EXHIBIT 4.6
EXECUTION COPY
CKE RESTAURANTS, INC.
AND
----------------
J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION
AS TRUSTEE
----------------
$90,000,000
4% Convertible Subordinated Notes due 2023*
----------------
INDENTURE
Dated as of September 29, 2003
- -------------------
* Plus an option to purchase up to $15,000,000 aggregate principal amount of 4%
Convertible Subordinated Notes due 2023.
TABLE OF CONTENTS
PAGE
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ARTICLE 1
DEFINITIONS
1
Section 1.01 Definitions................................................ 1
Section 1.02 Other Definitions.......................................... 8
Section 1.03 Incorporation by Reference of Trust Indenture Act.......... 9
Section 1.04 Rules of Construction...................................... 9
ARTICLE 2
THE CONVERTIBLE SUBORDINATED NOTES
10
Section 2.01 Form and Dating............................................ 10
Section 2.02 Execution and Authentication............................... 11
Section 2.03 Registrar, Paying Agent and Conversion Agent............... 12
Section 2.04 Paying Agent to Hold Money in Trust........................ 12
Section 2.05 Holder Lists............................................... 12
Section 2.06 Transfer and Exchange...................................... 13
Section 2.07 Replacement Convertible Subordinated Notes................. 15
Section 2.08 Outstanding Convertible Subordinated Notes................. 15
Section 2.09 When Treasury Convertible Subordinated Notes Disregarded... 16
Section 2.10 Temporary Convertible Subordinated Notes; Transfers of
Global Security to Beneficial Owners....................... 16
Section 2.11 Cancellation............................................... 18
Section 2.12 Defaulted Interest......................................... 18
Section 2.13 CUSIP Number............................................... 18
Section 2.14 Regulation S............................................... 19
ARTICLE 3
REDEMPTION AND PURCHASES
19
Section 3.01 Optional Redemption........................................ 19
Section 3.02 Notices to Trustee......................................... 19
Section 3.03 Selection of Convertible Subordinated Notes to Be Redeemed. 19
Section 3.04 Notice of Redemption....................................... 20
Section 3.05 Effect of Notice of Redemption............................. 21
Section 3.06 Deposit of Redemption Price................................ 21
Section 3.07 Convertible Subordinated Notes Redeemed in Part............ 22
Section 3.08 Conversion Arrangement on Call for Redemption.............. 22
Section 3.09 Repurchase of Convertible Subordinated Notes at Option of
the Holder................................................. 23
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Section 3.10 Repurchase Upon Fundamental Change......................... 26
ARTICLE 4
COVENANTS
28
Section 4.01 Payment of Convertible Subordinated Notes.................. 28
Section 4.02 Commission Reports......................................... 29
Section 4.03 Compliance Certificate..................................... 29
Section 4.04 Maintenance of Office or Agency............................ 29
Section 4.05 Continued Existence........................................ 29
Section 4.06 Appointments to Fill Vacancies in Trustee's Office......... 30
Section 4.07 Stay, Extension and Usury Laws............................. 30
Section 4.08 Taxes...................................................... 30
Section 4.09 Investment Company Act..................................... 30
ARTICLE 5
SUCCESSORS
30
Section 5.01 When the Company May Merge, Etc............................ 30
Section 5.02 Successor Corporation Substituted.......................... 31
Section 5.03 Purchase Option on Change of Control....................... 32
ARTICLE 6
DEFAULTS AND REMEDIES
32
Section 6.01 Events of Default.......................................... 32
Section 6.02 Acceleration............................................... 34
Section 6.03 Other Remedies............................................. 34
Section 6.04 Waiver of Past Defaults.................................... 35
Section 6.05 Control by Majority........................................ 35
Section 6.06 Limitation on Suits........................................ 35
Section 6.07 Rights of Holders to Receive Payment....................... 36
Section 6.08 Collection Suit by Trustee................................. 36
Section 6.09 Trustee May File Proofs of Claim........................... 36
Section 6.10 Priorities................................................. 36
Section 6.11 Undertaking for Costs...................................... 37
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE 7
THE TRUSTEE
37
Section 7.01 Duties of the Trustee...................................... 37
Section 7.02 Rights of the Trustee...................................... 38
Section 7.03 Individual Rights of the Trustee........................... 40
Section 7.04 Trustee's Disclaimer....................................... 40
Section 7.05 Notice of Defaults......................................... 40
Section 7.06 Reports by the Trustee to Holders.......................... 40
Section 7.07 Compensation and Indemnity................................. 41
Section 7.08 Replacement of the Trustee................................. 42
Section 7.09 Successor Trustee by Merger, etc........................... 43
Section 7.10 Eligibility, Disqualification.............................. 43
Section 7.11 Preferential Collection of Claims Against Company.......... 43
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
43
Section 8.01 Discharge of Indenture..................................... 43
Section 8.02 Deposited Monies to Be Held in Trust by Trustee............ 44
Section 8.03 Paying Agent to Repay Monies Held.......................... 44
Section 8.04 Return of Unclaimed Monies................................. 44
Section 8.05 Reinstatement.............................................. 45
ARTICLE 9
AMENDMENTS
45
Section 9.01 Without the Consent of Holders............................. 45
Section 9.02 With the Consent of Holders................................ 46
Section 9.03 Compliance With the Trust Indenture Act.................... 47
Section 9.04 Revocation and Effect of Consents.......................... 47
Section 9.05 Notation on or Exchange of Convertible Subordinated Notes.. 48
Section 9.06 Trustee Protected.......................................... 48
ARTICLE 10
GENERAL PROVISIONS
48
Section 10.01 Trust Indenture Act Controls............................... 48
Section 10.02 Notices.................................................... 49
Section 10.03 Communication by Holders With Other Holders................ 49
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(CONTINUED)
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Section 10.04 Certificate and Opinion as to Conditions Precedent......... 49
Section 10.05 Statements Required in Certificate or Opinion.............. 50
Section 10.06 Rules by Trustee and Agents................................ 50
Section 10.07 Legal Holidays............................................. 51
Section 10.08 No Recourse Against Others................................. 51
Section 10.09 Counterparts............................................... 51
Section 10.10 Other Provisions........................................... 51
Section 10.11 Governing Law.............................................. 52
Section 10.12 No Adverse Interpretation of Other Agreements.............. 52
Section 10.13 Successors................................................. 52
Section 10.14 Severability............................................... 52
Section 10.15 Table of Contents, Headings, etc........................... 52
ARTICLE 11
SUBORDINATION
52
Section 11.01 Agreement to Subordinate................................... 52
Section 11.02 Liquidation; Dissolution; Bankruptcy....................... 53
Section 11.03 Default on Senior Debt and/or Designated Senior
Indebtedness............................................... 53
Section 11.04 Acceleration of Convertible Subordinated Notes............. 54
Section 11.05 When Distribution Must Be Paid Over........................ 54
Section 11.06 Notice by Company.......................................... 55
Section 11.07 Subrogation................................................ 55
Section 11.08 Relative Rights............................................ 55
Section 11.09 Subordination May Not Be Impaired by Company............... 56
Section 11.10 Distribution or Notice to Representative................... 56
Section 11.11 Rights of Trustee and Paying Agent......................... 56
Section 11.12 Authorization to Effect Subordination...................... 56
Section 11.13 Article Applicable to Paying Agents........................ 57
Section 11.14 Senior Debt Entitled to Rely............................... 57
Section 11.15 Permitted Payments......................................... 57
ARTICLE 12
CONVERSION OF CONVERTIBLE SUBORDINATED NOTES
57
Section 12.01 Right to Convert........................................... 57
Section 12.02 Exercise of Conversion Privilege; Issuance of Common Stock
on Conversion; No Adjustment for Interest or Dividends..... 58
Section 12.03 Cash Payments in Lieu of Fractional Shares................. 60
Section 12.04 Taxes on Shares Issued..................................... 60
Section 12.05 Reservation of Shares; Shares to Be Fully Paid; Listing of
Common Stock............................................... 60
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TABLE OF CONTENTS
(CONTINUED)
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Section 12.06 Adjustment for Change in Capital Stock..................... 61
Section 12.07 [Reserved]................................................. 66
Section 12.08 [Reserved]................................................. 66
Section 12.09 When Adjustment May Be Deferred............................ 66
Section 12.10 When No Adjustment is Required............................. 67
Section 12.11 Notice of Adjustment....................................... 67
Section 12.12 Voluntary Increase......................................... 67
Section 12.13 Notice of Certain Transactions............................. 67
Section 12.14 Reorganization of Company; Special Distributions........... 68
Section 12.15 Company Determination Final................................ 69
Section 12.16 Trustee's Adjustment Disclaimer............................ 69
Section 12.17 Simultaneous Adjustments................................... 69
Section 12.18 Successive Adjustments..................................... 69
Section 12.19 Restriction on Common Stock Issuable Upon Conversion....... 69
EXHIBITS
Exhibit A Form of Convertible Subordinated Note...................... A-1
Exhibit B Form of Transfer Certificate for Transfer of Restricted
Common Stock............................................... B-1
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CROSS-REFERENCE TABLE*
Trust Indenture Indenture
Act Section Section
----------- -------
310(a)(1)............................................................ 7.10
(a)(2).......................................................... 7.10
(a)(3).......................................................... n/a
(a)(4).......................................................... n/a
(b)............................................................. 7.08, 7.10, 10.02
(c)............................................................. n/a
311(a)............................................................... 7.11
(b)............................................................. 7.11
(c)............................................................. n/a
312(a)............................................................... 2.05
(b)............................................................. 10.03
(c)............................................................. 10.03
313(a)............................................................... 7.06
(b)(1).......................................................... n/a
(b)(2).......................................................... 5.7, 7.06
(c)............................................................. 7.06, 10.02
(d)............................................................. 7.06
314(a)............................................................... 4.02, 10.02, 10.05
(b)............................................................. n/a
(c)(1).......................................................... 10.04
(c)(2).......................................................... 10.04
(c)(3).......................................................... n/a
(d)............................................................. n/a
(e)............................................................. 10.05
(f)............................................................. n/a
315(a)............................................................... 7.01(b)
(b)............................................................. 7.05, 10.02
(c)............................................................. 7.01(a)
(d)............................................................. 7.01(c)
(e)............................................................. 6.11
316(a)(last sentence)................................................ 2.09
(a)(1)(A)....................................................... 6.05
(a)(1)(B)....................................................... 6.04
(a)(2).......................................................... n/a
(b)............................................................. 11.08
(c)............................................................. 9.04
317(a)(1)............................................................ 6.08
(a)(2).......................................................... 6.09
(b)............................................................. 2.04
318(a)............................................................... 10.01
(b)............................................................. n/a
(c)............................................................. 10.01
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"n/a" means not applicable.
*This Cross-Reference Table shall not, for any purpose, be deemed to be a part
of the Indenture.
vi
THIS INDENTURE, dated as of September 29, 2003, is between CKE
Restaurants, Inc., a Delaware corporation (the "Company"), and J.P. Morgan Trust
Company, National Association (the "Trustee"). The Company has duly authorized
the creation of its 4% Convertible Subordinated Notes due 2023 (the "Convertible
Subordinated Notes"), and to provide therefor the Company and the Trustee have
duly authorized the execution and delivery of this Indenture. Each party agrees
as follows for the benefit of the other party and for the equal and ratable
benefit of the holders from time to time of the Convertible Subordinated Notes:
ARTICLE 1
DEFINITIONS
SECTION 1.01 Definitions.
"Affiliate" means, when used with reference to any person, any other
person directly or indirectly controlling, controlled by, or under direct or
indirect common control of, the referent person. For the purposes of this
definition, "control" when used with respect to any specified person means the
power to direct or cause the direction of management or policies of the referent
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise. The terms "controlling" and "controlled"
have meanings correlative of the foregoing.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Agent Member" means any member of, or participant in, the Depositary.
"Business Day" means any day on which banking institutions in the State
of New York or the State of California are open for business.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.
"Capital Stock" of any person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such person, but excluding any debt
securities convertible into such equity.
