the day of the Stated Maturity of any Note or installment of
interest, all payments so due. The principal amount, Fundamental Change Purchase
Price and cash interest shall be considered paid on the applicable date due if
on such date (or, in the case of a Fundamental Change Purchase Price on the
Business Day following the applicable Fundamental Change Purchase Date) the
Trustee or the Paying Agent holds, in accordance with this Indenture, money or
Notes, if permitted hereunder, sufficient to pay all such amounts then due.
The Company shall, to the extent permitted by law, pay cash interest on
overdue amounts at the rate per annum set forth in paragraph 1 of the Notes,
which interest shall accrue from the date such overdue amount was originally due
to the date payment of such amount, including interest thereon, has been made or
duly provided for. All such interest shall be payable on demand.
Section 4.02. Reports by the Company. The Company shall file with the
Trustee (and the SEC after the Indenture becomes qualified under the TIA), and
transmit to holders of Notes, such information, documents and other reports and
such summaries thereof, as may be required pursuant to the TIA at the times and
in the manner provided pursuant to the TIA, whether or not the Notes are
governed by the TIA; provided, however, that any such information, documents or
reports required to be filed with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act shall be filed with the Trustee within fifteen (15) days after the
same is so required to be filed with the SEC; provided, however, that delivery
may be effected in accordance with the provisions of Rule 19a-1 under the TIA if
and during any time the Company is eligible thereunder; and provided further,
that the Company shall not be required to deliver to the Trustee any material
for which the Company has sought and received confidential treatment by the SEC.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.03. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on December 31, 2005) an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
34
Section 4.04. Further Instruments and Acts. Upon request of the Trustee,
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
Section 4.05. Maintenance of Office or Agency. The Company will maintain in
the Borough of Manhattan, the City of New York, an office or agency of the
Trustee, Note Registrar, Paying Agent and Conversion Agent where Notes may be
presented or surrendered for payment, where Notes may be surrendered for
registration of transfer, exchange, purchase or conversion and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Corporate Trust Office and each office or agency of the Trustee in
the Borough of Manhattan, the City of New York, shall initially be one such
office or agency for all of the aforesaid purposes. The Company shall give
prompt written notice to the Trustee of the location, and of any change in the
location, of any such office or agency (other than a change in the location of
the office of the Trustee). If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 12.02.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York, for such purposes.
Section 4.06. Delivery of Certain Information. At any time when the Company
is not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a
holder or any beneficial holder of Notes or Common Shares issued upon conversion
thereof, the Company will promptly furnish or cause to be furnished Rule 144A
Information (as defined below) to such Holder or any beneficial holder of Notes
or holder of Common Shares issued upon conversion of Notes, or to a prospective
purchaser of any such security designated by any such holder, as the case may
be, to the extent required to permit compliance by such Holder or holder with
Rule 144A under the Securities Act in connection with the resale of any such
security. "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act.
Section 4.07. Existence. Subject to Article 5, the Company will do or cause
to be done all things necessary to preserve and keep in full force and effect
its existence and rights (charter and statutory); provided, however, that the
Company shall not be required to preserve any such right if the Company shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and that the loss thereof is not disadvantageous in
any material respect to the Noteholders.
Section 4.08. Maintenance of Properties. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Significant Subsidiary
35
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Significant Subsidiary and not
disadvantageous in any material respect to the Noteholders.
Section 4.09. Payment of Taxes and Other Claims. The Company will pay or
discharge, or cause to be paid or discharged, before the same may become
delinquent, all taxes, assessments and governmental charges levied or imposed
upon the Company or any Significant Subsidiary or upon the income, profits or
property of the Company or any Significant Subsidiary, all claims for labor,
materials and supplies which, if unpaid, might by law become a lien or charge
upon the property of the Company or any Significant Subsidiary and (iii) all
stamps and other duties, if any, which may be imposed by the United States or
any political subdivision thereof or therein in connection with the issuance,
transfer, exchange or conversion of any Notes or with respect to this Indenture;
provided, however, that, in the case of clauses (i) and (ii), the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim (A) if the failure to do so will not, in the
aggregate, have a material adverse impact on the Company, or (B) if the amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 4.10. Liquidated Damages Notice. In the event that the Company is
required to pay Liquidated Damages to holders of Notes pursuant to the
Registration Rights Agreement, the Company will provide written notice
("Liquidated Damages Notice") to the Trustee of its obligation to pay Liquidated
Damages no later than fifteen days prior to the proposed payment date for the
Liquidated Damages, and the Liquidated Damages Notice shall set forth the amount
of Liquidated Damages to be paid by the Company on such payment date. The
Trustee shall not at any time be under any duty or owe a responsibility to any
holder of Notes to determine the Liquidated Damages, or with respect to the
nature, extent or calculation of the amount of Liquidated Damages when made, or
with respect to the method employed in such calculation of the Liquidated
Damages.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. When Company May Merge or Transfer Assets. The Company may,
without the consent of the Holders of the Notes, consolidate or amalgamate with,
merge with or convert into any other Person or convey, transfer or lease all or
substantially all of its properties and assets to any other Person, if:
36
(a) such Person (other than an individual) is organized and validly
existing under the laws of Bermuda or the United States or any of its political
subdivisions and such Person shall expressly remain liable for or assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of the Company under the
Notes and this Indenture;
(b) at the time of such transaction, no Event of Default and no event
which, after notice or lapse of time, would become an Event of Default, shall
have happened and be continuing; and
(c) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
amalgamation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture, comply with this Article 5 and that all conditions precedent herein
provided for relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of the properties and assets of one or more Subsidiaries (other than
to the Company or another Subsidiary), which, if such assets were owned by the
Company, would constitute all or substantially all of the properties and assets
of the Company, shall be deemed to be the transfer of all or substantially all
of the properties and assets of the Company.
The successor person formed by such consolidation or amalgamation or into
which the Company is merged or the successor person to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor had been named as the Company herein; and
thereafter, except in the case of a lease and obligations the Company may have
under a supplemental indenture pursuant to Section 10.11, the Company shall be
discharged from all obligations and covenants under this Indenture and the
Notes. Subject to Section 9.06, the Company, the Trustee and the successor
person shall enter into a supplemental indenture to evidence the succession and
substitution of such successor person and such discharge and release of the
Company.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. An "Event of Default" occurs if:
(a) the Company fails to pay when due the principal of or premium, if any,
on any of the Notes at maturity, upon exercise of a repurchase right or
otherwise;
(b) the Company fails to pay an installment of interest (including
Liquidated Damages, if any) on any of the Notes that continues for 30 days after
the date when due;
37
(c) the Company fails to deliver Common Shares, together with cash in lieu
of fractional shares, when such Common Shares or cash in lieu of fractional
shares are required to be delivered upon conversion of a Note and such failure
continues for 10 days after such delivery date;
(d) the Company fails to give notice regarding a Fundamental Change within
the time period specified in Section 3.05;
(e) the Company fails to perform or observe any other term, covenant or
agreement contained in the Notes or this Indenture for a period of 60 days after
receipt by the Company of a Notice of Default (as defined below);
(f) the Company or any Significant Subsidiary fails to make any payment by
the end of the applicable grace period, if any, after the final scheduled
payment date for such payment with respect to any indebtedness for borrowed
money in an aggregate amount in excess of $10 million or indebtedness for
borrowed money of the Company or any Significant Subsidiary in an aggregate
amount in excess of $10 million shall have been accelerated or otherwise
declared due and payable, or required to be prepaid or repurchased (other than
by regularly scheduled required prepayment) prior to the scheduled maturity
thereof as a result of a default with respect to such indebtedness, in either
case without such indebtedness referred to in subclause (i) or (ii) of this
clause (f) having been discharged, cured, waived, rescinded or annulled, for a
period of 30 days after receipt by the Company of a Notice of Default;
(g) the Company or any Significant Subsidiary fails to make any payment on
a final judgment in an aggregate amount in excess of $10 million without such
judgment having been paid, discharged or stayed for a period of 60 days;
(h) the Company, or any Significant Subsidiary, or any Subsidiaries of the
Company which in the aggregate would constitute a Significant Subsidiary
pursuant to or under or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against it in an
involuntary case or proceeding or the commencement of any case against it;
(iii) consents to the appointment of a Custodian of it or for any
substantial part of its property;
(iv) makes a general assignment for the benefit of its creditors;
(v) files a petition in bankruptcy or answer or consent seeking
reorganization or relief; or
(vi) consents to the filing of such a petition or the appointment of
or taking possession by a Custodian; and
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(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Significant Subsidiary or
any Subsidiaries of the Company which in the aggregate would constitute a
Significant Subsidiary in an involuntary case or proceeding, or adjudicates
the Company or any Significant Subsidiary or any Subsidiaries of the
Company which in the aggregate would constitute a Significant Subsidiary
insolvent or bankrupt;
(ii) appoints a Custodian of the Company or any Significant Subsidiary
or any Subsidiaries of the Company which in the aggregate would constitute
a Significant Subsidiary or for any substantial part of its or their
properties; or
(iii) orders the winding up or liquidation of the Company or any
Significant Subsidiary or any Subsidiaries of the Company which in the
aggregate would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 days.
For purposes of Sections 6.01(h) and 6.01(i) above:
"Bankruptcy Law" means Title 11, United States Code, or any similar federal
or state law for the relief of debtors.
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (e) or (f) above is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the Notes at the time outstanding notify the Company and the
Trustee, of the Default and the Company does not cure such Default (and such
Default is not waived) within the time specified in clause (e) or (f) above
after actual receipt of such notice. Any such notice must specify the Default,
demand that it be remedied and state that such notice is a "Notice of Default."
The Company shall deliver to the Trustee, within five Business Days of
becoming aware of the occurrence of an Event of Default, written notice thereof.
In addition, the Company shall deliver to the Trustee, within 30 days after it
becomes aware of the occurrence thereof, written notice of any event which with
the lapse of time would become an Event of Default under clause (e) above, its
status and what action the Company is taking or proposes to take with respect
thereto.
The Trustee shall, within 90 days of the occurrence of an Event of Default,
give to the Noteholders notice of all uncured Events of Defaults known to it,
provided that the Trustee shall be protected in withholding such notice if the
Trustee, in good faith,
39
determines that the withholding of such notice is in the best interest of the
Noteholders, except in the case of an Event of Default described in Section
6.01(a) or 6.01(b).
Section 6.02. Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.01(h) or 6.01(i)) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in aggregate
principal amount of the Notes at the time outstanding by notice to the Company
and the Trustee, may declare the Notes due and payable at their principal amount
together with accrued interest (including Liquidated Damages, if any). Upon a
declaration of acceleration, such principal and accrued and unpaid interest to
the date of payment shall be immediately due and payable. If an Event of Default
is cured prior to any such declaration by the Trustee or the Holders, the
Trustee and the Holders shall not be entitled to declare the Notes due and
payable as provided herein as a result of such cured Event of Default and any
such cured Event of Default shall be deemed waived by the Holders and the
Trustee.
If an Event of Default specified in Sections 6.01(h) or 6.01(i) above
occurs and is continuing, then the principal and the accrued interest (including
Liquidated Damages, if any) on all the Notes shall become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Noteholders.