"Change of Control" means the occurrence of one or more of the
following events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of shares
representing more than 50% of the combined voting power of the then outstanding
Voting Stock of the Company, (b) the Company consolidates with or merges into
any other corporation, any other corporation merges into the Company, or the
Company effects a share exchange, and, in the case of any such transaction, the
outstanding Common Stock of the Company is reclassified into or exchanged for
any other property or securities, unless the shareholders of the Company
immediately before such transaction own, directly or indirectly immediately
following such transaction, at least a majority of the combined voting power of
the then outstanding Voting Stock of the corporation resulting from such
transaction in substantially the same respective proportions as their ownership
of the Voting Stock of the Company immediately before such transaction, (c) the
Company or the Company and its subsidiaries, taken
1
as a whole, sells, assigns, conveys, transfers or leases all or substantially
all assets of the Company or of the Company and its subsidiaries, taken as a
whole, as applicable (other than to one or more wholly-owned subsidiaries of the
Company), or (d) any time the Continuing Directors do not constitute a majority
of the full Board of Directors of the Company (or, if applicable, a successor
corporation to the Company); provided, that a Change of Control under (a), (b)
and (c) above shall not be deemed to have occurred if either (y) the Closing
Sale Price per share of Common Stock for any five trading days within the period
of ten consecutive trading days ending immediately after the later of the Change
of Control or the public announcement of the Change of Control (in the case of a
Change of Control under clause (a) above) or the period of ten consecutive
trading days ending immediately before the Change of Control (in the case of a
Change of Control under clause (b) or (c) above) shall equal or exceed 110% of
the conversion price in effect on the date of such Change of Control or the
public announcement of such Change of Control, as applicable or (z) at least 90%
of the consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change of Control consists of
shares of common stock that are, or upon issuance will be, traded on the New
York Stock Exchange or quoted on The Nasdaq National Market and, as a result of
the transaction, the Convertible Subordinated Notes become convertible solely
into such common stock.
"Closing Sale Price" of a security on any trading day means (a) the
last reported per share sale price (or, if the last sale price is not reported,
the average bid and ask prices or, if more than one in either case, the average
of the bid and the average ask prices) on such date as reported on The New York
Stock Exchange or if such security is not then listed on The New York Stock
Exchange, then as reported by the principal U.S. exchange or quotation system on
which such security is then listed or quoted or (b) in the absence of such
quotation, such price as the Company shall determine on the basis of such
quotations as the Company considers appropriate.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the provisions
of Section 12.14, however, shares issuable on conversion of Convertible
Subordinated Notes shall include only shares of the class designated as Common
Stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which are not subject to redemption by the Company; provided
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Company" means the party named as such above until a successor
replaces it in accordance with Article 5 and thereafter means the successor.
References to the Company shall not include any subsidiary.
2
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of such Board of Directors
on the date of this Indenture or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board of Directors at the time of such
nomination or election.
"conversion price" has the meaning specified in paragraph 9 of the
Convertible Subordinated Notes.
"Convertible Subordinated Notes" means the 4% Convertible Subordinated
Notes due 2023 issued, authenticated and delivered under this Indenture.
"Corporate Trust Office" means the corporate trust office of the
Trustee at which at any particular time the trust created by this Indenture
shall principally be administered; as of the date hereof, the Corporate Trust
Office is located at 560 Mission St., Floor 13, San Francisco, CA 94105.
"Default" means any event that is, or after notice or passage of time,
or both, would be, an Event of Default.
"Depositary" means, with respect to any Global Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as Depositary for such Global Securities (or any successor
securities clearing agency so registered), which shall initially be DTC.
"Designated Senior Indebtedness" means (a) the Senior Credit Facility
and (ii) any particular Senior Debt which has at the time of the giving of the
Payment Blockage Notice an aggregate outstanding principal amount in excess of
$25 million, if the instrument creating or evidencing the same or the assumption
or guarantee thereof (or related agreements or documents to which the Company is
a party) expressly provides that such Indebtedness shall be "Designated Senior
Indebtedness" for purposes of the Indenture (provided that such instrument,
agreement or other document may place limitations and conditions on the right of
such Senior Debt to exercise the rights of Designated Senior Indebtedness.)
"DTC" means The Depository Trust Company, a New York corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Ex-Dividend Date" for any issuance or distribution means the date
immediately prior to the commencement of "ex-dividend" trading for such issuance
or distribution on The New York Stock Exchange or the principal U.S. exchange or
quotation system on which the Common Stock is then listed or quoted.
"fair market value" means the amount which a willing buyer would pay an
unaffiliated willing seller in an arm's length transaction.
3
"Fundamental Change" means the occurrence of a Change of Control or a
Termination of Trading.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect from time to time.
"Global Securities Legend" means the legend labeled as such and that is
set forth in Exhibit A hereto.
"Indebtedness" means, with respect to any person, all obligations,
whether or not contingent, of such person (i) (a) for borrowed money (including,
but not limited to, any indebtedness secured by a security interest, mortgage or
other lien on the assets of the Company that is (1) given to secure all or part
of the purchase price of property subject thereto, whether given to the vendor
of such property or to another, or (2) existing on property at the time of
acquisition thereof), (b) evidenced by a note, debenture, bond or other written
instrument, (c) under a lease required to be capitalized on the balance sheet of
the lessee under GAAP or under any lease or related document (including a
purchase agreement) that provides that the Company is contractually obligated to
purchase or cause a third party to purchase and thereby guarantee a minimum
residual value of the lease property to the lessor and the obligations of the
Company under such lease or related document to purchase or to cause a third
party to purchase such leased property, (d) in respect of letters of credit,
bank guarantees or bankers' acceptances (including reimbursement obligations
with respect to any of the foregoing), (e) with respect to indebtedness secured
by a mortgage, pledge, lien, encumbrance, charge or adverse claim affecting
title or resulting in an encumbrance to which the property or assets of such
person are subject, whether or not the obligation secured thereby shall have
been assumed by or shall otherwise be such person's legal liability, (f) in
respect of the balance of deferred and unpaid purchase price of any property or
assets, (g) under interest rate or currency swap agreements, cap, floor and
collar agreements, spot and forward contracts and similar agreements and
arrangements; (ii) with respect to any obligation of others of the type
described in the preceding clause (i) or under clause (iii) below assumed by or
guaranteed in any manner by such person through an agreement to purchase
(including, without limitation, "take or pay" and similar arrangements),
contingent or otherwise (and the obligations of such person under any such
assumptions, guarantees or other such arrangements); and (iii) any and all
deferrals, renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Initial Purchasers" means Citigroup Global Markets Inc. and BNP
Paribas Securities Corp.
"Interest Payment Date" means April 1 and October 1 of each year,
beginning April 1, 2004.
4
"Issue Date" means the date on which Convertible Subordinated Notes are
first issued and authenticated under this Indenture.
"Maturity Date" means October 1, 2023, unless earlier redeemed,
repurchased or converted.
"Note Custodian" means J.P. Morgan Trust Company, National Association,
as custodian for the Depositary with respect to any Global Security, or any
successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the offering memorandum dated September 23,
2003, relating to the Convertible Subordinated Notes, including all amendments
thereto.
"Officer" means the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Financial Officer, the Chief Accounting Officer, any
Executive Vice President, Senior Vice President or Vice President (whether or
not designated by a number or numbers or word or words before or after the title
"Vice President"), the Treasurer and the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers, one
of whom is the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer or the Treasurer of the Company.
"Opinion of Counsel" means a written opinion from legal counsel who may
be an employee of or counsel to the Company or the Trustee except to the extent
otherwise indicated in this Indenture.
A "person" means any individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization, limited liability company
or government or any agency or political subdivision thereof.
"Principal Amount" of each Convertible Subordinated Note means the
principal amount as set forth on the face of the Convertible Subordinated Note.
"Redemption Date" when used with respect to any of the Convertible
Subordinated Notes to be redeemed, means the date fixed by the Company for such
redemption pursuant to Article 3 of this Indenture and the Convertible
Subordinated Notes.
"Redemption Price" when used with respect to any of the Convertible
Subordinated Notes to be redeemed, means the price fixed for such redemption
pursuant to Article 3 of this Indenture and the Convertible Subordinated Notes.
"Registrable Securities" has the meaning specified in paragraph 18 of
the Convertible Subordinated Note.
5
"Registration Default Damages" has the meaning specified in paragraph
18 of the form of Convertible Subordinated Note, which is attached as Exhibit A
hereto.
"Registration Rights Agreement" means the Registration Rights Agreement
relating to the Convertible Subordinated Notes and Common Stock issuable upon
conversion of such Convertible Subordinated Notes dated September 29, 2003,
between the Company and the Initial Purchasers, as such agreement may be
amended, modified or supplemented from time to time.
"Regular Record Date" means the March 15 or September 15 immediately
preceding each Interest Payment Date.
"Representative" means (a) the indenture trustee or other trustee,
agent or representative for any Senior Debt or (b) with respect to any Senior
Debt that does not have any such trustee, agent or other representative, (i) in
the case of such Senior Debt issued pursuant to an agreement providing for
voting arrangements as among the holders or owners of such Senior Debt, any
holder or owner of such Senior Debt acting with the consent of the required
persons necessary to bind such holders or owners of such Senior Debt and (ii) in
the case of all other such Senior Debt, the holder or owner of such Senior Debt.
"Restricted Securities Legend" means the legend labeled as such and
that is set forth in Exhibit A hereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Credit Facility" means the Fourth Amended and Restated Credit
Agreement dated as of January 31, 2002 among the Company, as borrower, the
lenders identified therein, and BNP Paribas, as administrative agent and
including any related notes, guarantee agreements and other instruments and
agreements executed in connection therewith, in each case including any
deferrals, renewals, extensions, replacements, refinancings or refundings
thereof, or amendments, modifications or supplements thereto and any agreement
providing therefor whether by or with the same or any other lender, creditor,
group of lenders or group of creditors.
"Senior Debt" means the principal of, premium, if any, and interest on,
rent under, fees, costs, expenses and any other amounts payable on or in respect
of any Indebtedness of the Company (including, without limitation, any
Obligations in respect of such Indebtedness and any interest accruing after the
filing of a petition by or against the Company under any bankruptcy law, whether
or not allowed as a claim after such filing in any proceeding under such
bankruptcy law), whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company
(including all deferrals, renewals, extensions, refinancings or refundings of,
or amendments, modifications or supplements to the foregoing); provided,
however, that Senior Debt does not include (u) Indebtedness evidenced by the
Convertible Subordinated Notes, (v) the Company's 4 1/4% Convertible
Subordinated Notes Due 2004, (w) any liability for federal, state, local or
other taxes owed or owing by the Company, (x) Indebtedness of the Company to any
subsidiary of the Company except to the extent such Indebtedness is of a type
described in clause (ii) of the definition of Indebtedness, (y) trade payables
of the Company for goods, services or materials purchased in the ordinary course
of
6
business (other than, to the extent they may otherwise constitute trade
payables, any obligations of the type described in clause (ii) of the definition
of Indebtedness), and (z) any particular Indebtedness in which the instrument
creating or evidencing the same expressly provides that such Indebtedness shall
not be senior in right of payment to, or is pari passu with, or is subordinated
or junior to, the Convertible Subordinated Notes.
"Shelf Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
A "subsidiary" means, with respect to any person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other subsidiaries of that person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or managing
general partner of which is such person or a subsidiary of such person or (b)
the only general partners of which are such person or of one or more
subsidiaries of such person (or any combination thereof).
"Termination of Trading" will be deemed to have occurred if the Common
Stock (or other common stock into which the Convertible Subordinated Notes are
then convertible) is neither listed for trading on the New York Stock Exchange
nor approved for trading on The Nasdaq National Market.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of execution of this Indenture, except as
provided in Sections 9.03 and 12.06.
"trading day" means any day on which The New York Stock Exchange is
open for trading or, if the applicable security is then quoted on the Nasdaq
National Market, any day on which trades may be made on the Nasdaq National
Market or, if the applicable security is not so listed, admitted for trading or
quoted, any Business Day.
"Trading Price" has the meaning specified in paragraph 9 of the
Convertible Subordinated Notes.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor.
"Trust Officer" means an officer in the Corporate Trust Office of the
Trustee and having direct responsibility for the administration of this
Indenture or, with respect to a particular trust matter, any other officer to
whom such matter is referred because of such officer's knowledge and familiarity
with the particular subject.
"U.S. Government Obligations" means direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged. In order to have money available on a
payment date to pay principal or interest on the Convertible Subordinated Notes,
the U.S. Government Obligations shall be payable as to principal or interest on
or before such payment date in such amounts as will provide the necessary money.
U.S. Government Obligations shall not be callable at the issuer's option.
7
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.
SECTION 1.02 Other Definitions.