The Holders of a majority in aggregate principal amount of the Notes at the
time outstanding, by notice to the Trustee (and without notice to any other
Noteholder) may rescind or annul an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of the principal
and any accrued cash interest (including Liquidated Damages, if any) that have
become due solely as a result of acceleration and if all amounts due to the
Trustee under Section 7.06 have been paid. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
Section 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the principal, the premium, if any, and any accrued cash interest (including
Liquidated Damages, if any) on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if the Trustee does not possess
any of the Notes or produce any of the Notes in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of, or acquiescence in, the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.04. Waiver of Past Defaults. The Holders of a majority in
aggregate principal amount of the Notes at the time outstanding, by notice to
the Trustee (and without notice to any other Noteholder), may waive an existing
Event of Default and its consequences except (1) an Event of Default described
in Section 6.01(a) or 6.01(b) or (2) an Event of Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Noteholder affected. When an Event of Default is
40
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Event of Default or impair any consequent right.
Section 6.05. Control By Majority. The Holders of a majority in aggregate
principal amount of the Notes at the time outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee. However,
the Trustee may refuse to follow any direction that conflicts with law or this
Indenture or that the Trustee determines in good faith is prejudicial to the
rights of other Noteholders or would involve the Trustee in personal liability
unless the Trustee is offered indemnity satisfactory to it against loss,
liability or expense.
Section 6.06. Limitation on Suits. A Noteholder may not pursue any remedy
with respect to this Indenture or the Notes unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in aggregate principal amount of the
Notes at the time outstanding make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity satisfactory
to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of such notice, request and offer of security or indemnity; and
(5) the Holders of a majority in aggregate principal amount of the
Notes at the time outstanding do not give the Trustee a direction
inconsistent with the request during such 60-day period.
A Noteholder may not use this Indenture to prejudice the rights of any
other Noteholder or to obtain a preference or priority over any other
Noteholder.
Section 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
the principal amount, premium, if any, Fundamental Change Purchase Price, or any
accrued cash interest (including Liquidated Damages, if any) in respect of the
Notes held by such Holder, on or after the respective due dates expressed in the
Notes or any Fundamental Change Purchase Date, and to convert the Notes in
accordance with Article 10, or to bring suit for the enforcement of any such
payment on or after such respective dates or the right to convert, shall not be
impaired or affected adversely without the consent of such Holder.
Section 6.08. Collection Suit by Trustee. If an Event of Default described
in Section 6.01(a) or 6.01(b) occurs and is continuing, the Trustee may recover
judgment in
41
its own name and as trustee of an express trust against the Company for the
whole amount owing with respect to the Notes and the amounts provided for in
Section 7.06.
Section 6.09. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Notes or the property of the Company
or of such other obligor or their creditors, the Trustee (irrespective of
whether the principal amount, Fundamental Change Purchase Price, or any accrued
cash interest in respect of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of any such amount)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of the principal amount,
Fundamental Change Purchase Price, or any accrued cash interest and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel or
any other amounts due the Trustee under Section 7.06) and of the Holders allowed
in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.06.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 6.10. Priorities. If the Trustee collects any money pursuant to
this Article 6, it shall pay out the money in the following order:
(1) to the Trustee for amounts due under Section 7.06;
(2) to Noteholders for amounts due and unpaid on the Notes for the
principal amount, Fundamental Change Purchase Price or any accrued cash
interest (including Liquidated Damages, if any) as the case may be,
ratably, without preference or priority of any kind, according to such
amounts due and payable on the Notes; and
42
(3) the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 6.10. At least 15 days before such record
date, the Trustee shall mail to each Noteholder and the Company a notice that
states the record date, the payment date and the amount to be paid.
Section 6.11. Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant (other than the Trustee) in the suit of an
undertaking to pay the costs of the suit in the manner and to the extent
provided in the TIA, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in aggregate principal amount of the Notes at the
time outstanding.
Section 6.12. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other law
wherever enacted, now or at any time hereafter in force, which would prohibit or
forgive the Company from paying all or any portion of the principal amount,
Fundamental Change Purchase Price, or any accrued cash interest (including
Liquidated Damages, if any) in respect of Notes, or any interest on such
amounts, as contemplated herein, or which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
Section 7.01. Duties and Responsibilities of the Trustee; During Default;
Prior to Default. The Trustee, prior to the occurrence of an Event of Default
hereunder and after the curing or waiving of all such Events of Default which
may have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default hereunder
has occurred (which has not been cured or waived), the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a reasonable person would
exercise or use under the circumstances in the conduct of his own affairs.
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No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default hereunder and after the
curing or waiving of all such Events of Default which may have occurred:
(i) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture, and the Trustee shall
not be liable except for the performance of such duties and obligations as
are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty
to examine the same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(c) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders pursuant to Section 6.05 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers.
Section 7.02. Certain Rights of the Trustee. Subject to Section 7.01:
(a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, Officers' Certificate or
any other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, Note or other paper or document
(whether in its original or facsimile form) believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned herein
shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of
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Directors may be evidenced to the Trustee by a copy thereof certified by the
secretary or an assistant secretary of the Company;
(c) the Trustee may consult with counsel of its selection and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the trusts
or powers vested in it by this Indenture with the request, order or direction of
any of the Noteholders pursuant to the provisions of this Indenture, unless such
Noteholders shall have offered to the Trustee reasonable security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by it
in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and after the
curing or waiving of all such Events of Default, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, appraisal, bond, debenture, note, coupon, security, or other
paper or document unless requested in writing to do so by the Holders of not
less than a majority in aggregate principal amount of the Notes then
outstanding; provided that, if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Indenture, the Trustee may require reasonable indemnity against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of every such
investigation shall be paid by the Company or, if paid by the Trustee or any
predecessor trustee, shall be repaid by the Company upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder;
(h) the Trustee shall not be required to take notice or be deemed to have
notice of any Event of Default, except failure of the Company to cause to be
made any of the payments required to be made to the Trustee, unless the Trustee
shall be specifically notified by a writing of such default by the Company or by
the Holders of at least 25% aggregate principal amount of the Notes then
outstanding delivered to the Corporate Trust Office of the Trustee and, in the
absence of such notice so delivered the Trustee may conclusively assume no
default exists;
(i) the rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and
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shall be enforceable by, the Trustee in each of its capacities hereunder, and
each agent, custodian and other Person employed to act hereunder;
(j) before taking any action or refraining from taking any action under
this Indenture, the Trustee may require that indemnity satisfactory to it be
furnished for the reimbursement of all expenses to which it may be put and to
protect it against all liability, including costs incurred in defending itself
against any and all charges, claims, complaints, allegations, assertions or
demands of any nature whatsoever, except liability which is adjudicated to be a
result of the Trustee's negligence or willful misconduct in connection with any
such action; and
(k) whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct of, or affecting the liability of, or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.02.
Section 7.03. Trustee Not Responsible for Recitals, Dispositions of Notes
or Application of Proceeds Thereof. The recitals contained herein and in the
Notes, except the Trustee's certificates of authentication, shall be taken as
the statements of the Company, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representation as to the validity
or sufficiency of this Indenture or of the Notes. The Trustee shall not be
accountable for the use or application by the Company of any of the Notes or of
the proceeds thereof.
Section 7.04. Trustee and Agents May Hold Notes; Collections, Etc. The
Trustee or any agent of the Company or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Notes with the same rights it
would have if it were not the Trustee or such agent and, subject to Sections
7.08 and 7.13, if operative, may otherwise deal with the Company and receive,
collect, hold and retain collections from the Company with the same rights it
would have if it were not the Trustee or such agent.
Section 7.05. Moneys Held by Trustee. Subject to the provisions of Section
8.04 hereof, all moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
mandatory provisions of law. Neither the Trustee nor any agent of the Company or
the Trustee shall be under any liability for interest on any moneys received by
it hereunder. Under no circumstances shall the Trustee be liable in its
individual capacity for the obligations evidenced by the Notes. In accepting the
trust hereby created, the Trustee acts solely as Trustee for the Holders of the
Notes and not in its individual capacity and all persons, including without
limitation the Holders of Notes and the Company having any claim against the
Trustee arising from this Indenture shall look only to the funds and accounts
held by the Trustee hereunder for payment except as otherwise provided herein.
Section 7.06. Compensation and Indemnification of Trustee and Its Prior
Claim. The Company covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, such compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) to be
46
agreed to in writing by the Trustee and the Company, and the Company covenants
and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its
request for all expenses, disbursements and advances incurred or made by or on
behalf of it in accordance with any of the provisions of this Indenture
(including (i) the reasonable compensation and the expenses and disbursements of
its counsel and of all agents and other persons not regularly in its employ and
(ii) interest at the prime rate on any disbursements and advances made by the
Trustee and not paid by the Company within 5 days after receipt of an invoice
for such disbursement or advance) except any such expense, disbursement or
advance as shall be determined by a court of competent jurisdiction to have been
caused by its own negligence or bad faith. The Company also covenants to fully
indemnify each of the Trustee, each predecessor Trustee, any Authenticating
Agent and any officer, director, employee or agent of the Trustee, each such
predecessor Trustee or any such Authenticating Agent for, and to hold it
harmless against, any and all loss, liability, claim, damage or expense
(including legal fees and expenses) incurred without negligence or willful
misconduct on its part, arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder and its duties
hereunder, including the costs and expenses of defending itself against or
investigating any claim of liability in the premises. The obligations of the
Company under this Section 7.06 to compensate and indemnify the Trustee, each
predecessor Trustee, any Authenticating Agent and any officer, director,
employee or agent of the Trustee, each such predecessor Trustee or any such
Authenticating Agent and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall be a senior claim to that of the
Notes upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the Holders of particular Notes,
and the Notes are hereby effectively subordinated to such senior claim to such
extent. The provisions of this Section 7.06 shall survive the termination of
this Indenture and the resignation or removal of the Trustee. The Trustee's fees
and expenses are intended to constitute an "Administrative Expense" under the
Bankruptcy Law.
No provision of this Indenture shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or powers,
if repayment of such funds or adequate indemnity against such risk or liability
is not assured to its satisfaction.
Section 7.07. Right of Trustee to Rely on Officers' Certificate, Etc.
Subject to Sections 7.01 and 7.02, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
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Section 7.08. Conflicting Interests. If the Trustee has or shall acquire a
conflicting interest within the meaning of the TIA, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the TIA.
Section 7.09. Persons Eligible for Appointment as Trustee. The Trustee
shall at all times be a corporation or banking association having a combined
capital and surplus of at least $50,000,000. If such corporation or banking
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purposes of this Section 7.09, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 7.09, the Trustee shall resign immediately in the manner and with the
effect specified in Section 7.10.
Section 7.10. Resignation and Removal; Appointment of Successor Trustee.
(a) The Trustee, or any trustee or trustees hereafter appointed, may at any time
resign with respect to one or more or all series of Notes by giving written
notice of resignation to the Company and by mailing notice thereof by first
class mail to the Holders of Notes at their last addresses as they shall appear
on the Note Register. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee or trustees by written instrument in
duplicate, executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee or trustees. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the mailing of such
notice of resignation, the resigning trustee may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
trustee, or any Noteholder who has been a bona fide Holder of a Note for at
least six months may, subject to the provisions of Section 7.11, on behalf of
himself and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of Section
7.08 with respect to any Notes after written request therefor by the
Company or by any Noteholder who has been a bona fide Holder of a Note for
at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 7.09 and shall fail to resign after written request
therefor by the Company or by any Noteholder; or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee
48
or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation; or
(iv) the Company shall determine that the Trustee has failed to
perform its obligations under this Indenture in any material respect;
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 7.11, any Noteholder who has been a bona fide Holder of a
Note for at least six months may on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee. If no successor trustee shall have been
appointed and have accepted appointment within 30 days after a notice of removal
has been given, the removed trustee may petition a court of competent
jurisdiction for the appointment of a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the Notes at
the time outstanding may at any time remove the Trustee and appoint a successor
trustee by delivering to the Trustee so removed, to the successor trustee so
appointed and to the Company the evidence provided for in Section 1.05 of the
action in that regard taken by the Noteholders.
(d) Any resignation or removal of the Trustee and any appointment of a
successor trustee pursuant to any of the provisions of this Section 7.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 7.11.
Section 7.11. Acceptance of Appointment by Successor Trustee. Any successor
trustee appointed as provided in Section 7.10 shall execute and deliver to the
Company and to the predecessor trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as trustee hereunder; but, nevertheless, on the written request of the
Company or of the successor trustee, upon payment of its charges then unpaid,
the trustee ceasing to act shall pay over to the successor trustee all moneys at
the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Company shall
execute any and all instruments in writing for more fully and certainly vesting
in and confirming to such successor trustee all such rights and powers. Any
trustee ceasing to act shall, nevertheless, retain a prior claim upon all
property or funds held or collected by such trustee to secure any amounts then
due it pursuant to the provisions of Section 7.06.
49
No successor trustee shall accept appointment as provided in this Section
7.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 7.08 and eligible under the provisions
of Section 7.09.
Upon acceptance of appointment by any successor trustee as provided in this
Section 7.11, the Company shall mail notice thereof by first class mail to the
Holders of Notes at their last addresses as they shall appear in the Note
Register. If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 7.10. If the Company fails to
mail such notice within ten days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Company.
Section 7.12 . Merger, Conversion, Consolidation or Succession to Business
of Trustee. Any corporation or banking association into which the Trustee may be
merged or converted or with which it may be consolidated, or any corporation or
banking association resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation or banking association
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder; provided that such
corporation or banking association shall be qualified under the provisions of
Section 7.08 and eligible under the provisions of Section 7.09, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding. In case at the
time such successor to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor Trustee or Authenticating Agent and deliver such Notes so
authenticated; and, in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee or any Authenticating Agent
appointed by such successor Trustee may authenticate such Notes either in the
name of any predecessor hereunder or in the name of the successor Trustee; and
in all such cases such certificate shall have the full force and effect that
this Indenture provides for the certificate of authentication of the Trustee;
provided that the right to adopt the certificate of authentication of any
predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 7.13. Preferential Collection of Claims Against the Company. If and
when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Notes), the Trustee shall be subject to the provisions of the
TIA regarding the collection of the claims against the Company (or any such
other obligor).
Section 7.14. Reports By The Trustee. (a) Within sixty (60) days after May
15 of each year commencing with the year 2005, the Trustee shall transmit to
Holders and other persons such reports dated as of May 15 of the year in which
such reports are made concerning the Trustee and its actions under this
Indenture as may be required pursuant to the TIA.
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(b) A copy of each such report shall, at the time of such transmission to
Noteholders, be furnished to the Company and be filed by the Trustee with each
stock exchange upon which the Notes are listed and also with the SEC. The
Company agrees to notify the Trustee when and as the Notes become admitted to
trading on any national securities exchange or become delisted therefrom.
Section 7.15. Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances. The Trustee shall transmit to the Noteholders, as the
names and addresses of such Holders appear on the Note Register, notice by mail
of all Events of Defaults which have occurred, such notice to be transmitted
within 90 days after the occurrence thereof, unless such defaults shall have
been cured before the giving of such notice; provided that, except in the case
of an Event of Default in the payment of the principal of, premium, if any, or
interest (including Liquidated Damages, if any) on any of the Notes when due or
in the payment of any repurchase obligation, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors or trustees and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the best interests of the Noteholders.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Discharge of Indenture. When the Company has deposited with
the Trustee cash sufficient to pay and discharge all outstanding Notes on the
date of their Stated Maturity together with any interest payable on such Notes,
then the Company may discharge its obligations under this Indenture while Notes
remain outstanding; provided that provisions of Section 2.04, Section 2.05,
Section 2.06, Section 2.07, Section 2.08, Section 4.01, Section 4.05, Section
7.06, Article 10 and this Article 8 shall survive until the Notes have been paid
in full. The Trustee shall join in the execution of a document prepared by the
Company acknowledging satisfaction and discharge of this Indenture on demand of
the Company accompanied by an Officers' Certificate and Opinion of Counsel as
required by Section 12.04 and at the cost and expense of the Company; the
Company, however, hereby agrees to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred by the Trustee and to
compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture or the Notes. The
Company will remain obligated to issue Common Shares upon conversion of the
Notes until such maturity as described under Article 10.
Section 8.02. [Intentionally Omitted.]
Section 8.03. Paying Agent to Repay Monies Held. Upon the discharge of this
Indenture, all monies then held by any Paying Agent of the Notes (other than the
Trustee) shall, upon written request of the Company, be repaid to it or paid to
the Trustee, and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
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Section 8.04. Return of Unclaimed Monies. Subject to the requirements of
applicable law, any monies deposited with or paid to the Trustee or the Paying
Agent for payment of the principal of, premium, if any, or interest on Notes and
not applied but remaining unclaimed by the holders of Notes for two years after
the date upon which the principal of, premium, if any, or interest on such
Notes, as the case may be, shall have become due and payable, shall be repaid to
the Company by the Trustee or the Paying Agent on written demand and all
liability of the Trustee or the Paying Agent shall thereupon cease with respect
to such monies; and the holder of any of the Notes shall thereafter look only to
the Company for any payment that such holder may be entitled to collect unless
an applicable abandoned property law designates another Person.
ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.01. Without Consent of Holders. The Company and the Trustee may,
from time to time and at any time, enter into an indenture or indentures
supplemental hereto without the consent of any Noteholder for one or more of the
following purposes:
(a) adding to the Company's covenants for the benefit of the Holders;
(b) surrendering any right or power conferred upon the Company;
(c) providing for the continuation or assumption of the Company's
obligations to the Holders in the case of an amalgamation, merger,
consolidation, conveyance, transfer or lease in accordance with Article 5;
(d) increasing the Conversion Rate or reducing the Conversion Price;
provided that the increase or reduction will not adversely affect the interests
of Holders in any material respect;
(e) complying with the requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(f) making any changes or modifications to this Indenture necessary in
connection with the registration of the Notes under the Securities Act as
contemplated by the Registration Rights Agreement; provided that this action
does not adversely affect the interests of the Holders in any material respect;
(g) curing any ambiguity or correcting or supplementing any defective
provision contained in this Indenture; provided that such modification or
amendment does not adversely affect the interests of the Holders in any material
respect; provided, however, that any change to conform this Indenture to the
Description of the Notes contained in the Offering Memorandum shall be deemed
not to adversely affect the interests of the Holders of the Notes in any
material respect;
(h) establishing the forms or terms of the Notes;
52
(i) evidencing the acceptance of appointment by a successor ▇▇▇▇▇▇▇;
(j) adding or modifying any other provisions which the Company and the
Trustee may deem necessary or desirable and which will not adversely affect the
interests of the Holders in any material respect;
(k) complying with the requirements regarding amalgamation, merger or
transfer of assets; or
(l) providing for uncertificated Notes in addition to the certificated
Notes so long as such uncertificated Notes are in registered form for purpose of
the Internal Revenue Code of 1986, as amended.
Notwithstanding any other provision of the Indenture or the Notes, the
Registration Rights Agreement and the obligation to pay Liquidated Damages
thereunder may be amended, modified or waived in accordance with the provisions
of the Registration Rights Agreement.
Section 9.02. With Consent of Holders. With the written consent of the
Holders of at least a majority in aggregate principal amount of the Notes at the
time outstanding, the Company and the Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or change in any manner or eliminating any of the
provisions of this Indenture or any supplemental indenture or of modifying in
any manner the rights of the Holders of the Notes. However, without the consent
of each Noteholder so affected, a supplemental indenture may not:
(a) change the payment date of the principal of or any installment of
interest on any Note (including any payment of Liquidated Damages);
(b) reduce the principal amount of, or any premium or interest on
(including any payment of Liquidated Damages), any Note or the Additional Shares
a Holder is entitled to receive pursuant to Section 3.05(a);
(c) change the currency of payment of such Note or interest thereon;
(d) impair the right to institute suit for the enforcement of any payment
on or with respect to any Note;
(e) modify the Company's obligations to maintain an office or agency in New
York City;
(f) except as otherwise permitted or contemplated by provisions concerning
corporate reorganizations, adversely affect the repurchase option of Holders
upon a Fundamental Change or the conversion rights of Holders; or
(g) reduce the percentage in aggregate principal amount of Notes
outstanding necessary to modify or amend this Indenture or to waive any past
Event of Default.
53
It shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such consent approves the substance thereof.
After a supplemental indenture under this Section 9.02 becomes effective,
the Company shall mail to each Holder a notice briefly describing the
supplemental indenture.
Section 9.03. Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall comply with the TIA; provided
that this Section 9.03 shall not require such supplemental indenture or the
Trustee to be qualified under the TIA prior to the time such qualification is in
fact required under the terms of the TIA or the Indenture has been qualified
under the TIA, nor shall it constitute any admission or acknowledgment by any
party to such supplemental indenture that any such qualification is required
prior to the time such qualification is in fact required under the terms of the
TIA or the Indenture has been qualified under the TIA.
Section 9.04. Revocation and Effect of Consents, Waivers and Actions. Until
a supplemental indenture, waiver or other action by Holders becomes effective, a
consent thereto by a Holder of a Note hereunder is a continuing consent by the
Holder and every subsequent Holder of that Note or portion of the Note that
evidences the same obligation as the consenting Holder's Note, even if notation
of the consent, waiver or action is not made on the Note. However, any such
Holder or subsequent Holder may revoke the consent, waiver or action as to such
Holder's Note or portion of the Note if the Trustee receives the notice of
revocation before the date the supplemental indenture, waiver or action becomes
effective. After a supplemental indenture, waiver or action becomes effective,
it shall bind every Noteholder.
Section 9.05. Notation on or Exchange of Notes. Notes authenticated and
delivered after the execution of any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Notes so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee or an Authenticating Agent in
exchange for outstanding Notes.
Section 9.06. Trustee to Sign Supplemental Indentures. The Trustee shall
sign any supplemental indenture authorized pursuant to this Article 9 if the
amendment contained therein does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign such supplemental indenture. In signing such supplemental indenture
the Trustee shall be provided with, and (subject to the provisions of Section
7.01) shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture.
54
Section 9.07. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Notes theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
ARTICLE 10
CONVERSION
Section 10.01. Conversion Right and Conversion Rate. Subject to and upon
compliance with the provisions of this Article, at the option of the Holder
thereof, any Note or any portion of the principal amount thereof which is $1,000
or a whole multiple of $1,000 may be converted at the principal amount thereof,
or of such portion thereof, into duly authorized, fully paid and nonassessable
Common Shares, at the Conversion Rate (the "Conversion Obligation"), determined
as hereinafter provided, in effect at the time of conversion. Such conversion
right shall expire at the close of business on the final maturity date of the
Notes.
In the case of a Fundamental Change for which the Holder exercises its
repurchase right with respect to a Note or portion thereof, such conversion
right in respect of the Note or portion thereof shall expire at the close of
business on the Business Day immediately preceding the Fundamental Change
Purchase Date.