Defined in
Section
"Accepted Purchase Shares"............................................................... 12.06
"Agent Members".......................................................................... 2.01
"Bankruptcy Law"......................................................................... 6.01
"Business Day"........................................................................... 10.07
"Clearstream"............................................................................ 2.01
"Commencement Date"...................................................................... 12.06
"Conversion Agent"....................................................................... 2.03
"Conversion Date"........................................................................ 12.02
"Conversion Rate"........................................................................ 12.01
"Conversion Shares"...................................................................... 12.02
"Current market price"................................................................... 12.06
"Custodian".............................................................................. 6.01
"Determination Date"..................................................................... 12.06
"Distribution Date"...................................................................... 12.06
"Euroclear".............................................................................. 2.01
"Event of Default"....................................................................... 6.01
"Expiration Time"........................................................................ 12.06
"Fundamental Change Date"................................................................ 3.10
"Fundamental Change Offer"............................................................... 3.10
"Fundamental Change Offer Termination Date".............................................. 3.10
"Fundamental Change Payment"............................................................. 3.10
"Fundamental Change Payment Date"........................................................ 3.10
"Global Security"........................................................................ 2.01
"Investment Company Act"................................................................. 4.09
"Legal Holiday".......................................................................... 10.07
"Measurement Date"....................................................................... 12.06
"Non-Payment Default".................................................................... 11.03
"Offer Expiration Time".................................................................. 12.06
"Paying Agent"........................................................................... 2.03
"Payment Blockage Notice"................................................................ 11.03
"Payment Default"........................................................................ 6.01
"Purchase Agreement"..................................................................... 2.01
"Purchased Shares"....................................................................... 12.06
"Registrar".............................................................................. 2.03
"Register"............................................................................... 2.03
"Regulation S"........................................................................... 2.01
"Repurchase Date"........................................................................ 3.09
"Repurchase Notice"...................................................................... 3.09
"Repurchase Price"....................................................................... 3.09
8
"Restricted Common Stock Legend"......................................................... 12.19
"Rights"................................................................................. 12.06
"Rule 144A".............................................................................. 2.01
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 Commission;
"indenture securities" means the Convertible Subordinated
Notes;
"indenture security holder" means a holder of a Convertible
Subordinated Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Convertible Subordinated Notes means the
Company or any other obligor on the Convertible Subordinated
Notes.
All other terms in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) the male, female and neuter genders include one
another.
9
ARTICLE 2
THE CONVERTIBLE SUBORDINATED NOTES
SECTION 2.01 Form and Dating.
(a) GLOBAL SECURITIES. The Convertible Subordinated Notes are
being offered and sold by the Company pursuant to a Purchase Agreement relating
to the Convertible Subordinated Notes, dated September 23, 2003, among the
Company and the Initial Purchasers (the "Purchase Agreement").
The Convertible Subordinated Notes are being offered and sold (i) in
reliance on Regulation S under the Securities Act ("Regulation S") or (ii) to
"qualified institutional buyers" as defined in Rule 144A in reliance on Rule
144A under the Securities Act ("Rule 144A"), each as provided in the Purchase
Agreement, and shall be issued in the form of one or more permanent global
securities in definitive, fully registered form without interest coupons with
the Global Securities Legend and Restricted Securities Legend set forth in
Exhibit A hereto (each, a "Global Security"). Any Global Security shall be
deposited on behalf of the purchasers of the Convertible Subordinated Notes
represented thereby with the Trustee, as Note Custodian, and registered in the
name of the Depositary or a nominee of the Depositary for the accounts of
participants in the Depositary (and, in the case of Convertible Subordinated
Notes held in accordance with Regulation S, registered with the Depositary for
the accounts of designated agents holding on behalf of the Euroclear System
("Euroclear") or Clearstream Banking, societe anonyme ("Clearstream")), duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of a Global Security may from time to
time be increased or decreased by adjustments made on the records of the Trustee
and the Depositary or its nominee as hereinafter provided.
(b) BOOK-ENTRY PROVISIONS. This Section 2.01(b) shall apply only
to a Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b) and the written order of the Company, authenticate and
deliver initially one or more Global Securities that (i) shall be registered in
the name of Cede & Co. or other nominee of such Depositary and (ii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as Note Custodian pursuant to a FAST Balance
Certificate Agreement between the Depositary and the Trustee.
Except as provided in Section 2.10, members of, or participants in, the
Depositary ("Agent Members") shall have no rights under this Indenture with
respect to any Global Security held on their behalf by the Depositary or by the
Trustee as the Note Custodian of the Depositary or under such Global Security,
and the Depositary may be treated by the Company, the Trustee and any agent of
the Company or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, the registered holder of a
Global Security may grant proxies and otherwise authorize any person, including
Agent Members and persons that may hold interests through Agent Members, to take
any action that a Holder is entitled to take under this Indenture or the
Convertible Subordinated Notes, and nothing herein
10
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of such Depositary
governing the exercise of the rights of a holder of a beneficial interest in any
Global Security.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations and Instructions to Participants" of Clearstream shall be applicable
to interests in any Global Securities that are held by participants through
Euroclear or Clearstream. The Trustee shall have no obligation to notify holders
of any such procedures or to monitor or enforce compliance with the same.
(c) DEFINITIVE SECURITIES. Except as provided in Section 2.10,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Convertible Subordinated Notes in
definitive form. If applicable, certificated Convertible Subordinated Notes in
definitive form will bear the Restricted Securities Legend set forth on Exhibit
A unless removed in accordance with Section 2.06(c).
SECTION 2.02 Execution and Authentication.
One Officer shall sign the Convertible Subordinated Notes for the
Company by manual or facsimile signature.
If an Officer whose signature is on a Convertible Subordinated Note no
longer holds that office at the time the Convertible Subordinated Note is
authenticated, the Convertible Subordinated Note shall nevertheless be valid.
A Convertible Subordinated Note shall not be valid until authenticated
by the manual signature of the Trustee. The signature shall be conclusive
evidence that the Convertible Subordinated Note has been authenticated under
this Indenture.
Upon a written order of the Company signed by an Officer of the
Company, the Trustee shall authenticate Convertible Subordinated Notes for
original issue up to an aggregate Principal Amount of $90,000,000 (plus up to
$15,000,000 aggregate Principal Amount of Convertible Subordinated Notes that
may be sold by the Company pursuant to the option to purchase additional
Convertible Subordinated Notes granted to the Initial Purchasers pursuant to the
Purchase Agreement) to the Initial Purchasers. The aggregate Principal Amount of
Convertible Subordinated Notes outstanding at any time may not exceed that
amount except as provided in Section 2.07.
The Convertible Subordinated Notes shall be issuable only in registered
form without coupons and only in denominations of $1,000 or any integral
multiple thereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Convertible Subordinated Notes. An authenticating agent
may authenticate Convertible Subordinated Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An
11
authenticating agent has the same right as an Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.03 Registrar, Paying Agent and Conversion Agent.
The Company shall maintain or cause to be maintained in such locations
as it shall determine, which may be the Corporate Trust Office, an office or
agency: (i) where securities may be presented for registration of transfer or
for exchange ("Registrar"); (ii) where Convertible Subordinated Notes may be
presented for payment ("Paying Agent"); (iii) an office or agency where
Convertible Subordinated Notes may be presented for conversion (the "Conversion
Agent"); and (iv) where notices and demands to or upon the Company in respect of
Convertible Subordinated Notes and this Indenture may be served by the holders
of the Convertible Subordinated Notes. The Registrar shall keep a Register
("Register") of the Convertible Subordinated Notes and of their transfer and
exchange. The Company may appoint 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, and the term "Conversion
Agent" includes any additional Conversion Agent. The Company may change any
Paying Agent, Registrar, Conversion Agent or co-registrar without prior notice.
The Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture and shall enter into an appropriate agency agreement
with any Registrar, Paying Agent, Conversion Agent or co-registrar not a party
to this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company or any of its subsidiaries may
act as Paying Agent, Registrar, Conversion Agent or co-registrar, except that
for purposes of Articles 3 and 8, neither the Company nor any of its
subsidiaries shall act as Paying Agent. If the Company fails to appoint or
maintain another entity as Registrar, or Paying Agent or Conversion Agent, the
Trustee shall act as such, and the Trustee shall initially act as such.
SECTION 2.04 Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent (other than the Trustee,
who hereby so agrees), to agree in writing that the Paying Agent will hold in
trust for the benefit of holders of the Convertible Subordinated Notes or the
Trustee all money held by the Paying Agent for the payment of principal or
interest and Registration Default Damages, if any, on the Convertible
Subordinated Notes, and will notify the Trustee of any default by the Company in
respect of making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other
than the Company or a subsidiary of the Company) shall have no further liability
for the money. If the Company or a subsidiary of the Company acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the holders of the Convertible Subordinated Notes all money held by it as Paying
Agent.
SECTION 2.05 Holder 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
holders of Convertible Subordinated Notes and shall otherwise comply with TIA
Section 312(a). If the Trustee is not the Registrar, the
12
Company shall furnish to the Trustee at least seven Business Days before each
Interest Payment Date, and as the Trustee may request in writing within fifteen
(15) days after receipt by the Company of any such request (or such lesser time
as the Trustee may reasonably request in order to enable it to timely provide
any notice to be provided by it hereunder), a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of holders
of Convertible Subordinated Notes.
SECTION 2.06 Transfer and Exchange.
(a) When Convertible Subordinated Notes are presented to the
Registrar or a co-registrar with a request to register a transfer or to exchange
them for an equal Principal Amount of Convertible Subordinated Notes for other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall issue and the Trustee shall
authenticate Convertible Subordinated Notes at the Registrar's request, bearing
registration numbers not contemporaneously outstanding. No service charge shall
be made to a holder for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Company and the Registrar may
require payment of a sum sufficient to cover any transfer tax or other
governmental charge payable upon exchanges pursuant to Sections 2.10, 3.07, 9.05
or 12.02.
The Company or the Registrar shall not be required (i) to issue,
register the transfer of or exchange Convertible Subordinated Notes during a
period beginning at the opening of business fifteen (15) days before the day of
any selection of Convertible Subordinated Notes for redemption under Section
3.03 and ending at the close of business on the day of selection, (ii) to
register the transfer or exchange of any Convertible Subordinated Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Convertible Subordinated Note being redeemed in part or (iii) to register
the transfer of any Convertible Subordinated Notes surrendered for repurchase
pursuant to Section 3.09 or Section 3.10.
All Convertible Subordinated Notes issued upon any transfer or exchange
of Convertible Subordinated Notes in accordance with this Indenture shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture as the Convertible Subordinated Notes
surrendered upon such registration of transfer or exchange.
(b) Notwithstanding any provision to the contrary herein, so long
as a Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Sections
2.01(b) and 2.10; provided, however, that beneficial interests in a Global
Security may be transferred to persons who take delivery thereof in the form of
a beneficial interest in the Global Security in accordance with the transfer
restrictions set forth under the heading "Notice to Investors" in the Offering
Memorandum and, if applicable, in the Restricted Securities Legend.
Except for transfers or exchanges made in accordance with Section 2.10,
transfers of a Global Security shall be limited to transfers of such Global
Security in whole, but not in part, to nominees of the Depositary or to a
successor of the Depositary or such successor's nominee.
13
In the event that a Global Security is exchanged for Convertible
Subordinated Notes in definitive form pursuant to Section 2.10 prior to the
effectiveness of a Shelf Registration Statement with respect to such Convertible
Subordinated Notes, such exchange may occur, and such Convertible Subordinated
Notes may be further exchanged or transferred, only upon receipt by the
Registrar and the Trustee of (1) such Global Security or such Convertible
Subordinated Notes in definitive form, duly endorsed as provided herein, as
applicable, (2) instructions from the holder directing the Trustee to
authenticate and deliver one or more Convertible Subordinated Notes in
definitive form of the same aggregate Principal Amount as the Global Security or
the Convertible Subordinated Notes in definitive form (or portion thereof), as
applicable, to be transferred, such instructions to contain the name or names of
the designated transferee or transferees, the authorized denomination or
denominations of the Convertible Subordinated Notes in definitive form to be so
issued and appropriate delivery instructions, and (3) such certifications or
other information and, in the case of transfers pursuant to Rule 144 under the
Securities Act, legal opinions as the Company, the Registrar and the Trustee may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act (including the certification requirements
intended to ensure that such transfers comply with Rule 144A or Regulation S
under the Securities Act, as the case may be), and upon compliance with such
other procedures as may from time to time be adopted by the Company and the
Registrar.
(c) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Rights
Agreement, if Convertible Subordinated Notes are issued upon the registration of
transfer, exchange or replacement of Convertible Subordinated Notes bearing a
Restricted Securities Legend, or if a request is made to remove such a
Restrictive Securities Legend on Convertible Subordinated Notes, the Convertible
Subordinated Notes so issued shall bear the Restricted Securities Legend, or a
Restricted Securities Legend shall not be removed, as the case may be, unless
there is delivered to the Company such satisfactory evidence, which, in the case
of a transfer made pursuant to Rule 144 under the Securities Act, may include an
opinion of counsel given in accordance with the laws in the State of New York,
as may be reasonably required by the Company, that neither the legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A, Rule 144 or Regulation S under
the Securities Act or that such Convertible Subordinated Notes are not
"restricted" within the meaning of Rule 144 under the Securities Act. Upon
provision to the Company of such satisfactory evidence, the Trustee, at the
written direction of the Company, shall authenticate and deliver Convertible
Subordinated Notes that do not bear the legend. The Company shall not otherwise
be entitled to require the delivery of a legal opinion in connection with any
transfer or exchange of Securities.