The rate at which Common Shares shall be delivered upon conversion per
$1,000 principal amount of Notes (the "Conversion Rate") shall be initially
equal to 533.4756, which is equal to an initial Conversion Price of
approximately $1.87 per share. The Conversion Rate shall be adjusted in certain
instances as provided in paragraphs (a), (b), (c), (d), (e), (f), (g)and (i) of
Section 10.04 hereof.
Section 10.02. Exercise of Conversion Right. To exercise the conversion
right, the Holder of any Note to be converted shall surrender such Note duly
endorsed or assigned to the Company or in blank, at the office of any Conversion
Agent, accompanied by a duly signed conversion notice substantially in the form
attached to the Note to the Company stating that the Holder elects to convert
such Note or, if less than the entire principal amount thereof is to be
converted, the portion thereof to be converted.
Notes surrendered for conversion during the period from the close of
business on any Regular Record Date to the opening of business on the next
succeeding Interest Payment Date shall be accompanied by payment in New York
Clearing House funds or other funds acceptable to the Company of an amount equal
to the interest to be received on such Interest Payment Date on the principal
amount of Notes being surrendered for conversion.
Notes shall be deemed to have been converted immediately prior to the close
of business on the day of surrender of such Notes for conversion in accordance
with the foregoing provisions, and at such time the rights of the Holders of
such Notes as Holders
55
shall cease, and the Person or Persons entitled to receive the Common Shares
issuable upon conversion shall be treated for all purposes as the record holder
or holders of such Common Shares at such time. As promptly as practicable on or
after the conversion date, the Company shall cause to be issued and delivered to
such Conversion Agent a certificate or certificates for the number of full
Common Shares issuable upon conversion, together with payment in lieu of any
fraction of a share as provided in Section 10.03 hereof.
In the case of any Note which is converted in part only, upon such
conversion the Company shall execute and the Trustee or an Authenticating Agent
shall authenticate and deliver to the Holder thereof, at the expense of the
Company, a new Note or Notes of authorized denominations in aggregate principal
amount equal to the unconverted portion of the principal amount of such Notes.
If Common Shares to be issued upon conversion of a Note that is a
Restricted Security (a "Restricted Note"), or securities to be issued upon
conversion of a Restricted Note in part only, are to be registered in a name
other than that of the Holder of such Restricted Note, such Holder must deliver
to the Conversion Agent a certificate in substantially the form of Exhibit B-1
hereto, dated the date of surrender of such Restricted Note and signed by such
Holder, as to compliance with the restrictions on transfer applicable to such
Restricted Note. Neither the Trustee nor any Conversion Agent, Note Registrar or
transfer agent shall be required to register in a name other than that of the
Holder of Notes or Common Shares issued upon conversion of any such Restricted
Note not so accompanied by a properly completed certificate.
By delivering the full number of Common Shares issuable upon conversion,
together with a cash payment in lieu of fractional shares to the Conversion
Agent or to the Holder or such Holder's nominee or nominees, the Company will
have satisfied in full its Conversion Obligation with respect to such Note, and
upon such delivery accrued and unpaid Interest, if any, with respect to such
Note will be deemed to be paid in full rather than canceled, extinguished or
forfeited.
Section 10.03. Fractions of Shares. No fractional Common Shares shall be
issued upon conversion of any Note or Notes. If more than one Note shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issued upon conversion thereof shall be computed on the
basis of the aggregate principal amount of the Notes (or specified portions
thereof) so surrendered. Instead of any fractional Common Share which would
otherwise be issued upon conversion of any Note or Notes (or specified portions
thereof), the Company shall pay a cash adjustment in respect of such fraction
(calculated to the nearest one-100th of a share) in an amount equal to the same
fraction of the quoted price of the Common Shares as of the Trading Day
preceding the date of conversion.
Section 10.04. Adjustment of Conversion Rate. The Conversion Rate shall be
adjusted from time to time by the Company as follows:
56
(a) In case the Company shall hereafter pay a dividend, make a bonus issue
or make any other distribution to all holders of the outstanding Common Shares
in Common Shares, the Conversion Rate shall be increased so that the same shall
equal the rate determined by multiplying the Conversion Rate in effect at the
opening of business on the date following the Record Date for such dividend,
bonus issue or other distribution by a fraction,
(i) the numerator of which shall be the sum of the number of Common
Shares outstanding at the close of business on such Record Date plus the
total number of Common Shares constituting such dividend, bonus issue or
other distribution; and
(ii) the denominator of which shall be the number of Common Shares
outstanding at the close of business on such Record Date,
such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. If any dividend, bonus
issue or other distribution of the type described in this Section 10.04(a) is
declared but not so paid or made, the Conversion Rate shall again be adjusted to
the Conversion Rate that would then be in effect if such dividend, bonus issue
or other distribution had not been declared.
(b) In case the Company shall issue rights or warrants to all holders of
its outstanding Common Shares entitling them (for a period expiring within
forty-five (45) days after the Record Date for the issuance of such rights and
warrants) to subscribe for or purchase Common Shares at a price per share less
than the Closing Price on the Trading Day immediately preceding the date such
distribution is first publicly announced by the Company, the Conversion Rate
shall be increased so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to such Record Date
by a fraction,
(i) the numerator of which shall be the number of Common Shares
outstanding on such Record Date plus the total number of additional Common
Shares offered for subscription or purchase, and
(ii) the denominator of which shall be the sum of the number of Common
Shares outstanding at the close of business on such Record Date plus the
number of shares that the aggregate offering price of the total number of
shares so offered would purchase at a price equal to the Closing Price on
the Trading Day immediately preceding the date such distribution is first
publicly announced by the Company.
Such adjustment shall be successively made whenever any such rights or
warrants are issued, and shall become effective immediately after the opening of
business on the day following the Record Date for the issuance of such rights or
warrants. To the extent that Common Shares are not delivered after the
expiration of such rights or warrants, the Conversion Rate shall be readjusted
to the Conversion Rate that would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made on the
57
basis of delivery of only the number of Common Shares actually delivered. If
such rights or warrants are not so issued, the Conversion Rate shall again be
adjusted to be the Conversion Rate that would then be in effect if such Record
Date had not been fixed. In determining whether any rights or warrants entitle
the holders to subscribe for or purchase Common Shares at a price less than the
Closing Price for the Trading Day immediately preceding the date such
distribution is first publicly announced by the Company, and in determining the
aggregate offering price of such Common Shares, there shall be taken into
account any consideration received by the Company for such rights or warrants
and any amount payable on exercise or conversion thereof, the value of such
consideration, if other than cash, to be determined by the Board of Directors.
(c) In case outstanding Common Shares shall be subdivided into a greater
number of Common Shares, the Conversion Rate in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately increased, and conversely, in case
outstanding Common Shares shall be consolidated into a smaller number of Common
Shares, the Conversion Rate in effect at the opening of business on the day
following the day upon which such consolidation becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or consolidation becomes effective.
(d) In case the Company shall, by dividend, bonus issue or otherwise,
distribute to all holders of its Common Shares, shares of any class of Capital
Stock of the Company or evidences of its indebtedness or assets (including cash
or securities, but excluding (1) any rights or warrants referred to in Section
10.04(b), (2) any dividend, bonus issue or other distribution paid exclusively
in cash, (3) any dividend, bonus issue, or other distribution in connection with
a reclassification, amalgamation, consolidation, statutory share exchange,
merger, combination, sale of conveyance to which Section 10.11 hereof applies,
(any of the foregoing hereinafter in this Section 10.04(d)) called the
"Securities")), then, in each such case (unless the Company elects to reserve
such Securities for distribution to the Noteholders upon the conversion of the
Securities so that any such Holder converting Securities will receive upon such
conversion, in addition to the Common Shares to which such Holder is entitled,
the amount and kind of such Securities which such Holder would have received if
such Holder had converted its Securities into Common Shares immediately prior to
the Record Date for such distribution of the Securities) the Conversion Rate
shall be increased so that the same shall be equal to the rate determined by
multiplying the Conversion Rate in effect on the Record Date with respect to
such distribution by a fraction,
(i) the numerator of which shall be the Current Market Price on such
Record Date; and
(ii) the denominator of which shall be the Current Market Price on
such Record Date less the Fair Market Value (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) on such Record Date of the portion of
the Securities so distributed applicable to one Common Share,
58
such adjustment to become effective immediately prior to the opening of business
on the day following such Record Date; provided that if the then Fair Market
Value (as so determined) of the portion of the Securities so distributed
applicable to one Common Share is equal to or greater than the Current Market
Price on such Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Noteholder shall have the right to receive
upon conversion the amount of Securities such holder would have received had
such holder converted each Note on the Record Date for such distribution. If
such dividend, bonus issue or other distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such dividend, bonus issue or other distribution had not
been declared. If the Board of Directors determines the Fair Market Value of any
distribution for purposes of this Section 10.04(d) by reference to the actual or
when issued trading market for any securities, it must in doing so consider the
prices in such market over the same period used in computing the Current Market
Price on the applicable Record Date for such distribution. Notwithstanding the
foregoing, if the Securities distributed by the Company to all holders of its
Common Shares consist of Capital Stock of, or similar equity interests in, a
Subsidiary or other business unit of the Company or a Subsidiary, the Conversion
Rate shall be increased so that the same shall be equal to the rate determined
by multiplying the Conversion Rate in effect on the Record Date with respect to
such distribution by a fraction,
(i) the numerator of which shall be the sum of (A) the average of the
Closing Prices of the Common Shares for the ten (10) Trading Days
commencing on and including the fifth Trading Day after the date on which
"ex-dividend trading" commences for such dividend or distribution on the
NASDAQ National Market or such other national or regional exchange or
market on which such securities are then listed or quoted (the "Ex-Dividend
Date") plus (B) the Fair Market Value of the securities distributed in
respect of each Common Share for which this Section 10.04(d) applies, which
shall equal the number of securities distributed in respect of each Common
Share multiplied by the average of the Closing Prices of those securities
distributed for the ten (10) Trading Days commencing on and including the
fifth Trading Day after the Ex-Dividend Date; and
(ii) the denominator of which shall be the average of the Closing
Prices of the Common Shares for the ten (10) Trading Days commencing on and
including the fifth Trading Day after the Ex-Dividend Date,
such adjustment to become effective immediately prior to the opening of business
on the day following such Record Date; provided that the Company may in lieu of
the foregoing adjustment make adequate provision so that each Noteholder shall
have the right to receive upon conversion the amount of Securities such holder
would have received had such holder converted each Note on the Record Date with
respect to such distribution.
Rights or warrants distributed by the Company to all holders of Common
Shares entitling the holders thereof to subscribe for or purchase shares of the
Company's Capital Stock (either initially or under certain circumstances), which
rights or warrants, until the
59
occurrence of a specified event or events ("Trigger Event"): (i) are deemed to
be transferred with such Common Shares; (ii) are not exercisable; and (iii) are
also issued in respect of future issuances of Common Shares, shall be deemed not
to have been distributed for purposes of this Section 10.04 (and no adjustment
to the Conversion Rate under this Section 10.04 will be required) until the
occurrence of the earliest Trigger Event, whereupon such rights and warrants
shall be deemed to have been distributed and an appropriate adjustment (if any
is required) to the Conversion Rate shall be made under this Section 10.04(d).