(d) Neither the Trustee nor any Agent shall have any
responsibility for any actions taken or not taken by the Depositary.
(e) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Convertible Subordinated Notes (including any transfers between
or among the Depositary's participants or beneficial owners of interests in any
Global Security) other than to require delivery of such certificates and other
documentation as is expressly required by, and to do so if and when expressly
required by, the terms of this
14
Indenture and to examine the same to determine substantial compliance as to form
with the express requirements hereof.
SECTION 2.07 Replacement Convertible Subordinated Notes.
If the holder of a Convertible Subordinated Note claims that its
Convertible Subordinated Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Convertible
Subordinated Note if the Trustee's and the Company's requirements are met. If
required by the Trustee or the Company as a condition of receiving a replacement
Convertible Subordinated Note, the holder of a Convertible Subordinated Note
must provide a certificate of loss and an indemnity and/or an indemnity bond
sufficient, in the judgment of both the Company and the Trustee, to fully
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss, liability, cost or expense which any of them may suffer or incur if
the Convertible Subordinated Note is replaced. The Company and the Trustee may
charge the relevant holder for their expenses in replacing any Convertible
Subordinated Note.
The Trustee or any authenticating agent may authenticate any such
substituted Convertible Subordinated Note, and deliver the same upon the receipt
of such security or indemnity as the Trustee, the Company and, if applicable,
such authenticating agent may require. Upon the issuance of any substituted
Convertible Subordinated Note, the Company and the Trustee 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 connected therewith.
In case any Convertible Subordinated Note which has matured or is about to
mature, or has been called for redemption pursuant to Article 3, submitted for
repurchase pursuant to Section 3.09 or Section 3.10 or is about to be converted
into Common Stock pursuant to Article 12, shall become mutilated or be
destroyed, lost or stolen, the Company may, instead of issuing a substitute
Convertible Subordinated Note, pay or authorize the payment of or convert or
authorize the conversion of the same (without surrender thereof except in the
case of a mutilated Convertible Subordinated Note), as the case may be, if the
applicant for such payment or conversion shall furnish to the Company, to the
Trustee and, if applicable, to the authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or connected with such substitution, and,
in case of destruction, loss or theft, evidence satisfactory to the Company, the
Trustee and, if applicable, any paying agent or conversion agent of the
destruction, loss or theft of such Convertible Subordinated Note and of the
ownership thereof.
Every replacement Convertible Subordinated Note is an additional
obligation of the Company and shall be entitled to all the benefits provided
under this Indenture equally and proportionately with all other Convertible
Subordinated Notes duly issued, authenticated and delivered hereunder.
SECTION 2.08 Outstanding Convertible Subordinated Notes.
The Convertible Subordinated Notes outstanding at any time are all the
Convertible Subordinated Notes properly authenticated by the Trustee except for
those canceled by the
15
Trustee, those delivered to it for cancellation, and those described in this
Section as not outstanding.
If a Convertible Subordinated Note is replaced pursuant to Section
2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory
to it that the replaced Convertible Subordinated Note is held by a bona fide
purchaser.
If Convertible Subordinated Notes are considered paid under Section
4.01 or converted under Article 12, they cease to be outstanding, and interest
on them ceases to accrue.
Subject to Section 2.09 hereof, a Convertible Subordinated Note does
not cease to be outstanding because the Company or an Affiliate of the Company
holds the Convertible Subordinated Note.
SECTION 2.09 When Treasury Convertible Subordinated Notes Disregarded.
In determining whether the holders of the required principal amount of
Convertible Subordinated Notes have concurred in any direction, waiver or
consent, Convertible Subordinated Notes owned by the Company or an Affiliate of
the Company shall be considered as though they are not outstanding except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Convertible Subordinated
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so disregarded.
SECTION 2.10 Temporary Convertible Subordinated Notes; Transfers of Global
Security to Beneficial Owners.
(a) Until definitive Convertible Subordinated Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Convertible Subordinated Notes. Temporary Convertible Subordinated Notes shall
be substantially in the form of definitive Convertible Subordinated Notes but
may have variations that the Company considers appropriate for temporary
Convertible Subordinated Notes and shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Convertible Subordinated Notes in exchange for
temporary Convertible Subordinated Notes.
(b) A Global Security deposited with the Depositary or with the
Trustee as Note Custodian for the Depositary pursuant to Section 2.01 shall be
transferred to the beneficial owners thereof in the form of certificated
Convertible Subordinated Notes in definitive form only if such transfer complies
with Section 2.06 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or if at
any time such Depositary ceases to be a "clearing agency" registered under the
Exchange Act at a time when the Depositary is required to be so registered in
order to act as depositary and in each case a successor Depositary is not
appointed by the Company within 90 days of such notice, or (ii) the Company
executed and delivers to the Trustee and Registrar an Officer's Certificate
stating that such Global Security shall be so exchangeable.
16
In connection with the exchange of an entire Global Security for
certificated Convertible Subordinated Notes pursuant to this subsection (b),
such Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and upon Company order the Trustee
shall authenticate and deliver, to each beneficial owner identified by the
Depositary in exchange for its beneficial interest in such Global Security, an
equal aggregate Principal Amount of certificated Convertible Subordinated Notes
of authorized denominations.
In addition, the owner of a beneficial interest in a Global Security
will be entitled to receive a certificated Convertible Subordinated Note in
exchange for such interest if an Event of Default has occurred and is
continuing. Upon receipt by the Note Custodian and Registrar of instructions
from the Holder of a Global Security directly the Note Custodian and Registrar
to (x) issue one or more certificate Convertible Subordinated Notes in the
amounts specified to the owner of a beneficial interest in such Global Security
and (y) debit or cause to be debited an equivalent amount of beneficial interest
in such Global Security, subject to the rules and procedures of the Depositary:
(i) the Note Custodian and Registrar shall notify the Company and
the Trustee of such instructions, identifying the owner and amount of such
beneficial interest in such Global Security;
(ii) the Company shall promptly execute, and upon Company order the
Trustee shall authenticate and deliver, to such beneficial owner certificated
Convertible Subordinated Notes in an equivalent amount to such beneficial
interest in such Global Security; and
(iii) the Registrar shall decrease such Global Security by such
amount in accordance with the foregoing.
In the event that the certificated Convertible Subordinated Notes are
not issued to each such beneficial owner promptly after the Registrar has
received a request from the Holder of a Global Security to issue such
certificated Convertible Subordinated Notes, the Company expressly acknowledges,
with respect to the right of any holder to pursue a remedy pursuant to Sections
6.06 or 6.07 hereof, the right of any beneficial owner of the Convertible
Subordinated Notes to pursue such remedy with respect to the portion of the
Convertible Subordinated Notes that represents such beneficial owner's
Convertible Subordinated Notes as if such certificated Convertible Subordinated
Notes had been issued.
(c) Any Global Security or interest thereon that is transferable
to the beneficial owners thereof in the form of certificated Convertible
Subordinated Notes in definitive form shall, if held by the Depository, be
surrendered by the Depositary to the Trustee, without charge, and the Trustee
shall authenticate and deliver, upon such transfer of each portion of such
Global Security, an equal aggregate Principal Amount of Convertible Subordinated
Notes of authorized denominations in the form of certificated Convertible
Subordinated Notes in definitive form. Any portion of a Global Security
transferred pursuant to this Section shall be executed, authenticated and
delivered only in denominations of $1,000 of Principal Amount and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any Convertible Subordinated Notes in the form of certificated Convertible
Subordinated Notes in
17
definitive form delivered in exchange for an interest in the Global Security
shall, except as otherwise provided by Section 2.06(c), bear the Restricted
Securities Legend.
(d) Prior to any transfer pursuant to Section 2.10(b), the
registered holder of a Global Security may grant proxies and otherwise authorize
any person, including Agent Members and persons that may hold interests through
Agent Members, to take any action that a holder is entitled to take under this
Indenture or the Convertible Subordinated Notes.
SECTION 2.11 Cancellation.
The Company at any time may deliver Convertible Subordinated Notes to
the Trustee for cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Convertible Subordinated Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else may
cancel Convertible Subordinated Notes surrendered for registration of transfer,
exchange, payment, replacement, conversion, redemption, repurchase or
cancellation. Upon written instructions of the Company, the Trustee shall
destroy and dispose of canceled Convertible Subordinated Notes as the Company
directs and, after such destruction, shall deliver a certificate of destruction
to the Company. The Company may not issue new Convertible Subordinated Notes to
replace Convertible Subordinated Notes that it has paid, redeemed or repurchased
or that have been delivered to the Trustee for cancellation or that any holder
has (i) converted pursuant to Article 12 hereof, (ii) submitted for redemption
pursuant to Article 3 hereof or (iii) submitted for repurchase pursuant to
Section 3.09 or Section 3.10 hereof (unless revoked).
SECTION 2.12 Defaulted Interest.
If the Company fails to make a payment of interest on the Convertible
Subordinated Notes, it shall pay such defaulted interest plus, to the extent
lawful, any interest payable on the defaulted interest. It may pay such
defaulted interest, plus any such interest payable on it, to the persons who are
holders of Convertible Subordinated Notes on a subsequent special record date.
The Company shall fix any such record date and payment date. At least 15 days
before any such record date, the Company shall mail to holders of the
Convertible Subordinated Notes a notice that states the record date, payment
date and amount of such interest to be paid.
SECTION 2.13 CUSIP Number.
The Company in issuing the Convertible Subordinated Notes may use a
"CUSIP" number, and if so, such CUSIP number shall be included in notices of
redemption, repurchase or exchange as a convenience to holders of Convertible
Subordinated Notes; provided, however, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Convertible Subordinated Notes and that reliance
may be placed only on the other identification numbers printed on the
Convertible Subordinated Notes. The Company will promptly notify the Trustee of
any change in the CUSIP number.
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SECTION 2.14 Regulation S.
The Company agrees that it will refuse to register any transfer of
Convertible Subordinated Notes or any shares of Common Stock issued upon
conversion of Convertible Subordinated Notes that is not made in accordance with
the provisions of Regulation S under the Securities Act, pursuant to a
registration statement which has been declared effective under the Securities
Act or pursuant to an available exemption from the registration requirements of
the Securities Act; provided that the provisions of this paragraph shall not be
applicable to any Convertible Subordinated Notes which do not bear a Restricted
Securities Legend or to any shares of Common Stock evidenced by certificates
which do not bear a Restricted Common Stock Legend.
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.01 Optional Redemption.
The Company, at its option, may redeem all or any portion of the
Convertible Subordinated Notes upon the terms and at the Redemption Prices set
forth in each of the Convertible Subordinated Notes. Any redemption shall be
made in accordance with the provisions of Paragraph 6 the Convertible
Subordinated Notes and this Article 3.
SECTION 3.02 Notices to Trustee.
If the Company elects to redeem Convertible Subordinated Notes pursuant
to the optional redemption provisions of paragraph 6 of the Convertible
Subordinated Notes, it shall furnish to the Trustee, at least 30 (45 if less
than all of the then outstanding Convertible Subordinated Notes are to be
redeemed) days but not more than 60 days before a Redemption Date (unless a
shorter period shall be satisfactory to the Trustee), an Officers' Certificate
setting forth (i) the Section of this Indenture pursuant to which the redemption
shall occur, (ii) the Redemption Date, (iii) the principal amount of Convertible
Subordinated Notes (if less than all) to be redeemed, (iv) the Redemption Price
and (v) the CUSIP number of the Convertible Subordinated Notes being redeemed.
SECTION 3.03 Selection of Convertible Subordinated Notes to Be Redeemed.
If less than all the Convertible Subordinated Notes are to be redeemed,
the Trustee shall select the Convertible Subordinated Notes to be redeemed pro
rata or by lot or by any other method the Trustee considers fair and appropriate
(so long as such method is not prohibited by the rules of any stock exchange on
which the Securities are then listed). The Trustee shall make the selection at
least 30 days but not more than 60 days before a Redemption Date from
outstanding Convertible Subordinated Notes not previously called for redemption.
Convertible Subordinated Notes and any portions thereof that the
Trustee selects shall be in Principal Amounts of $1,000 or an integral multiple
of $1,000. Provisions of this Indenture that apply to Convertible Subordinated
Notes called for redemption also apply to portions of Convertible Subordinated
Notes called for redemption. The Trustee shall notify the Company
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promptly of the Convertible Subordinated Notes or portions of Convertible
Subordinated Notes to be redeemed.
If any Convertible Subordinated Note selected for partial redemption is
converted in part before termination of the conversion right with respect to the
portion of the Convertible Subordinated Note so selected, the converted portion
of such Convertible Subordinated Note shall be deemed (so far as may be) to be
the portion selected for redemption. The Convertible Subordinated Notes (or
portion thereof) so selected shall be deemed duly selected for redemption for
all purposes hereof, notwithstanding that any such Convertible Subordinated Note
is converted in whole or in part before the mailing of the notice of redemption.
SECTION 3.04 Notice of Redemption.
The Company shall mail by first-class mail a notice of redemption to
each holder whose Convertible Subordinated Notes are to be redeemed, at such
holder's registered address. The Company will not give fewer than 30 days'
notice of redemption by first class mail to holders of notes.
The notice shall identify the Convertible Subordinated Notes to be
redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and accrued and unpaid interest,
if any, payable on the Redemption Date;
(3) the Conversion Rate;
(4) the name and address of the Paying Agent and
Conversion Agent;
(5) that Convertible Subordinated Notes called for
redemption may be converted at any time prior to the close of business on the
last trading day immediately preceding the Redemption Date and if not converted
prior to the close of business on such date, the right of conversion will be
lost;
(6) that holders who want to convert Convertible
Subordinated Notes must satisfy the requirements set forth in Paragraph 9 of the
Convertible Subordinated Notes;
(7) that Convertible Subordinated Notes called for
redemption must be surrendered to the Paying Agent to collect the Redemption
Price and accrued and unpaid interest and Registration Default Damages, if any;
(8) if fewer than all the outstanding Convertible
Subordinated Notes are to be redeemed, the certificate number and Principal
Amounts of the particular Convertible Subordinated Notes to be redeemed;
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(9) that, unless the Company defaults in making payment
of such Redemption Price and any interest or Registration Default Damages which
are due and payable, interest and Registration Default Damages, if any, will
cease to accrue on and after the Redemption Date;
(10) the CUSIP number of the Convertible Subordinated
Notes;
(11) that in the case of Convertible Subordinated Notes or
portions thereof called for redemption on a date that is also an Interest
Payment Date, the interest payment and Registration Default Damages, if any, due
on such date shall be paid to the person in whose name the Convertible
Subordinated Notes are registered at the close of business on the relevant
Regular Record Date; and
(12) any other information that the Company wants to
present.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been 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 Convertible Subordinated Note designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any Convertible Subordinated Note.
At the Company's request, the Trustee shall give the notice of
redemption to holders in the Company's name and at the Company's expense,
provided that the Company makes such request at least three Business Days
(unless a shorter period shall be satisfactory to the Trustee) prior to the date
such notice of redemption must be mailed.
SECTION 3.05 Effect of Notice of Redemption.
Once notice of redemption is given, Convertible Subordinated Notes
called for redemption become due and payable on the Redemption Date and at the
Redemption Price (together with accrued and unpaid interest and Registration
Default Damages, if any) stated in the notice except for Convertible
Subordinated Notes which are converted in accordance with the terms of this
Indenture. Upon surrender to the Paying Agent, such Convertible Subordinated
Notes shall be paid at the Redemption Price, together with accrued and unpaid
interest and Registration Default Damages, if any, as stated in the notice.
SECTION 3.06 Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or a subsidiary or an Affiliate of either of
them is the Paying Agent, shall segregate and hold in trust) in immediately
available funds sufficient to pay the Redemption Price of, and any accrued and
unpaid interest and any Registration Default Damages on, all Convertible
Subordinated Notes to be redeemed on that date other than Convertible
Subordinated Notes or portions of Convertible Subordinated Notes called for
redemption which on or prior thereto have been delivered by the Company to the
Trustee for cancellation or have been converted. The Paying Agent shall as
promptly as practicable return to the Company any money not required for that
purpose.
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On and after the Redemption Date, unless the Company shall default in
the payment of the Redemption Price, interest and Registration Default Damages,
if applicable, will cease to accrue on the Principal Amount of the Convertible
Subordinated Notes or portions thereof called for redemption and for which funds
have been set apart for payment, and such Convertible Subordinated Notes, or
portions thereof, shall cease after the close of business on the trading day
immediately preceding the Redemption Date to be convertible into Common Stock
and, except as provided in this Section 3.06 and Section 8.04, to be entitled to
any benefit or security under this Indenture, and the holders thereof shall have
no right in respect of such Convertible Subordinated Notes, or portions thereof,
except the right to receive the Redemption Price thereof and unpaid interest and
Registration Default Damages, if any, to (but excluding) the Redemption Date. In
the case of Convertible Subordinated Notes or portions thereof redeemed on a
Redemption Date which is also an Interest Payment Date, the interest payment and
Registration Default Damages, if any, due on such date shall be paid to the
person in whose name the Convertible Subordinated Note is registered at the
close of business on the relevant Regular Record Date.
SECTION 3.07 Convertible Subordinated Notes Redeemed in Part.
Upon surrender of a Convertible Subordinated Note that is redeemed in
part only, the Company shall issue and the Trustee shall authenticate and
deliver to the holder of a Convertible Subordinated Note a new Convertible
Subordinated Note equal in Principal Amount to the unredeemed portion of the
Convertible Subordinated Note surrendered, at the expense of the Company, except
as specified in Section 2.06 or 2.07.
SECTION 3.08 Conversion Arrangement on Call for Redemption.
In connection with any redemption of Convertible Subordinated Notes,
the Company may arrange for the purchase and conversion of any Convertible
Subordinated Notes by an arrangement with one or more investment banks or other
purchasers to purchase such Convertible Subordinated Notes by paying to the
Trustee in trust for the holders, on or before 10:00 a.m. New York City time on
the Redemption Date, an amount not less than the applicable Redemption Price,
together with interest and Registration Default Damages, if any, accrued to the
Redemption Date, of such Convertible Subordinated Notes. Notwithstanding
anything to the contrary contained in this Article 3, the obligation of the
Company to pay the Redemption Price of such Convertible Subordinated Notes,
together with interest and Registration Default Damages, if any, accrued to the
Redemption Date, 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 Redemption Date, and
any Convertible Subordinated 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
(notwithstanding anything to the contrary contained in Article 12) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the Redemption Date (and the right to convert any such Convertible
Subordinated Notes shall be deemed to have been 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 Convertible Subordinated Notes. Without the Trustee's prior
22
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Convertible Subordinated Notes shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations of
the Trustee as set forth in this Indenture, and the Company agrees to indemnify
the Trustee from, and defend and hold it harmless against, any loss, liability
or expense arising out of or in connection with any such arrangement for the
purchase and conversion of any Convertible Subordinated Notes between the
Company and such purchasers to which the Trustee has not consented in writing,
including the reasonable costs and expenses incurred by the Trustee in the
defense of any claim or liability arising out of or in connection with the
exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.
SECTION 3.09 Repurchase of Convertible Subordinated Notes at Option of the
Holder.
(a) Convertible Subordinated Notes shall be purchased by the
Company pursuant to the terms of the Convertible Subordinated Notes at the
option of the holder on October 1 of 2008, 2013 and 2018 (each, a "Repurchase
Date"), at a purchase price of 100% of the Principal Amount plus any accrued and
unpaid interest and any Registration Default Damages (the "Repurchase Price"),
in each case, to, but excluding, such Repurchase Date, subject to the provisions
of this Section 3.09(a).
Notice of an upcoming Repurchase Date shall be mailed by or at the
direction of the Company to the holders of Convertible Subordinated Notes as
shown on the Register of such holders maintained by the Registrar not less than
20 Business Days prior to the Repurchase Date at the addresses as shown on the
Register of holders maintained by the Registrar. The Company will also give
notice to beneficial owners as required by applicable law. Such notice will
describe, among other things, the repurchase right at the option of the holder,
the Repurchase Date, the Repurchase Price, that the holder must exercise the
repurchase right at any time from the opening of business on the date that is 20
Business Days prior to the Repurchase Date until the close of business on the
Business Day prior to the Repurchase Date, that the holder shall have the right
to withdraw any Convertible Subordinated Notes surrendered prior to the close of
business on the Repurchase Date, the procedures that a holder of Convertible
Subordinated Notes must follow in order to require the Company to repurchase
such holder's Convertible Subordinated Notes and to withdraw any surrendered
Convertible Subordinated Notes, the place or places where the holder is to
surrender such holder's Convertible Subordinated Notes, the amount of interest
and Registration Default Damages, if any, accrued on each Convertible
Subordinated Note to (but excluding) the Repurchase Date, and the CUSIP number
or numbers of the Convertible Subordinated Notes (if then generally in use).
No failure of the Company to give the foregoing notices and no defect
therein shall limit the Convertible Subordinated Note holders' repurchase rights
or affect the validity of the proceedings for the repurchase of the Convertible
Subordinated Notes pursuant to this Section 3.09.
Repurchases of Convertible Subordinated Notes under this Section 3.09
shall be made, at the option of the holder thereof, upon:
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(1) delivery to the Paying Agent by a holder of a written
notice (a "Repurchase Notice") during the period beginning at any time
from the opening of business on the date that is 20 Business Days prior
to the applicable relevant Repurchase Date until the close of business
on the Business Day prior to such Repurchase Date stating:
(A) if certificated Convertible Subordinated Notes
have been issued, the certificate numbers of the
Convertible Subordinated Notes which the holder will
deliver to be purchased (or if a holder's Convertible
Subordinated Notes are not certificated, such
holder's Repurchase Notice must comply with
appropriate Depositary procedures),
(B) the portion of the Principal Amount of the
Convertible Subordinated Notes which the holder will
deliver to be purchased, which portion must be a
Principal Amount of $1,000 or an integral multiple
thereof,
(C) that such Convertible Subordinated Note shall be
purchased as of the Repurchase Date pursuant to the
terms and conditions specified in paragraph 7 of the
Convertible Subordinated Notes and in this Indenture,
and
(2) delivery or book-entry transfer of the Convertible
Subordinated Notes to Paying Agent at any time after delivery of the
applicable Repurchase Notice (together with all necessary endorsements)
at the office of the Paying Agent, such delivery being a condition to
receipt by the holder of the Repurchase Price therefor; provided that
such Repurchase Price shall be so paid pursuant to this Section 3.09
only if the Convertible Subordinated Note so delivered to Paying Agent
shall conform in all respects to the description thereof in the related
Repurchase Notice.
The Company shall purchase from the holder thereof, pursuant to this
Section 3.09, a portion of a Convertible Subordinated Note if the Principal
Amount of such portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to the purchase of all of a Convertible
Subordinated Note also apply to the purchase of such portion of such Convertible
Subordinated Note.
The Paying Agent shall promptly notify the Company of the receipt by it
of any Repurchase Notice or written notice of withdrawal thereof.
(b) Upon receipt by the Paying Agent of the Repurchase Notice
specified in Section 3.09(a), the holder of the Convertible Subordinated Note in
respect of which such Repurchase Notice was given shall (unless such Repurchase
Notice is validly withdrawn) thereafter be entitled to receive solely the
Repurchase Price with respect to such Convertible Subordinated Note. Such
Repurchase Price shall be paid to such holder, subject to receipt of funds
and/or Convertible Subordinated Notes by the Paying Agent, promptly following
the later of (x) the Repurchase Date with respect to such Convertible
Subordinated Note (provided the holder has satisfied the conditions in Section
3.09(a)) and (y) the time of delivery of such Convertible
24
Subordinated Note to the Paying Agent by the holder thereof in the manner
required by Section 3.09(a). Notwithstanding anything herein to the contrary,
Convertible Subordinated Notes in respect of which a Repurchase Notice has been
given by the holder thereof may not be converted pursuant to Article 12 hereof
on or after the date of the delivery of such Repurchase Notice unless such
Repurchase Notice has first been validly withdrawn.
A Repurchase Notice may be withdrawn by means of a written notice of
withdrawal delivered to the office of the Paying Agent in accordance with the
Repurchase Notice at any time prior to the close of business on the Repurchase
Date so long as delivery or book-entry transfer of the Convertible Subordinated
Notes in exchange for the Repurchase Price has not occurred, specifying:
(1) the certificate number, if any, of the Convertible
Subordinated Note in respect of which such notice of
withdrawal is being submitted, or the appropriate Depositary
information if the Convertible Subordinated Note in respect of
which such notice of withdrawal is being submitted is
represented by a Global Security,
(2) the Principal Amount of the Convertible Subordinated Note
with respect to which such notice of withdrawal is being
submitted, and
(3) the Principal Amount, if any, of such Convertible
Subordinated Note which remains subject to the original
Repurchase Notice and which has been or will be delivered for
purchase by the Company.
(a) On or prior to the Repurchase Date, the Company shall deposit
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 2.04) an amount of cash (in immediately available funds
if deposited on such Business Day) sufficient to pay the aggregate Repurchase
Price of all the Convertible Subordinated Notes or portions thereof that are to
be purchased as of the Repurchase Date.