If any such right or warrant, including any such existing rights or warrants
distributed prior to the date of this Indenture, are subject to events, upon the
occurrence of which such rights or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date
of the occurrence of any and each such event shall be deemed to be the date of
distribution and Record Date with respect to new rights or warrants with such
rights (and a termination or expiration of the existing rights or warrants
without exercise by any of the holders thereof). In addition, in the event of
any distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Rate under this Section 10.04
was made, (1) in the case of any such rights or warrants that shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Rate shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder or holders of Common Shares with respect to such
rights or warrants (assuming such holder had retained such rights or warrants),
made to all holders of Common Shares as of the date of such redemption or
repurchase, and (2) in the case of such rights or warrants that shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Rate shall be readjusted as if such rights and warrants had not been
issued.
No adjustment of the Conversion Rate shall be made pursuant to this Section
10.04(d) in respect of rights or warrants distributed or deemed distributed on
any Trigger Event to the extent that such rights or warrants are actually
distributed, or reserved by the Company for distribution to holders of
Securities upon conversion by such holders of Securities to Common Shares.
For purposes of this Section 10.04(d) and Section 10.04(a) and (b), any
dividend, bonus issue or other distribution to which this Section 10.04(d) is
applicable that also includes Common Shares, or rights or warrants to subscribe
for or purchase Common Shares (or both), shall be deemed instead to be (1) a
dividend, bonus issue or other distribution of the evidences of indebtedness,
assets or shares of Capital Stock other than such Common Shares or rights or
warrants (and any Conversion Rate adjustment required by this Section 10.04(d)
with respect to such dividend, bonus issue or other distribution shall then be
made) immediately followed by (2) a dividend, bonus issue or other distribution
of such Common Shares or such rights or warrants (and any further Conversion
Rate adjustment required by Sections 10.04(a) and 10.04(b) with respect to such
dividend, bonus issue or other distribution shall then be made), except any
Common Shares included in such dividend, bonus issue or other distribution shall
not be deemed
60
"outstanding at the close of business on such Record" within the meaning of
Section 10.04(a).
(e) In case the Company shall, by dividend, bonus issue or otherwise,
distribute to all holders of its Common Shares cash (excluding any dividend,
bonus issue or other distribution in connection with the liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary),
then, in such case, the Conversion Rate shall be increased so that the same
shall equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the close of business on the Record Date for such dividend,
bonus issue or other distribution by a fraction,
(i) the numerator of which shall be the Current Market Price on such
Record Date; and
(ii) the denominator of which shall be the Current Market Price on
such Record Date less the amount of cash so distributed applicable to one
Common Share,
such adjustment to be effective immediately prior to the opening of business on
the day following such Record Date; provided that if the portion of the cash so
distributed applicable to one Common Share is equal to or greater than the
Current Market Price on such Record Date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Noteholder shall have the right to
receive upon conversion the amount of cash such Holder would have received had
such Holder converted each Note on such Record Date. If such dividend, bonus
issue or other distribution is not so paid or made, the Conversion Rate shall
again be adjusted to be the Conversion Rate that would then be in effect if such
dividend, bonus issue or other distribution had not been declared.
(f) In case a tender offer or exchange offer made by the Company or any of
its Subsidiaries for all or any portion of the Common Shares shall expire and
such tender offer or exchange offer (as amended upon the expiration thereof)
shall require the payment to shareholders (based on the acceptance (up to any
maximum specified in the terms of the tender offer) of Purchased Shares (as
defined below)) of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and set forth in a Board Resolution) that combined together with the aggregate
of the cash plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and set forth in a Board Resolution), as
of the expiration of such tender offer or exchange offer, of other consideration
paid in respect of any other tender offers or exchange offers, by the Company or
any of its Subsidiaries for all or any portion of the Common Shares expiring
within the 12 months preceding the expiration of such tender offer or exchange
offer and in respect of which no adjustment pursuant to this Section 10.04(f)
has been made, exceeds the last reported sale price of the Common Shares on the
Trading Day next succeeding the last time (the "Expiration Time") tenders or
exchanges could have been made pursuant to such tender offer or exchange offer,
the Conversion Rate shall be increased so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect immediately prior to the
Expiration Time by a fraction,
61
(i) the numerator of which shall be the sum of (x) the Fair Market
Value (determined as aforesaid) of the aggregate consideration payable to
shareholders 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 Common Shares outstanding
(less any Purchased Shares) at the Expiration Time and the Closing Price of
a Common Share on the Trading Day next succeeding the Expiration Time, and
(ii) the denominator of which shall be the number of Common Shares
outstanding (including any Purchased Shares) at the Expiration Time
multiplied by the Closing Price of a Common Share on the Trading Day next
succeeding the Expiration Time
such adjustment to become effective immediately prior to the opening of business
on the day following the Expiration Time. If the Company is obligated to
purchase shares pursuant to any such tender or exchange offer, but the Company
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Rate shall again be adjusted to
be the Conversion Rate that would then be in effect if such tender or exchange
offer had not been made.
(g) In case of a tender or exchange offer made by a Person other than the
Company or any Subsidiary for an amount that increases the offeror's ownership
of Common Shares to more than twenty-five percent (25%) of the Common Shares
outstanding and shall involve the payment by such Person of consideration per
Common Share having a Fair Market Value (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) that as of the last time (the "Offer
Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the Closing Price of
a Common Share on the Trading Day next succeeding the Offer Expiration Time, and
in which, as of the Offer Expiration Time the Board of Directors is not
recommending rejection of the offer, the Conversion Rate shall be increased so
that the same shall equal the rate determined by multiplying the Conversion Rate
in effect immediately prior to the Offer Expiration Time by a fraction
(i) the numerator of which shall be the sum of (x) the Fair Market
Value (determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Offer Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the
"Accepted Purchased Shares") and (y) the product of the number of Common
Shares outstanding (less any Accepted Purchased Shares) at the Offer
Expiration Time and the Closing Price of a Common Share on the Trading Day
next succeeding the Offer Expiration Time, and
62
(ii) the denominator of which shall be the number of Common Shares
outstanding (including any tendered or exchanged shares) at the Offer
Expiration Time multiplied by the Closing Price of a Common Share on the
Trading Day next succeeding the Offer Expiration Time,
such adjustment to become effective immediately prior to the opening of business
on the day following the Offer Expiration Time. If such Person is obligated to
purchase shares pursuant to any such tender or exchange offer, but such Person
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Rate shall again be adjusted to
be the Conversion Rate that would then be in effect if such tender or exchange
offer had not been made. Notwithstanding the foregoing, the adjustment described
in this Section 10.04(g) shall not be made if, as of the Offer Expiration Time,
the offering documents with respect to such offer disclose a plan or intention
to cause the Company to engage in any transaction described in Section 10.11.
(h) For purposes of this Section 10.04, the following terms shall have the
meaning indicated:
(i) "Current Market Price" shall mean the average of the daily Closing
Prices per Common Share for the ten consecutive Trading Days selected by
the Company commencing no more than 30 Trading Days before and ending not
later than the earlier of such date of determination and the day before the
"ex" date with respect to the issuance, distribution, subdivision or
consolidation requiring such computation immediately prior to the date in
question. For purposes of this paragraph, the term "ex" date, (1) when used
with respect to any issuance or distribution, means the first date on which
the Common Shares trades, regular way, on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the right
to receive such issuance or distribution, and (2) when used with respect to
any subdivision or consolidation of Common Shares, means the first date on
which the Common Shares trades, regular way, on such exchange or in such
market after the time at which such subdivision or consolidation becomes
effective.
If another issuance, distribution, subdivision or consolidation to which
Section 10.04 applies occurs during the period applicable for calculating
"Current Market Price" pursuant to the definition in the preceding paragraph,
"Current Market Price" shall be calculated for such period in a manner
determined by the Board of Directors to reflect the impact of such issuance,
distribution, subdivision or consolidation on the Closing Price during such
period.
(ii) "Fair Market Value" shall mean the amount which a willing buyer
would pay a willing seller in an arm's-length transaction.
(iii) "Record Date" shall mean, with respect to any dividend, bonus
issue or other distribution or other transaction or event in which the
holders of Common Shares have the right to receive any cash, securities or
other property or
63
in which the Common Shares (or other applicable security) is exchanged for
or converted into any combination of cash, securities or other property,
the date fixed for determination of shareholders entitled to receive such
cash, securities or other property (whether such date is fixed by the Board
of Directors or by statute, contract or otherwise).
(i) The Company may make such increases in the Conversion Rate, in addition
to those required by Section 10.04(a), (b), (c), (d), (e), (f) or (g) as the
Board of Directors considers to be advisable to avoid or diminish any income tax
to holders of Common Shares or rights to purchase Common Shares resulting from
any dividend or distribution of shares (or rights to acquire shares) or from any
event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to time
may increase the Conversion Rate by any amount for any period of time if the
Board of Directors shall have made a determination that such increase would be
in the best interests of the Company, which determination shall be conclusive.
Whenever the Conversion Rate is increased pursuant to the preceding sentence,
the Company shall mail to holders of record of the Notes a notice of the
increase at least fifteen (15) days prior to the date the increased Conversion
Rate takes effect, and such notice shall state the increased Conversion Rate and
the period during which it will be in effect.
(j) No adjustment to the Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at least 1% in such rate;
provided, however, that any adjustments which by reason of this Section 10.04(j)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article 10 shall be made
by the Company and shall be made to the nearest one hundredth of a cent or to
the nearest one hundredth of a share, as the case may be. No adjustment need be
made for a change in the par value or no par value of the Common Shares.
(k) In any case in which this Section 10.04 provides that an adjustment
shall become effective immediately after (1) a Record Date for an event, (2) the
Record Date for a dividend or distribution as described in Section 10.04(a), (3)
the Record Date for the issuance of rights or warrants as described in Section
10.04(b), or (4) the Expiration Time for any tender or exchange offer pursuant
to Section 10.04(f) or Section 10.04(g) (each a "Determination Date"), the
Company may elect to defer until the occurrence of the applicable Adjustment
Event (as hereinafter defined) (x) issuing to the holder of any Note converted
after such Determination Date and before the occurrence of such Adjustment
Event, the additional Common Shares or other securities issuable upon such
conversion by reason of the adjustment required by such Adjustment Event over
and above the Common Shares issuable upon such conversion before giving effect
to such adjustment and (y) paying to such holder any amount in cash in lieu of
any fraction pursuant to Section 10.03. For purposes of this Section 10.04(k),
the term "Adjustment Event" shall mean:
64
(i) in any case referred to in clause (1) hereof, the occurrence of
such event,
(ii) in any case referred to in clause (2) hereof, the date any such
dividend or distribution is paid or made,
(iii) in any case referred to in clause (3) hereof, the date of
expiration of such rights or warrants, and
(iv) in any case referred to in clause (4) hereof, the date a sale or
exchange of Common Shares pursuant to such tender or exchange offer is
consummated and becomes irrevocable.
(l) For purposes of this Section 10.04, the number of Common Shares at any
time outstanding shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of Common Shares.
Section 10.05. Notice of Adjustments of Conversion Rate. Whenever the
Conversion Rate is adjusted as herein provided (other than in the case of an
adjustment pursuant to the second paragraph of Section 10.04 for which the
notice required by such paragraph has been provided), the Company shall promptly
file with the Trustee and any Conversion Agent other than the Trustee an
Officers' Certificate setting forth the adjusted Conversion Rate and showing in
reasonable detail the facts upon which such adjustment is based. Promptly after
delivery of such Officers' Certificate, the Company shall prepare a notice
stating that the Conversion Rate has been adjusted and setting forth the
adjusted Conversion Rate and the date on which each adjustment becomes
effective, and shall mail such notice to each Holder at the address of such
Holder as it appears in the Note Register within 20 days of the effective date
of such adjustment. Failure to deliver such notice shall not effect the legality
or validity of any such adjustment.