(b) Upon presentation of any Convertible Subordinated Note
repurchased only in part, 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 Convertible Subordinated Note or Convertible
Subordinated Notes, of any authorized denomination, in aggregate Principal
Amount equal to the unrepurchased portion of the Convertible Subordinated Notes
presented.
(c) The Paying Agent shall return to the Company any cash that
remains unclaimed, together with interest, if any, thereon, held by them for the
payment of the Repurchase Price; provided that to the extent that the aggregate
amount of cash deposited by the Company pursuant to Section 3.09 exceeds the
aggregate Repurchase Price of the Convertible Subordinated Notes or portions
thereof which the Company is obligated to purchase as of the Repurchase Date
then, unless otherwise agreed in writing with the Company, promptly after the
Business Day following the Repurchase Date, the Paying Agent shall return any
such excess to the Company together with interest, if any, thereon. If the
Paying Agent holds money sufficient to pay the Repurchase Price of a Convertible
Subordinated Note on the Business Day following the Repurchase Date, then on or
after that date, such Convertible Subordinated Note shall cease to be
outstanding, and
25
interest and Registration Default Damages, if applicable, will cease to accrue
on the Principal Amount of the Convertible Subordinated Note and the holders
thereof shall have no right in respect of such Convertible Subordinated Note
except the right to receive the Repurchase Price thereof and unpaid interest and
Registration Default Damages, if any, to (but excluding) the Repurchase Date.
SECTION 3.10 Repurchase Upon Fundamental Change.
Following a Fundamental Change (the date of each such occurrence being
the "Fundamental Change Date"), the Company shall notify the holders of
Convertible Subordinated Notes in writing of such occurrence and shall make an
offer (the "Fundamental Change Offer") to repurchase all Convertible
Subordinated Notes then outstanding at a repurchase price in cash equal to 100%
of the Principal Amount thereof, plus accrued and unpaid interest and
Registration Default Damages, if any (the "Fundamental Change Payment"), to, but
excluding, the Fundamental Change Payment Date (as defined below).
Notice of a Fundamental Change shall be mailed by or at the direction
of the Company to the holders of Convertible Subordinated Notes as shown on the
Register of such holders maintained by the Registrar not more than 20 days after
the applicable Fundamental Change Date at the addresses as shown on the Register
of holders maintained by the Registrar, with a copy to the Trustee and the
Paying Agent. The Fundamental Change Offer shall remain open until a specified
date (the "Fundamental Change Offer Termination Date") which is at least 20
Business Days from the date such notice is mailed. During the period specified
in such notice, holders of Convertible Subordinated Notes may elect to tender
their Convertible Subordinated Notes in whole or in part in integral multiples
of $1,000 of Principal Amount in exchange for cash. Payment shall be made by the
Company in respect of Convertible Subordinated Notes properly tendered pursuant
to this Section on a specified Business Day (the "Fundamental Change Payment
Date") which shall be no later than 60 days after the applicable Fundamental
Change.
The notice, which shall govern the terms of the Fundamental Change
Offer, shall include such disclosures as are required by law and shall state:
(a) that a Fundamental Change Offer is being made pursuant to this
Section 3.10 and that all Convertible Subordinated Notes will be accepted for
payment;
(b) the event, transaction or transactions that constitute the
Fundamental Change;
(c) the Fundamental Change Payment for each Convertible
Subordinated Note, the Fundamental Change Offer Termination Date and the
Fundamental Change Payment Date;
(d) that any Convertible Subordinated Note not properly tendered
will continue to accrue interest (including Contingent Interest, if any) and
Registration Default Damages, if applicable, in accordance with the terms
thereof;
(e) that, unless the Company defaults on making the Fundamental
Change Payment, any Convertible Subordinated Note properly tendered pursuant to
the Fundamental Change Offer shall cease to accrue interest and Registration
Default Damages, if applicable, on the
26
Fundamental Change Payment Date and no further interest (including Contingent
Interest, if any) or Registration Default Damages shall accrue on or after such
date;
(f) that holders electing to have Convertible Subordinated Notes
repurchased pursuant to a Fundamental Change Offer will be required to surrender
their Convertible Subordinated Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City time, on the
Fundamental Change Offer Termination Date and must complete any form letter of
transmittal proposed by the Company and acceptable to the Trustee and the Paying
Agent;
(g) that holders of Convertible Subordinated Notes will be
entitled to withdraw their election if the Paying Agent receives, not later than
5:00 p.m., New York City time, on the Fundamental Change Offer Termination Date,
a facsimile transmission or letter setting forth the name of the holder, the
principal amount of Convertible Subordinated Notes the holder delivered for
purchase, the Convertible Subordinated Note certificate number (if any) and a
statement that such holder is withdrawing his election to have such Convertible
Subordinated Notes purchased;
(h) that holders whose Convertible Subordinated Notes are tendered
for repurchase in part will be issued Convertible Subordinated Notes equal in
Principal Amount to the unpurchased portion of the Convertible Subordinated
Notes surrendered;
(i) the instructions that holders must follow in order to tender
their Convertible Subordinated Notes; and
(j) that in the case of a Fundamental Change Offer Termination
Date that is also an Interest Payment Date, the interest payment (including
Contingent Interest, if any) and Registration Default Damages, if any, due on
such date shall be paid to the person in whose name the Convertible Subordinated
Note is registered at the close of business on the relevant Fundamental Change
Offer Termination Date.
On the Fundamental Change Offer Termination Date, the Company shall (i)
accept for payment all Convertible Subordinated Notes or portions thereof
properly tendered pursuant to the Fundamental Change Offer, (ii) deposit with
the Paying Agent money sufficient to pay the Fundamental Change Payment with
respect to all Convertible Subordinated Notes or portions thereof so tendered
and (iii) deliver or cause to be delivered to the Trustee the Convertible
Subordinated Notes so tendered together with an Officers' Certificate setting
forth the aggregate principal amount of Convertible Subordinated Notes or
portions thereof tendered to the Company. On the Fundamental Change Payment
Date, the Paying Agent shall send or deliver the Fundamental Change Payment to
the holders of Convertible Subordinated Notes so tendered and the Trustee shall
promptly authenticate and send or cause to be transferred by book entry to such
holders a new Convertible Subordinated Note equal in principal amount to any
unpurchased portion of the Convertible Subordinated Note surrendered, if any;
provided that such new Convertible Subordinate Notes will be in a Principal
Amount of $1,000 or an integral multiple thereof. Any Convertible Subordinated
Notes not properly tendered shall be promptly mailed or delivered by the Company
to the holder thereof.
27
In the case of any reclassification, change, consolidation, merger,
share exchange, combination or sale or conveyance to which Section 12.14 applies
in which the Common Stock of the Company is changed or exchanged as a result
into the right to receive stock, securities or other property or assets
(including cash) which includes shares of common stock of the Company or another
person that are, or upon issuance will be, traded on a United States national
securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such stock, securities other property and assets
(including cash) (as determined by the Company, which determination shall be
conclusive and binding), then the person formed by such consolidation or
resulting from such merger or share exchange or which acquires such assets, as
the case may be, shall execute and deliver to the Trustee a supplemental
indenture (which shall comply with the TIA as in force at the date of execution
of such supplemental indenture) modifying the provisions of this Indenture
relating to the right of holders of Convertible Subordinated Notes to cause the
Company to repurchase Convertible Subordinated Notes following a Fundamental
Change, including the applicable provisions of this Section 3.10 and the
definitions of Fundamental Change, Change of Control and Termination of Trading,
as appropriate, as determined in good faith by the Company (which determination
shall be conclusive and binding), to make such provision apply to such common
stock and the issuer thereof if different from the Company and Common Stock of
the Company (in lieu of the Company and the Common Stock of the Company).
The Fundamental Change Offer shall be made by the Company in compliance
with all applicable provisions of the Exchange Act, and all applicable tender
offer rules promulgated thereunder, to the extent such laws and regulations are
then applicable and shall include all instructions and materials that the
Company shall reasonably deem necessary to enable such holders of Convertible
Subordinated Notes to tender their Convertible Subordinated Notes.
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of Convertible Subordinated Notes.
The Company shall pay the principal of and interest and Registration
Default Damages, if any, on the Convertible Subordinated Notes on the dates and
in the manner provided in the Convertible Subordinated Notes. Principal,
interest and Registration Default Damages, if any, the Redemption Price,
Repurchase Price and the Fundamental Change Payment shall be considered paid on
the date due if the Trustee or Paying Agent (other than the Company or a
subsidiary of the Company) holds as of 10:00 a.m., New York City time, on that
date immediately available funds designated for and sufficient to pay all
principal, interest, Registration Default Damages, if any, the Redemption Price,
Repurchase Price or the Fundamental Change Payment then due, provided, however,
that money held by the Agent for the benefit of holders of Senior Debt pursuant
to the provisions of Article 11 hereof or the payment of which to the holders of
the Convertible Subordinated Notes is prohibited by Article 11 shall not be
considered to be designated for the payment of any principal of or interest or
any Registration Default Damages on the Convertible Subordinated Notes within
the meaning of this Section 4.01.
28
To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i)
overdue principal, at the rate borne by Convertible Subordinated Notes,
compounded semiannually; and (ii) overdue installments of interest (without
regard to any applicable grace period) at the same rate, compounded
semiannually.
SECTION 4.02 Commission Reports.
The Company shall comply with Section 314(a) of the TIA.
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, an Officers' Certificate stating that a
review of the activities of the Company and its subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has fully performed its
obligations under this Indenture and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge, the Company
is not in default in the performance or observance of any of the terms and
conditions hereof (or, if any Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge) and, that to the best of his or her knowledge, no event has occurred
and remains in existence by reason of which payments on account of the principal
of or interest or Registration Default Damages, if any, on the Convertible
Subordinated Notes are prohibited.
The Company shall, so long as any of the Convertible Subordinated Notes
are outstanding, deliver to the Trustee, forthwith upon becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.04 Maintenance of Office or Agency.
The Company shall maintain or cause to be maintained the office or
agency required under Section 2.03. The Company shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency not maintained by 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, presentations, surrenders, notices and demands
with respect to the Convertible Subordinated Notes may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Convertible Subordinated Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designation.
SECTION 4.05 Continued Existence.
Subject to Article 5, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence.
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SECTION 4.06 Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 7.08, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 4.07 Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter enforced, that may affect the Company's
obligation to pay the Convertible Subordinated Notes; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law insofar as such law applies to the Convertible
Subordinated Notes, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 4.08 Taxes.
The Company shall, and shall cause each of its subsidiaries to, pay
prior to delinquency all taxes, assessments and government levies; provided,
however, that the Company shall not be required to pay or cause to be paid any
such tax, assessment or levy (A) if the failure to do so will not, in the
aggregate, have a material adverse impact on the Company and its subsidiaries
taken as a whole, or (B) if the amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 4.09 Investment Company Act.
As long as any Convertible Subordinated Notes are outstanding, the
Company will conduct its business and operations so as not to become an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "Investment Company Act"), and will take all steps required in
order for it to continue not to be an "investment company" and not to be
required to be registered under the Investment Company Act, including, if
necessary, redeployment of the assets of the Company.
ARTICLE 5
SUCCESSORS
SECTION 5.01 When the Company May Merge, Etc.
The Company may not, in a single transaction or series of related
transactions, consolidate or merge with or into or effect a share exchange with
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets to, any person as an entirety or substantially as an
entirety unless:
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(a) either
(i) the Company shall be the surviving or continuing
corporation or
(ii) the person formed by or surviving any such
consolidation or share exchange or into which the Company is merged (if other
than the Company) or the person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of the Company
substantially as an entirety
(1) shall be a corporation organized and validly
existing under the laws of the United States or any State thereof and
(2) shall expressly assume, by supplemental
indenture the due and punctual payment of the principal of, any premium on, and
any interest on, all of the Company's outstanding debt securities and the
performance of every covenant in this Indenture and the Registration Rights
Agreement and any other agreement related to the Company's outstanding debt
securities on the part of the Company to be performed or observed, including,
without limitation, with respect to this Indenture, modifications to rights of
holders to cause the repurchase of Convertible Subordinated Notes upon a
Fundamental Change in accordance with the penultimate paragraph of Section 3.10
and conversion rights in accordance with Section 12.14 to the extent required by
such Sections;
(b) immediately after giving effect to such transaction no Default
and no Event of Default, after notice or lapse of time or both, shall have
occurred and be continuing;
(c) in case of any such consolidation, merger, conveyance or
transfer, such successor corporation will succeed to and be substituted for the
Company as obligor on the Convertible Subordinated Notes, with the same effect
as if it had been named in the Indenture as the obligor and
(d) the Company or such person shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger, share exchange, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with this provision of this Indenture and that
all conditions precedent in this Indenture relating to such transaction have
been satisfied.