Section 10.06. Notice Prior to Certain Actions. In case at any time after
the date hereof:
(1) the Company shall declare a dividend (or any other distribution)
on its Common Shares payable otherwise than in cash out of its capital
surplus or its consolidated retained earnings;
(2) the Company shall authorize the granting to the holders of its
Common Shares of rights or warrants to subscribe for or purchase any shares
of Capital Stock of any class (or of securities convertible into shares of
Capital Stock of any class) or of any other rights;
(3) there shall occur any reclassification of the Common Shares of the
Company (other than a subdivision or consolidation of its outstanding
Common Shares, a change in par value, a change from par value to no par
value or a change from no par value to par value), or any amalgamation,
merger, consolidation, statutory share exchange or combination to which the
Company is a party and for
65
which approval of any shareholders of the Company is required, or the sale,
transfer or conveyance of all or substantially all of the assets of the
Company; or
(4) there shall occur the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
the Company shall cause to be filed at each office or agency maintained for the
purpose of conversion of Notes pursuant to Section 4.03 hereof, and shall cause
to be provided to the Trustee and all Holders in accordance with Section 12.02
hereof, at least 20 days (or 10 days in any case specified in clause (1) or (2)
above) prior to the applicable record or effective date hereinafter specified, a
notice stating:
(A) the date on which a record is to be taken for the purpose of
such dividend, distribution, rights or warrants, or, if a record is
not to be taken, the date as of which the holders of Common Shares of
record to be entitled to such dividend, distribution, rights or
warrants are to be determined, or
(B) the date on which such reclassification, amalgamation,
merger, consolidation, statutory share exchange, combination, sale,
transfer, conveyance, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected
that holders of Common Shares of record shall be entitled to exchange
their Common Shares for securities, cash or other property deliverable
upon such reclassification, amalgamation, merger, consolidation,
statutory share exchange, sale, transfer, dissolution, liquidation or
winding up.
Neither the failure to give such notice nor any defect therein shall affect
the legality or validity of the proceedings or actions described in clauses (1)
through (4) of this Section 10.06.
Section 10.07. Company to Reserve Common Shares. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Shares, for the purpose of effecting the
conversion of Notes, the full number of fully paid and nonassessable Common
Shares then issuable upon the conversion of all Notes outstanding.
Section 10.08. Taxes on Conversions. Except as provided in the next
sentence, the Company will pay any and all taxes (other than taxes on income)
and duties that may be payable in respect of the issue or delivery of Common
Shares on conversion of Notes pursuant hereto. A Holder delivering a Note for
conversion shall be liable for and will be required to pay any tax or duty which
may be payable in respect of any transfer involved in the issue and delivery of
Common Shares in a name other than that of the Holder of the Note or Notes to be
converted, and no such issue or delivery shall be made unless the Person
requesting such issue has paid to the Company the amount of any such tax or
duty, or has established to the satisfaction of the Company that such tax or
duty has been paid.
66
Section 10.09. Covenant as to Common Shares. The Company covenants that all
Common Shares which may be issued upon conversion of Notes will upon issue be
fully paid and nonassessable and, except as provided in Section 10.08, the
Company will pay all taxes, liens and charges with respect to the issue thereof.
Section 10.10. Cancellation of Converted Notes. All Notes delivered for
conversion shall be delivered to the Trustee to be canceled by or at the
direction of the Trustee, which shall dispose of the same as provided in Section
2.11.
Section 10.11. Effect of Reclassification, Consolidation, Merger or Sale.
If any of following events occur, namely:
(1) any reclassification or change of the outstanding Common Shares
(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
consolidation),
(2) any amalgamation, merger, consolidation, statutory share exchange
or combination of the Company with another corporation as a result of which
holders of Common Shares shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange
for such Common Shares or
(3) any sale or conveyance of all or substantially all the properties
and assets of the Company to any other corporation as a result of which
holders of Common Shares shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange
for such Common Shares,
the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Trustee and the Company a supplemental indenture (which
shall comply with the TIA as in force at the date of execution of such
supplemental indenture if such supplemental indenture is then required to so
comply) providing that such Note shall be convertible into the kind and amount
of shares and other securities or property or assets (including cash) which such
Holder would have owned or been entitled to receive upon such reclassification,
amalgamation, merger, consolidation, statutory share exchange, combination, sale
or conveyance had such Notes been converted into Common Shares immediately prior
to such reclassification, amalgamation, merger, consolidation, statutory share
exchange, combination, sale or conveyance assuming such holder of Common Shares
did not exercise its rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such reclassification,
amalgamation, merger, consolidation, statutory share exchange, combination, sale
or conveyance (provided that, if the kind or amount of securities, cash or other
property receivable upon such reclassification, amalgamation, merger,
consolidation, statutory share exchange, combination, sale or conveyance is not
the same for each Common Share in respect of which such rights of election shall
not have been exercised ("Non-Electing Share"), then for the purposes of this
Section 10.11 the kind and amount of securities, cash or other property
receivable upon such reclassification, amalgamation, merger, consolidation,
statutory share exchange, combination, sale or conveyance for each Non-Electing
Share
67
shall be deemed to be the kind and amount so receivable per share by a plurality
of the Non-Electing Shares). Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 10. If, in the case of any such
reclassification, amalgamation, merger, consolidation, statutory share exchange,
combination, sale or conveyance, the stock or other securities and assets
receivable thereupon by a holder of Common Shares includes shares or other
securities and assets of a corporation other than the successor or purchasing
corporation, as the case may be, in such reclassification, amalgamation, merger,
consolidation, statutory share exchange, combination, 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 shall reasonably consider necessary by
reason of the foregoing, including to the extent practicable the provisions
providing for the repurchase rights set forth in Section 3.05 hereof.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder, at the address of such Holder as it
appears on the Note Register, within 20 days after execution thereof. Failure to
deliver such notice shall not affect the legality or validity of such
supplemental indenture.
The above provisions of this Section 10.11 shall similarly apply to
successive reclassifications, amalgamations, mergers, consolidations, statutory
share exchanges, combinations, sales and conveyances.
If this Section 10.11 applies to any event or occurrence, Section 10.04
hereof shall not apply.
Section 10.12. Responsibility of Trustee for Conversion Provisions. The
Trustee, subject to the provisions of Section 7.01 hereof, and any Conversion
Agent shall not at any time be under any duty or responsibility to any Holder of
Notes to determine whether any facts exist which may require any adjustment of
the Conversion Rate, or with respect to the nature or intent of any such
adjustments when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same. Neither
the Trustee, subject to the provisions of Section 7.01 hereof, nor any
Conversion Agent shall be accountable with respect to the validity or value (of
the kind or amount) of any Common Shares, or of any other securities or
property, which may at any time be issued or delivered upon the conversion of
any Note; and it or they do not make any representation with respect thereto.
Neither the Trustee, subject to the provisions of Section 7.01 hereof, nor any
Conversion Agent shall be responsible for any failure of the Company to make any
cash payment or to issue, transfer or deliver any shares or share certificates
or other securities or property upon the surrender of any Note for the purpose
of conversion; and the Trustee, subject to the provisions of Section 7.01
hereof, and any Conversion Agent shall not be responsible or liable for any
failure of the Company to comply with any of the covenants of the Company
contained in this Article.
Section 10.13. Shareholder Rights Plans. Each Common Share issued upon
conversion of Notes pursuant to this Article 10 shall be entitled to receive the
appropriate
68
number of rights, if any, and the certificates representing the Common Shares
issued upon such conversion shall bear such legends, if any, in each case as may
be provided by the terms of any shareholder rights plan adopted by the Company,
as the same may be amended from time to time. If at the time of conversion,
however, the rights have separated from the Common Shares in accordance with the
provisions of the applicable shareholder rights agreement so that the holders of
the Notes would not be entitled to receive any rights in respect of Common
Shares issuable upon conversion of the Notes, the conversion rate will be
adjusted as if the Company distributed to all holders of Common Shares, shares
of the Company's share capital, evidences of indebtedness or assets (including
cash or securities, but excluding (1) any rights or warrants referred to in
Section 10.04(b), (2) any dividend or distribution paid exclusively in cash, (3)
any dividend, bonus issue, or other distributions in connection with a
reclassification, amalgamation, consolidation, statutory share exchange, merger,
combination, sale of conveyance to which Section 10.11 applies), subject to
readjustment in the event of the expiration, termination or redemption of the
rights.
ARTICLE 11
RESERVED
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls. This Indenture is hereby made
subject to, and shall be governed by, the provisions of the TIA required to be
part of and to govern indentures qualified under the TIA; provided, however,
that, unless otherwise required by law, notwithstanding the foregoing, this
Indenture and the Notes issued hereunder shall not be subject to the provisions
of subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the TIA as now in
effect or as hereafter amended or modified; provided further that this Section
12.01 shall not require this Indenture or the Trustee to be qualified under the
TIA prior to the time such qualification is in fact required under the terms of
the TIA, nor shall it constitute any admission or acknowledgment by any party to
the Indenture that any such qualification is required prior to the time such
qualification is in fact required under the terms of the TIA. If any provision
of this Indenture limits, qualifies, or conflicts with another provision which
is required to be included in this Indenture by the TIA, the required provision
shall control.
Section 12.02. Notices. Any request, demand, authorization, notice, waiver,
consent or communication shall be in writing and delivered in person or mailed
by first-class mail, postage prepaid, addressed as follows or transmitted by
facsimile transmission (confirmed by guaranteed overnight courier) to the
following facsimile numbers:
if to the Company:
XOMA Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
69
Berkeley, California 94710
Attention: Legal Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Trustee:
▇▇▇▇▇ Fargo Bank, National Association
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Madeliena Hall, Trust Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The Company or the Trustee by notice given to the other in the manner
provided above may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication given to a Noteholder shall be mailed to the
Noteholder, by first-class mail, postage prepaid, at the Noteholder's address as
it appears on the registration books of the Note Registrar and shall be
sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any defect in
it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not received by the addressee.
If the Company mails a notice or communication to the Noteholders, it shall
mail a copy to the Trustee and each Note Registrar, Paying Agent, Conversion
Agent or co-registrar.
Section 12.03. Communication by Holders with Other Holders. Noteholders may
communicate pursuant to Section 312(b) of the TIA with other Noteholders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Note Registrar, the Paying Agent, the Conversion Agent and anyone
else shall have the protection of Section 312(c) of the TIA.
70
Section 12.04. Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 12.05. Statements Required in Certificate or Opinion. Each
Officers' Certificate or Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(1) a statement that each person making such Officers' Certificate or
Opinion of Counsel has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
Officers' Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such person, he has made
such examination or investigation as is necessary to enable such person to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement that, in the opinion of such person, such covenant or
condition has been complied with.
Section 12.06. Separability Clause. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 12.07. Rules by Trustee, Paying Agent, Conversion Agent and Note
Registrar. The Trustee may make reasonable rules for action by or a meeting of
Noteholders. The Note Registrar, Conversion Agent and the Paying Agent may make
reasonable rules for their functions.
Section 12.08. Legal Holidays. A "Legal Holiday" is any day other than a
Business Day. If any specified date (including a date for giving notice) is a
Legal Holiday, the action shall be taken on the next succeeding day that is not
a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Notes, no interest, if any, shall accrue for the intervening
period.