For purposes of this Section 5.01, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more subsidiaries of the
Company, the capital stock of which constitutes 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.
SECTION 5.02 Successor Corporation Substituted.
Upon any such consolidation, merger, share exchange, sale, assignment,
conveyance, lease, transfer or other disposition in accordance with Section
5.01, the successor person formed by such consolidation, or share exchange or
into which the Company is merged or to which such
31
assignment, conveyance, lease, transfer or other disposition is made will
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 therein, and thereafter (except in the case of a sale,
assignment, transfer, lease, conveyance or other disposition) the predecessor
corporation will be relieved of all further obligations and covenants under this
Indenture and the Convertible Subordinated Notes.
SECTION 5.03 Purchase Option on Change of Control.
This Article 5 does not affect the obligations of the Company
(including without limitation any successor to the Company) under Section 3.10.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" with respect to any Convertible Subordinated
Notes occurs if:
(a) the Company defaults in the payment (whether or not such
payment is prohibited by the subordination provisions set forth in Article 11 of
this Indenture) of any interest on or Registration Default Damages on the
Convertible Subordinated Notes when due (including any interest or Registration
Default Damages, if any, payable in connection with a repurchase pursuant to
Section 3.09 or Section 3.10 or in connection with any optional redemption
payment pursuant to Article 3) and continuance of such default for 30 days or
more;
(b) the Company defaults in the payment (whether or not such
payment is prohibited by the subordination provisions set forth in Article 11 of
this Indenture) of principal of or premium, if any, on the Convertible
Subordinated Notes when due and payable, including, without limitation, failure
of the Company to make any optional redemption payment when required pursuant to
Article 3;
(c) the Company defaults in the payment of the Fundamental Change
Payment or the Repurchase Price in respect of the Convertible Subordinated Notes
on the date therefor, whether or not such payment is prohibited by the
subordination provisions set forth in Article 11 of this Indenture;
(d) the Company fails to provide timely notice of any Fundamental
Change in accordance with Section 3.10;
(e) a default in the Company's obligation to redeem the
Convertible Subordinated Notes after it has exercised its redemption option,
whether or not such payment is prohibited by the subordination provisions set
forth in Article 11 of this Indenture;
(f) a default in the Company's obligation to satisfy its
conversion obligation pursuant to Article 12 of this Indenture upon exercise of
a holder's conversion right;
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(g) the Company defaults (other than a default set forth in
clauses (a), (b), (c) and (d) above) in the performance of, or breaches, any
other covenant or warranty of the Company set forth in this Indenture or the
Convertible Subordinated Notes and fails to remedy such default or breach within
a period of 30 days after the receipt of written notice to the Company from the
Trustee or to the Company and the Trustee from the holders of at least 25% in
aggregate Principal Amount of the then outstanding Convertible Subordinated
Notes;
(h) a default under any credit agreement, mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any subsidiary
of the Company (or the payment of which is guaranteed by the Company or any of
its subsidiaries), whether such Indebtedness or guarantee exists on the date of
this Indenture or is created thereafter, which default (i) is caused by a
failure to pay when due any principal of or interest on such Indebtedness within
the grace period provided for in such Indebtedness (which failure continues
beyond any applicable grace period) (a "Payment Default") or (ii) results in the
acceleration of such Indebtedness prior to its express maturity (without such
acceleration being rescinded or annulled) and, in each case, the principal
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness under which there is a Payment Default or the maturity of
which has been so accelerated, aggregates $5,000,000 or more;
(i) a final, non-appealable judgment or final, non-appealable
judgments (other than any judgment as to which a reputable insurance company has
accepted full liability) for the payment of money are entered by a court or
courts of competent jurisdiction against the Company or any subsidiaries of the
Company and remain unstayed, unbonded or undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate amount of all such judgments exceeds $5,000,000;
(j) the Company or any subsidiary, pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against
it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors,
(v) makes the admission in writing that it generally is
unable to pay its debts as the same become due; or
(k) a court of competent jurisdiction enters a judgment, order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any subsidiary
in an involuntary case,
33
(ii) appoints a Custodian of the Company or any
subsidiary, and the order or decree remains unstayed and in effect for 90 days
or
(iii) orders the liquidation of the Company or any
subsidiary, and the order or decree remains unstayed and in effect for 90 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
SECTION 6.02 Acceleration.
If an Event of Default (other than an Event of Default with respect to
the Company specified in clauses (j) and (k) of Section 6.01) occurs and is
continuing, then and in every such case the Trustee, by written notice to the
Company, or the holders of at least 25% in aggregate Principal Amount of the
then outstanding Convertible Subordinated Notes, by written notice to the
Company and the Trustee, may declare the unpaid Principal Amount of, premium, if
any, and accrued and unpaid interest and Registration Default Damages, if any,
on all the Convertible Subordinated Notes to be due and payable. Upon such
declaration such Principal Amount, premium, if any, and accrued and unpaid
interest and Registration Default Damages, if any, shall become immediately due
and payable, notwithstanding anything contained in this Indenture or the
Convertible Subordinated Notes to the contrary, but subject to the provisions of
Article 11 hereof. If any Event of Default with respect to the Company specified
in clauses (j) or (k) of Section 6.01 occurs, all unpaid Principal Amount of and
premium, if any, and accrued and unpaid interest and Registration Default
Damages, if any, on the Convertible Subordinated Notes then outstanding shall
become automatically due and payable subject to the provisions of Article 11
hereof, without any declaration or other act on the part of the Trustee or any
holder of Convertible Subordinated Notes.
The holders of a majority in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes by notice to the Trustee may rescind
an acceleration of the Convertible Subordinated Notes and its consequences if
all existing Events of Default including payment of the Trustee's fees and
expenses (other than nonpayment of principal of or premium, if any, and interest
and Registration Default Damages, if any, on the Convertible Subordinated Notes
which has become due solely by virtue of such acceleration) have been cured or
waived and if the rescission would not conflict with any judgment or decree of
any court of competent jurisdiction. No such rescission shall affect any
subsequent Default or Event of 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 by proceeding at law or in equity to collect the payment of
Principal Amount of or interest or Registration Default Damages, if applicable,
on the Convertible Subordinated Notes or to enforce the performance of any
provision of the Convertible Subordinated Notes or this Indenture, subject to
the provisions of Article 11 hereof. The Trustee may maintain a proceeding even
if it does not possess any of the Convertible Subordinated Notes or does not
produce any of
34
them in the proceeding. A delay or omission by the Trustee or any holder of a
Convertible Subordinated Note in exercising any right or remedy occurring upon
an Event of Default shall not impair the right or remedy or constitute a waiver
of or acquiescence in the Event of Default. All remedies are cumulative to the
extent permitted by law.
SECTION 6.04 Waiver of Past Defaults.
The holders of a majority in aggregate Principal Amount of the
Convertible Subordinated Notes then outstanding may, on behalf of the holders of
all the Convertible Subordinated Notes, waive an existing Default or Event of
Default and its consequences, except a Default or Event of Default in the
payment of the principal of, premium, if any, or interest or Registration
Default Damages, if applicable, on the Convertible Subordinated Notes (other
than the non-payment of principal of and premium, if any, and interest and
Registration Default Damages, if any, on the Convertible Subordinated Notes
which has become due solely by virtue of an acceleration which has been duly
rescinded as provided above), or in respect of a covenant or provision of this
Indenture which cannot be modified or amended without the consent of all holders
of Convertible Subordinated Notes. When a Default or Event of Default is waived,
it is cured and stops continuing. No waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
SECTION 6.05 Control by Majority.
The holders of a majority in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of other holders of
Convertible Subordinated Notes or that may involve the Trustee in personal
liability; provided that the Trustee shall have no duty or obligation (subject
to Section 7.01) to ascertain whether or not such actions of forebearances are
unduly prejudicial to such holders; provided, further, that the Trustee may take
any other action the Trustee deems proper that is not inconsistent with such
directions.
SECTION 6.06 Limitation on Suits.
A holder of a Convertible Subordinated Note may not pursue any remedy
with respect to this Indenture or the Convertible Subordinated Notes unless:
(1) the holder gives to the Trustee notice of a
continuing Event of Default;
(2) the holders of at least 25% in Principal Amount of
the then outstanding Convertible Subordinated Notes make a request to the
Trustee to pursue the remedy;
(3) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
35
(4) during such 60-day period the holders of a majority
in Principal Amount of the then outstanding Convertible Subordinated Notes do
not give the Trustee a direction inconsistent with the request.
A holder of a Convertible Subordinated Note may not use this Indenture
to prejudice the rights of another holder or to obtain a preference or priority
over another holder.
SECTION 6.07 Rights of Holders to Receive Payment.
Subject to the provisions of Article 11 hereof, notwithstanding any
other provision of this Indenture, the right of any holder of a Convertible
Subordinated Note to receive payment of principal, premium, if any, and interest
and Registration Default Damages, if any, on the Convertible Subordinated Note,
on or after the respective due dates expressed in the Convertible Subordinated
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, or to bring suit for the enforcement of the right to convert
the Convertible Subordinated Note shall not be impaired or affected without the
consent of the holder of a Convertible Subordinated Note.
SECTION 6.08 Collection Suit by Trustee.
Subject to the provisions of Article 11 hereof, if an Event of Default
specified in Section 6.01(a), (b), or (e) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company for the whole amount of principal and interest and Registration
Default Damages, if any, remaining unpaid on the Convertible Subordinated Notes
and interest on overdue principal and interest and Registration Default Damages,
if any, and such further amount as shall be sufficient to cover the costs and,
to the extent lawful, expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee and
the holders of Convertible Subordinated Notes allowed in any judicial
proceedings relative to the Company, its creditors or its property. Nothing
contained herein shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any holder of a Convertible
Subordinated Note any plan of reorganization, arrangement, adjustment or
composition affecting the Convertible Subordinated 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. The Trustee may participate as a member of
any official committee of creditors appointed in matters as it deems necessary
or advisable.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
36
First: to the Trustee for amounts due under Section 7.07,
including payment of all compensation, expenses and liabilities
incurred, and all advances made, by the Trustee, and the costs and
expenses of collection;
Second: to holders of Senior Debt to the extent required by
Article 11;
Third: to holders of Convertible Subordinated Notes for
amounts due and unpaid on the Convertible Subordinated Notes for
principal, premium, if any, and interest and Registration Default
Damages, if any, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Convertible
Subordinated Notes for principal, premium, if any, and interest and
Registration Default Damages, if any, respectively; and
Fourth: to the Company.
Except as otherwise provided in Section 2.12, the Trustee may fix a
record date and payment date for any payment to holders of Convertible
Subordinated Notes.
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 a Trustee, a court in its discretion may require the filing by any party
litigant in the suit, other than the Trustee, of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys fees, 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 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 then outstanding Convertible Subordinated
Notes.
ARTICLE 7
THE TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed. Whether or
not herein expressly so provided, every provision of this Indenture relating to
the conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Article 7.
SECTION 7.01 Duties of the Trustee.
(a) If an Event of Default known to a Trust Officer of the Trustee
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default actually
known to the Trustee:
37
(1) The duties of the Trustee shall be
determined solely by the express provisions of this Indenture, and the Trustee
need perform only those duties that are specifically set forth in this Indenture
and no others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(2) In the absence of bad faith on its part, 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. However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the form required by this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section;
(2) The Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(3) The Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) Whether or not therein expressly so provided, every provision
of this Indenture that is in any way related to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any financial liability in the performance
of any of its duties or the exercise of any of its rights and powers hereunder,
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk of liability is not reasonably assured
to it.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02 Rights of the Trustee.
(a) The Trustee may rely on and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, security or other document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate any
fact or matter contained therein.
(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 is
38
herein specifically prescribed). In addition, before the Trustee acts or
refrains from acting, it may require an Officers' Certificate, an Opinion of
Counsel or both. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Officers' Certificate or Opinion
of Counsel. The Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection from liability in respect of any action taken, suffered or omitted by
it hereunder in good faith and in reliance thereon.
(c) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its attorneys
and agents and other persons not regularly in its employ and shall not be
responsible for the misconduct or negligence of any attorney or agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith without negligence or willful misconduct which it
believes to be authorized or within its discretion, rights or powers.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by Officers of the Company.
(f) The Trustee shall not be required to give any bond or surety
in respect of the performance of its powers and duties hereunder.
(g) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
discretion of any of the holders of Convertible Subordinated Notes pursuant to
the provisions of this Indenture, unless such holders have offered to the
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred therein or thereby.