71
Section 12.09. GOVERNING LAW. THIS INDENTURE AND THE NOTES WILL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 12.10. No Recourse Against Others. A director, officer, employee or
shareholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting a Note, each Noteholder shall waive and release all such liability.
The waiver and release shall be part of the consideration for the issue of the
Notes.
Section 12.11. Successors. All agreements of the Company in this Indenture
and the Notes shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
Section 12.12. Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto, any Paying Agent, any authenticating agent, any Note Registrar and their
successors hereunder and the holders of Notes, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 12.13. Table of Contents, Heading, Etc. The table of contents and
the titles and headings of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 12.14. Authenticating Agent. The Trustee may appoint an
authenticating agent (the "Authenticating Agent") that shall be authorized to
act on its behalf, and subject to its direction, in the authentication and
delivery of Notes in connection with the original issuance thereof and transfers
and exchanges of Notes hereunder, including under Sections 2.03, 2.07, 2.08,
3.08 and 10.02, as fully to all intents and purposes as though the
authenticating agent had been expressly authorized by this Indenture and those
Sections to authenticate and deliver Notes. For all purposes of this Indenture,
the authentication and delivery of Notes by the Authenticating Agent shall be
deemed to be authentication and delivery of such Notes "by the Trustee" and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent shall be deemed to satisfy any requirement hereunder or in
the Notes for the Trustee's certificate of authentication. Such Authenticating
Agent shall at all times be a Person eligible to serve as trustee hereunder
pursuant to Section 7.09.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section 2.14, without the
72
execution or filing of any paper or any further act on the part of the parties
hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
shall either promptly appoint a successor Authenticating Agent or itself assume
the duties and obligations of the former Authenticating Agent under this
Indenture and, upon such appointment of a successor Authenticating Agent, if
made, shall give written notice of such appointment of a successor
Authenticating Agent to the Company and shall mail notice of such appointment of
a successor Authenticating Agent to all holders of Notes as the names and
addresses of such holders appear on the Note Register.
The Company agrees to pay to the Authenticating Agent from time to time
such reasonable compensation for its services as shall be agreed upon in writing
between the Company and the Authenticating Agent.
The provisions of Sections 2.12, 7.03, 7.04, 7.07 and this Section 2.14
shall be applicable to any Authenticating Agent.
Section 12.15. Execution In Counterparts. This Indenture may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
73
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.
XOMA LTD.
By:
---------------------------------------
Name:
Title:
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By:
---------------------------------------
Name:
Title:
74
EXHIBIT A
FOR GLOBAL NOTE ONLY: [UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.]
IF REQUIRED PURSUANT TO SECTION 2.07(d): [THIS SECURITY AND THE COMMON
SHARES ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY, THE COMMON SHARES ISSUABLE
UPON CONVERSION OF THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE EXPIRATION OF
THE HOLDING PERIOD APPLICABLE TO SALES THEREOF UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION) (THE "RESALE RESTRICTION
PERIOD"), ONLY (A) TO XOMA LTD. (THE "COMPANY"), OR ANY SUBSIDIARY THEREOF,
(B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
A-1
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A REGISTRATION STATEMENT
THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (D) PURSUANT
TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, INCLUDING UNDER RULE 144, IF AVAILABLE, SUBJECT IN EACH OF
THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS
PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL
TIMES WITHIN ITS OR THEIR CONTROL. EACH PURCHASER ACKNOWLEDGES THAT PRIOR
TO THE EXPIRATION OF THE RESALE RESTRICTION PERIOD, THE COMPANY AND THE
TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST
OF THE HOLDER AFTER EXPIRATION OF THE RESALE RESTRICTION PERIOD.]
A-2
XOMA LTD.
6.50% Convertible Senior Notes due 2012
No. CUSIP: [ ]
Issue Date:
XOMA LTD., a Bermuda company promises to pay to [Cede & Co.]* or registered
assigns, [the principal amount of _______________ DOLLARS ($_____________)] [the
principal amount as set forth on Schedule I hereto]* on February 1, 2012.
This Note shall bear interest as specified on the other side of this Note.
This Note is convertible as specified on the other side of this Note.
Additional provisions of this Note are set forth on the other side of this
Note.
*Include only on Global Security
A-3
Dated: The common seal of XOMA Ltd. was affixed
hereto in the presence of:
By: ______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Finance
and Chief Financial Officer
A-4
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture (as
defined on the other side of this Note).
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By:___________________________
Authorized Signatory
By:___________________________
As Authenticating Agent
(if different from Trustee)
Dated:________________________
A-5
[FORM OF REVERSE SIDE OF NOTE]
6.50% Convertible Senior Note due 2012
1. Cash Interest.
The Company promises to pay interest in cash on the principal amount of
this Note at the rate per annum of 6.50%. The Company will pay cash interest
semiannually in arrears on February 1 and August 1 of each year (each an
"Interest Payment Date"), beginning August 1, 2005, to Holders of record at the
close of business on January 15 and July 15 (whether or not a business day)
(each a "Regular Record Date"), as the case may be, immediately preceding such
Interest Payment Date, and the Company will pay interest in arrears on the
maturity date to the Holder to whom it pays the principal of this Note. Cash
interest on the Notes will accrue from the most recent date to which interest
has been paid or duly provided or, if no interest has been paid, from the Issue
Date. Cash interest will be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay cash interest on overdue principal at 7%
per annum, and it shall pay interest in cash on overdue installments of cash
interest (including Liquidated Damages, if any) at the same rate to the extent
lawful. All such overdue cash interest shall be payable on demand. The Company
further promises to pay Liquidated Damages that it may from time to time be
required to pay pursuant to Section 2(e) of the Registration Rights Agreement at
the same time and in the same manner as payments of interest as specified
herein.
2. Method of Payment.
Subject to the terms and conditions of the Indenture, the Company will make
payments in respect of the principal of, premium, if any, and cash interest on
this Note and in respect of Fundamental Change Purchase Price to Holders who
surrender Notes to a Paying Agent to collect such payments in respect of the
Notes. The Company will pay cash amounts in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
However, the Company may make such cash payments by check payable in such money.
A holder of Notes with an aggregate principal amount in excess of $5,000,000
will be paid by wire transfer in immediately available funds at the election of
such holder. Any payment required to be made on any day that is not a Business
Day will be made on the next succeeding Business Day.
3. Paying Agent, Conversion Agent and Note Registrar.
Initially, ▇▇▇▇▇ Fargo Bank, National Association (the "Trustee"), will act
as Paying Agent, Conversion Agent and Note Registrar. The Company may appoint
and change any Paying Agent, Conversion Agent, Note Registrar or co-registrar
without notice, other than notice to the Trustee except that the Company will
maintain at least one Paying Agent in the State of New York, City of New
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York, Borough of Manhattan, which shall initially be an office or agency of the
Trustee. The Company or any of its Subsidiaries or any of their Affiliates may
act as Paying Agent, Conversion Agent, Note Registrar or co-registrar.
4. Indenture.
The Company issued this Note under an Indenture dated as of February 7,
2005 (the "Indenture"), between the Company and the Trustee. The terms of this
Note include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as in effect from time to time
(the "TIA"). Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in the Indenture. This Note is subject to all such
terms, and Noteholders are referred to the Indenture and the TIA for a statement
of those terms.
This Note is a general unsecured obligation of the Company (except as
provided in Paragraph 12 hereof) limited to $60,000,000 aggregate principal
amount or $65,000,000 aggregate principal amount if the Initial Purchasers'
Option is exercised fully (subject to Section 2.08 of the Indenture). The
Indenture does not limit other indebtedness of the Company, secured or
unsecured.
5. Redemption and Repurchase by the Company at the Option of the Holder.
Prior to February 6, 2008, the Notes shall not be redeemable at the
Company's option. At any time on or after February 6, 2008 and prior to Stated
Maturity, the Company, at its option, may redeem the Notes, in whole or in part,
in accordance with the Indenture on the Redemption Date for a Redemption Price
in cash equal to 100% of the principal amount of the Notes plus any accrued and
unpaid interest and Liquidated Damages, if any, on the Notes redeemed to but not
including the Redemption Date if the Closing Price of the Company's Common
Shares has exceeded 150% of the Conversion Price then in effect for at least 20
Trading Days in any consecutive 30 Trading Day period. In addition, if beginning
on February 6, 2008, on any Interest Payment Date, the aggregate principal
amount of the Notes outstanding is less than 15% of the aggregate principal
amount of Notes outstanding after the Issue Date, the Company, at its option,
may redeem the Notes, in whole but not in part, in accordance with the Indenture
on the Redemption Date for a Redemption Price in cash equal to 100% of the
principal amount of the Notes plus any accrued and unpaid Interest and
Liquidated Damages, if any, on the Notes to but not including the Redemption
Date. The Company will make an additional payment equal to the total value of
the aggregate amount of the interest otherwise payable on the Notes from the
last day through which Interest was paid on the Notes through the Redemption
Date.
If there shall have occurred a Fundamental Change (subject to certain
conditions provided for in the Indenture), each Holder, at such Holder's option,
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shall have the right, in accordance with the provisions of the Indenture, to
require the Company to purchase its Notes (or any portion of the principal
amount hereof that is at least $1,000 or any whole multiple thereof, provided
that the portion of the principal amount of this Note to be outstanding after
such purchase is at least equal to $1,000) at the Fundamental Change Purchase
Price in cash, plus any accrued and unpaid interest to but not including the
Fundamental Change Purchase Date.
A written notice of the Fundamental Change will be given to the Holders as
provided in the Indenture. To exercise a purchase right, a Holder must deliver
to the Trustee a Fundamental Change Purchase Notice as provided in the
Indenture.
Holders have the right to withdraw any Fundamental Change Purchase Notice
by delivering to the Paying Agent a written notice of withdrawal in accordance
with the provisions of the Indenture.
6. Conversion.
Subject to the next two succeeding sentences, a Holder of a Note may
convert it into Common Shares at any time before the close of business on the
final maturity date of the Note. A Note in respect of which a Holder has
delivered a Fundamental Change Purchase Notice exercising the option of such
Holder to require the Company to purchase such Note may be converted only if
such notice of exercise is withdrawn in accordance with the terms of the
Indenture.
The initial Conversion Rate shall be initially equal to 583.4756 Common
Shares per $1,000 principal amount of the Notes, subject to adjustment in
certain events described in the Indenture, which is equal to an initial
Conversion Price of approximately $1.87 per Common Share. The Company shall pay
a cash adjustment as provided in the Indenture in lieu of any fractional Common
Share.
In addition, following certain corporate transactions that constitute a
Fundamental Change pursuant to clause (ii) of the Change of Control definition
as set forth in Section 3.05(a) of the Indenture that occur on or prior to
February 1, 2012, a Holder who elects to convert its Notes in connection with
such corporate transaction will be entitled to receive Additional Shares upon
conversion, subject to the Company's payment elections set forth in the
Indenture. Notwithstanding the previous sentence, in the case of a Public
Acquirer Change of Control, the Company may, in lieu of increasing the
Conversion Rate by Additional Shares, elect to adjust the Conversion Rate and
Conversion Obligation such that from and after the effective date of such Public
Acquirer Change of Control, Holders of the Notes will be entitled to convert
their Securities into a number of shares of Public Acquirer Common Stock, as
determined pursuant to Section 3.05(b) of the Indenture.
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To convert a Note, a Holder must (1) complete and manually sign the
conversion notice below (or complete and manually sign a facsimile of such
notice) and deliver such notice to the Conversion Agent, (2) surrender the Note
to the Conversion Agent, (3) furnish appropriate endorsements and transfer
documents if required by the Conversion Agent, the Company or the Trustee and
(4) pay any transfer or similar tax, if required.
7. Denominations; Transfer; Exchange.
The Notes are in fully registered form, without coupons, in denominations
of $1,000 of principal amount and whole multiples of $1,000. A Holder may
transfer or exchange Notes in accordance with the Indenture. The Note Registrar
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Note Registrar need not transfer or exchange any
Notes in respect of which a Fundamental Change Purchase Notice has been given
and not withdrawn (except, in the case of a Note to be purchased in part, the
portion of the Note not to be purchased).
8. Persons Deemed Owners.
The registered Holder of this Note may be treated as the owner of this Note
for all purposes.
9. Unclaimed Money or Notes.
The Trustee and the Paying Agent shall return to the Company upon written
request any money or Notes held by them for the payment of any amount with
respect to the Notes that remains unclaimed for two years, subject to applicable
unclaimed property law. After return to the Company, Holders entitled to the
money or Notes must look to the Company for payment as general creditors unless
an applicable abandoned property law designates another person.
10. Amendment; Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Notes may be amended with the written consent of the Holders of at least
a majority in aggregate principal amount of the Notes at the time outstanding
and (ii) certain Defaults or Events of Default may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
at the time outstanding. Subject to certain exceptions set forth in the
Indenture, without the consent of any Noteholder, the Company and the Trustee
may amend the Indenture or the Notes, among other things, to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article 5 of the Indenture,
or to make any change that does not adversely affect the rights of any
Noteholder, or to
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comply with any requirement of the SEC in connection with the qualification of
the Indenture under the TIA.
11. Defaults and Remedies.
Under the Indenture, Events of Default include (1) the Company fails to pay
when due the principal of or premium, if any, on any of the Notes at maturity,
upon exercise of a repurchase right or otherwise; (2) the Company fails to pay
an installment of interest (including Liquidated Damages, if any) on any of the
Notes that continues for 30 days after the date when due; (3) the Company fails
to deliver Common Shares, together with cash in lieu of fractional shares, when
such Common Shares or cash in lieu of fractional shares is required to be
delivered upon conversion of a Note and such failure continues for 10 days after
such required delivery date; (4) the Company fails to give notice regarding a
Fundamental Change within the time period specified in the Indenture; (5) the
Company fails to perform or observe any other term, covenant or agreement
contained in the Notes or the Indenture for a period of 60 days after written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding; (6) (A) the Company or any Significant Subsidiary fails to make any
payment by the end of the applicable grace period, if any, after the final
scheduled payment date for such payment with respect to any indebtedness for
borrowed money in an aggregate amount in excess of $10 million or (B)
indebtedness for borrowed money of the Company or any Significant Subsidiary in
an aggregate amount in excess of $10 million shall have been accelerated or
otherwise declared due and payable, or required to be prepaid or repurchased
(other than by regularly scheduled required prepayment) prior to the scheduled
maturity thereof as a result of a default with respect to such indebtedness
referred to in subclause (A) or (B) hereof, in either case without such having
been discharged, cured, waived, rescinded or annulled, for a period of 30 days
after receipt by the Company of a Notice of Default; (7) the Company or any
Significant Subsidiary fails to make any payment on a final judgment in an
aggregate amount in excess of $10 million without such judgment having been
paid, discharged or stayed for a period of 60 days; and (8) certain events of
bankruptcy, insolvency or reorganization with respect to the Company or any
Significant Subsidiary or any Subsidiaries of the Company which in the aggregate
would constitute a Significant Subsidiary. If an Event of Default (other than an
Event of Default specified in clause (8) above) occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate principal amount of the
Notes at the time outstanding, may declare all the Notes to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Notes becoming due and payable immediately upon the
occurrence of such Events of Default.
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Noteholders may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes
unless it receives reasonable indemnity or security. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the Notes at
the time outstanding may direct the Trustee in its exercise of any trust or
power. The Trustee shall, within 90 days of the occurrence of an Event of
Default, give notice of such Event of Default to the holders of the Notes,
provided that the Trustee may withhold from Noteholders notice of any continuing
Default (except a Default in payment of amounts specified in clause (1) or (2)
above) if it determines that withholding notice is in their interests.
12. Trustee Dealings with the Company.
Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with and collect obligations owed to it
by the Company or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
13. No Recourse Against Others.
A director, officer, employee or shareholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Note, each Noteholder waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
14. Authentication.
This Note shall not be valid until an authorized signatory of the Trustee
or an Authenticating Agent manually signs the Trustee's Certificate of
Authentication on the other side of this Note.
15. Abbreviations.
Customary abbreviations may be used in the name of a Noteholder 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 Gift to Minors
Act).
16. GOVERNING LAW.
THE INDENTURE AND THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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_____________________
The Company will furnish to any Noteholder upon written request and without
charge a copy of the Indenture which has in it the text of this Note in larger
type. Requests may be made to:
XOMA Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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CONVERSION NOTICE
TO: XOMA LTD.
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion thereof (which is $1,000 or a
whole multiple thereof) below designated, into Common Shares of XOMA Ltd. in
accordance with the terms of the Indenture referred to in this Note, and directs
that the shares issuable and deliverable upon such conversion, together with any
check in payment for fractional shares and any Notes representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below. If shares or any
portion of this Note not converted are to be issued in the name of a person
other than the undersigned, the undersigned will provide the appropriate
information below and pay all transfer taxes payable with respect thereto. Any
amount required to be paid by the undersigned on account of interest accompanies
this Note.
Dated: ___________________
______________________________
Signature(s)
Signature(s) must be
guaranteed by an "eligible
guarantor institution"
meeting the requirements of
the Note Registrar, which
requirements include
membership or participation
in the Security Transfer
Agent Medallion Program
("STAMP") or such other
"signature guarantee
program" as may be
determined by the Note
Registrar in addition to,
or in substitution for,
STAMP, all in accordance
with the Securities
Exchange Act of 1934, as
amended.
______________________________
Signature Guarantee
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Fill in the registration of Common Shares if to be issued, and Notes if to
be delivered, other than to and in the name of the registered holder:
_________________________________
(Name)
_________________________________
(Street Address)
_________________________________
(City, State and Zip Code)
_________________________________
Please print name and address
Principal amount to be converted
(if less than all):
$_______________________________
Social Security or Other Taxpayer
Identification Number:
_________________________________
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FUNDAMENTAL CHANGE PURCHASE NOTICE
TO: XOMA LTD.
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from XOMA Ltd. (the "Company") as to the
occurrence of a Fundamental Change with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Note
(Certificate No.____), or the portion thereof (which is $1,000 or a whole
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note to the registered holder hereof.
Dated: ___________________
______________________________
______________________________
Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond
with the name as written upon the
face of the Note in every particular
without alteration or enlargement or
any change whatever.
Principal amount to be repaid (if
less than all):
$_____________________________
______________________________
Social Security or Other
Taxpayer Identification Number
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ASSIGNMENT
For value received __________________________________________ hereby
sell(s) assign(s) and transfer(s) unto
____________________________________________ (Please insert social security or
other Taxpayer Identification Number of assignee) the within Note, and hereby
irrevocably constitutes and appoints ____________________________________
attorney to transfer said Note on the books of the Company, with full power of
substitution in the premises.
In connection with any transfer of the Note prior to the expiration of the
holding period applicable to sales thereof under Rule 144(k) under the
Securities Act (or any successor provision) (other than any transfer pursuant to
a registration statement that has been declared effective under the Securities
Act), the undersigned confirms that such Note is being transferred:
o To XOMA Ltd. or a subsidiary thereof; or
o Inside the United States pursuant to and in compliance with Rule 144A
under the Securities Act of 1933, as amended; or
o Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").
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o The transferee is an Affiliate of the Company.
Dated: ___________________
____________________________________
____________________________________
Signature(s)
Signature(s) must be guaranteed by
an "eligible guarantor institution"
meeting the requirements of the Note
Registrar, which requirements
include membership or participation
in the Security Transfer Agent
Medallion Program ("STAMP") or such
other "signature guarantee program"
as may be determined by the Note
Registrar in addition to, or in
substitution for, STAMP, all in
accordance with the Securities
Exchange Act of 1934, as amended.
____________________________________
Signature Guarantee
NOTICE: The signature of the conversion notice, the Fundamental Change Purchase
Notice or the assignment must correspond with the name as written upon the face
of the Note in every particular without alteration or enlargement or any change
whatever.
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SCHEDULE I to EXHIBIT A
XOMA LTD.
6.50% Convertible Senior Notes Due 2012
No:
Date Principal Amount Notation
-------------------- ---------------------------- ----------------
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EXHIBIT B-1
Transfer Certificate
In connection with any transfer of any of the Notes within the period prior
to the expiration of the holding period applicable to the sales thereof under
Rule 144(k) under the Securities Act of 1933, as amended (the "Securities Act")
(or any successor provision), the undersigned registered owner of this Note
hereby certifies with respect to $____________ principal amount of the
above-captioned Notes presented or surrendered on the date hereof (the
"Surrendered Notes") for registration of transfer, or for exchange or conversion
where the Notes issuable upon such exchange or conversion are to be registered
in a name other than that of the undersigned registered owner (each such
transaction being a "transfer"), that such transfer complies with the
restrictive legend set forth on the face of the Surrendered Notes for the reason
checked below:
o A transfer of the Surrendered Notes is made to the Company or any
subsidiaries; or
o The transfer of the Surrendered Notes complies with Rule 144A under
the U.S. Securities Act of 1933, as amended (the "Securities Act"); or
o The transfer of the Surrendered Notes is pursuant to an effective
registration statement under the Securities Act, or
o The transfer of the Surrendered Notes is pursuant to another available
exemption from the registration requirement of the Securities Act.
and unless the box below is checked, the undersigned confirms that, to the
undersigned's knowledge, such Notes are not being transferred to an "affiliate"
of the Company as defined in Rule 144 under the Securities Act (an "Affiliate").
o The transferee is an Affiliate of the Company.
DATE: ____________________ __________________________
Signature(s)
(If the registered owner is a corporation, partnership or
fiduciary, the title of the Person signing on behalf of
such registered owner must be stated.
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SCHEDULE I
The following table sets forth the Share Prices and the number of Additional
Shares to be issuable per $1,000 principal amount of Notes.
$1.63 $1.75 $2.25 $2.75 $3.25 $3.75 $4.25 $4.75 $5.25 $5.75 $6.25 $6.75
------------------------------------------------------------------------------
Effective Date
February 1, 2005 50.00 50.00 50.00 50.00 50.00 20.89 16.56 13.25 10.65 8.58 6.90 0.00
February 1, 2006 50.00 50.00 50.00 50.00 21.09 16.47 13.15 10.61 8.61 7.00 5.67 0.00
February 1, 2007 50.00 50.00 50.00 18.07 12.78 9.81 7.85 6.41 5.28 4.35 3.58 0.00
February 1, 2008 50.00 50.00 18.02 1.72 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
February 1, 2009 50.00 50.00 16.87 0.87 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
February 1, 2010 50.00 50.00 16.32 0.60 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
February 1, 2011 50.00 50.00 14.03 0.52 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
February 1, 2012 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
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