(h) 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, security or other
document unless requested in writing to do so by the holders of not less than a
majority in aggregate Principal Amount of the Convertible Subordinated Notes
then outstanding, provided that if the Trustee determines in its discretion to
make any such investigation, then it shall be entitled, upon reasonable prior
notice and during normal business hours, to examine the books and records and
the premises of the Company, personally or by agent or attorney, and the
reasonable expenses of every such examination shall be paid by the Company or,
if paid by the Trustee or any predecessor Trustee, shall be reimbursed by the
Company upon demand.
(i) The permissive rights of the Trustee to do things enumerated
in this Indenture shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct.
(j) The Trustee shall not be responsible for the computation of
any adjustment to the Conversion Rate or for any determination as to whether an
adjustment is required and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received the notice from the Company
contemplated by Section 12.11.
39
SECTION 7.03 Individual Rights of the Trustee.
Subject to Sections 7.10 and 7.11, the Trustee in its individual or any
other capacity may become the owner or pledgee of Convertible Subordinated Notes
with the same rights it would have if it were not the Trustee and may otherwise
deal with the Company or an Affiliate of the Company and receive, collect, hold
and retain collections from the Company with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights.
SECTION 7.04 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Convertible Subordinated
Notes. It shall not be accountable for the Company's use of the proceeds from
the Convertible Subordinated Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture. It shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Convertible Subordinated Notes or any
other document in connection with the sale of the Convertible Subordinated Notes
or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to a Trust Officer of the Trustee, the Trustee shall mail to each holder
of a Convertible Subordinated Note a notice of the Default or Event of Default
within 60 days after it occurs. A Default or an Event of Default shall not be
considered known to a Trust Officer of the Trustee unless it is a Default or
Event of Default in the payment of principal, interest or Registration Default
Damages, if any, when due under Section 6.01(a), (b), (c) or (e), as applicable,
or a Trust Officer of the Trustee shall have received notice thereof, in
accordance with this Indenture, from the Company or from the holders of a
majority in aggregate Principal Amount of the outstanding Convertible
Subordinated Notes. Except in the case of a Default or Event of Default in
payment of principal of, premium, if any, or interest or Registration Default
Damages, if any, on any Convertible Subordinated Note, the Trustee may withhold
the notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interest of the holders of the
Convertible Subordinated Notes.
SECTION 7.06 Reports by the Trustee to Holders.
Within 60 days after the reporting date stated in Section 10.10, the
Trustee shall mail to holders of Convertible Subordinated Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if
no event described in TIA Section 313(a) has occurred within twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c) and TIA Section 313(d).
A copy of each report at the time of its mailing to holders of
Convertible Subordinated Notes shall be filed, at the expense of the Company, by
the Trustee with the Commission and each stock exchange or securities market, if
any, on which the Convertible Subordinated Notes
40
are listed. The Company shall timely notify the Trustee when the Convertible
Subordinated Notes are listed or quoted on any stock exchange or securities
market.
SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for its acceptance of this
Indenture and its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by or on behalf of it in
addition to the compensation for its services. Such expenses may include the
reasonable compensation, disbursements and expenses of the Trustee's agents,
counsel and other persons not regularly in its employ.
The Company shall indemnify the Trustee (including in each of its
capacities hereunder) against, and defend and hold the Trustee harmless from,
any loss, liability or expense incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture and the
trusts hereunder, including the costs and expenses of defending itself against
or investigating any claim of liability in the premises, except as set forth in
the next paragraph. The Trustee shall notify the Company promptly of any claim
for which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder, except to the extent
such failure of notice materially adversely affects the Company. The Company
shall defend the claim with counsel designated by the Company, who may be
outside counsel to the Company but shall in all events be reasonably
satisfactory to the Trustee, and the Trustee shall cooperate in the defense. The
indemnification herein extends to any settlement, provided that the Company will
not be liable for any settlement made without its consent, provided, further,
that such consent will not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence or willful
misconduct.
The Trustee shall have a lien prior to the Convertible Subordinated
Notes on all money or property held or collected by the Trustee to secure the
Company's payment obligations in this Section 7.07, except that held in trust to
pay principal, interest and Registration Default Damages, if any, on Convertible
Subordinated Notes. Such liens and the Company's obligations under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The provisions of this Section 7.07 shall survive the termination of
this Indenture, and shall extend to each agent, Custodian and other person
employed by the Trustee consistent with the terms of this Indenture.
41
SECTION 7.08 Replacement of the Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company. The holders of a majority in
aggregate Principal Amount of the then outstanding Convertible Subordinated
Notes may remove the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section
7.10;
(2) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the Trustee under
any Bankruptcy Law;
(3) a Custodian or public officer takes charge
of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the holders
of a majority in aggregate Principal Amount of the then outstanding Convertible
Subordinated Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
holders of at least 10% in aggregate Principal Amount of the then outstanding
Convertible Subordinated Notes may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
If the Trustee after written request by any holder of a Convertible
Subordinated Note who has been a holder for at least six months fails to comply
with Section 7.10, such holder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to holders of Convertible Subordinated Notes. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, provided that all sums owing to the retiring Trustee hereunder have
been paid and subject to the lien provided for in Section 7.07. Notwithstanding
the replacement of the Trustee pursuant to this Section 7.08, the Company's
obligations under Section 7.07 shall continue for the benefit of the retiring
Trustee with respect to expenses and liabilities incurred by it prior to such
replacement.
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Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in the
preceding paragraph.
SECTION 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business (including the trust
created by this Indenture) to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10 Eligibility, Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1). The Trustee shall always have a combined
capital and surplus as stated in Section 10.10. The Trustee is subject to TIA
Section 310(b) regarding the disqualification of a trustee upon acquiring a
conflicting interest.
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship set forth in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01 Discharge of Indenture.
When (a) the Company delivers to the Trustee for cancellation all
Convertible Subordinated Notes theretofore authenticated (other than any other
Convertible Subordinated Notes which have been destroyed, lost or stolen and in
lieu of or in substitution for which other Convertible Subordinated Notes have
been authenticated and delivered) and not theretofore canceled, or (b) all the
Convertible Subordinated Notes not theretofore canceled or delivered to the
Trustee for cancellation have become due and payable, or are by their terms will
become due and payable within one year or are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption, and the Company deposits with the Trustee (after the Company
obtains the necessary consents under the Senior Credit Facility to make such
deposit if the Senior Credit Facility is then in effect and such deposit is then
prohibited by the Senior Credit Facility), in trust, amounts sufficient to pay
at maturity or upon redemption of all of the Convertible Subordinated Notes
(other than any Convertible Subordinated Notes which have been mutilated,
destroyed, lost or stolen and in lieu of or in substitution for which other
Convertible Subordinated Notes have been authenticated and delivered) not
theretofore canceled or delivered to the Trustee for cancellation, including
principal and premium, if any, interest and Registration Default Damages, if
any, due or to become due to such Maturity Date or Redemption Date, as the case
may be, and if in either case
43
the Company also pays, or causes to be paid, all other sums payable hereunder by
the Company, then this Indenture shall cease to be of further effect (except as
to (i) rights of registration of transfer, substitution, replacement and
exchange and conversion of Convertible Subordinated Notes, (ii) rights hereunder
of holders of Convertible Subordinated Notes to receive payments of principal of
and premium, if any, interest and Registration Default Damages, if any, on, the
Convertible Subordinated Notes, (iii) the obligations under Sections 2.03 and
8.05 hereof and (iv) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel as required by Section 10.04 and
at the Company's cost and expense, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Company,
however, hereby agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee and to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Convertible Subordinated Notes.
SECTION 8.02 Deposited Monies to Be Held in Trust by Trustee.
Subject to Section 8.04, all monies deposited with the Trustee pursuant
to Section 8.01 shall be held in trust and applied by it to the payment,
notwithstanding the provisions of Article 11, either directly or through the
Paying Agent, to the holders of the particular Convertible Subordinated Notes
for the payment or redemption of which such monies have been deposited with the
Trustee, of all sums due and to become due thereon for principal, interest and
Registration Default Damages, if any, and premium, if any.
SECTION 8.03 Paying Agent to Repay Monies Held.
Upon the satisfaction and discharge of this Indenture, all monies then
held by any Paying Agent (other than the Trustee) shall, upon the Company's
demand, be repaid to it or paid to the Trustee, and thereupon such Paying Agent
shall be released from all further liability with respect to such monies.
SECTION 8.04 Return of Unclaimed Monies.
Subject to the requirements of applicable law, any monies deposited
with or paid to the Trustee for payment of the principal of, premium, if any,
interest or Registration Default Damages, if any, on Convertible Subordinated
Notes and not applied but remaining unclaimed by the holders thereof for two
years after the date upon which the principal of, premium, if any, interest or
Registration Default Damages, if any, on such Convertible Subordinated Notes, as
the case may be, have become due and payable, shall be repaid to the Company by
the Trustee on demand; provided, however, that the Company, or the Trustee at
the request of the Company, shall have first caused notice of such payment to
the Company to be mailed to each holder of a Convertible Subordinated Note
entitled thereto no less than 30 days prior to such payment and all liability of
the Trustee shall thereupon cease with respect to such monies; and the holder of
any of the Convertible Subordinated Notes shall thereafter look only to the
Company for any payment which such holder may be entitled to collect unless an
applicable abandoned property law designates another person.
44
SECTION 8.05 Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 8.02 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Convertible
Subordinated Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 until such time as the Trustee or the Paying
Agent is permitted to apply all such money in accordance with Section 8.02;
provided, however, that if the Company makes any payment of interest or
Registration Default Damages, if any, on or principal of any Convertible
Subordinated Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the holders thereof to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without the Consent of Holders.
The Company and the Trustee may amend this Indenture or the Convertible
Subordinated Notes without notice to or the consent of any holder of a
Convertible Subordinated Note for the purposes of:
(a) curing any ambiguity or correcting or supplementing any
defective or inconsistent provision contained in this Indenture or making any
other changes in the provisions of this Indenture which the Company and the
Trustee may deem necessary or desirable provided such amendment does not
materially and adversely affect the legal rights under the Indenture of the
holders of Convertible Subordinated Notes.
(b) providing for uncertificated Convertible Subordinated Notes in
addition to or in place of certificated Convertible Subordinated Notes;
(c) evidencing the succession of another person to the Company and
providing for the assumption by such successor of the covenants and obligations
of the Company thereunder and in the Convertible Subordinated Notes as permitted
by Section 5.01;
(d) providing for conversion rights and/or repurchase rights of
holders of Convertible Subordinated Notes in the event of consolidation, merger,
share exchange or sale of all or substantially all of the assets of the Company
as required to comply with Sections 5.01 and/or 12.14;
(e) increasing the Conversion Rate;
(f) evidence and provide for the acceptance of appointment under
this Indenture of a successor Trustee;
45
(g) making any changes that would provide the holders of the
Convertible Subordinated Notes with any additional rights or benefits or that
does not adversely affect the legal rights under this Indenture of any such
holder;
(h) modifying the subordination provisions of the Indenture in a
manner adverse to the holders of the Convertible Subordinated Notes; or
(i) complying with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the TIA.
SECTION 9.02 With the Consent of Holders.
Subject to Section 6.07, the Company and the Trustee may amend this
Indenture or the Convertible Subordinated Notes with the written consent of the
holders of at least a majority in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes (including consents obtained in
connection with a tender offer or exchange offer for Convertible Subordinated
Notes).
Subject to Sections 6.04 and 6.07, the holders of a majority in
aggregate Principal Amount of the Convertible Subordinated Notes then
outstanding may also waive compliance in a particular instance by the Company
with any provision of this Indenture or the Convertible Subordinated Notes.
However, without the consent of each holder of a Convertible
Subordinated Note affected, an amendment or waiver under this Section may not
(with respect to any Convertible Subordinated Notes held by a non-consenting
holder):
(a) reduce the principal amount of Convertible Subordinated Notes
whose holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or premium on or change the fixed
maturity of any Convertible Subordinated Note or, except as permitted pursuant
to Section 9.01(a), (d), (g) or (h), alter the redemption or repurchase
provisions with respect thereto;
(c) reduce the rate of, or change the time for payment of,
interest, including defaulted interest or Registration Default Damages on any
Convertible Subordinated Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest or Registration Default Damages, if
any, on the Convertible Subordinated Notes (except a rescission of acceleration
of the Convertible Subordinated Notes by the holders of at least a majority in
aggregate Principal Amount of the Convertible Subordinated Notes then
outstanding and a waiver of the payment default that resulted from such
acceleration);
(e) make any Convertible Subordinated Note payable in money other
than as provided for herein and in the Convertible Subordinated Notes;
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or Events of Default or the rights of holders of
Convertible Subordinated Notes to
46
receive payments of principal of, or interest or Registration Default Damages,
if any, on the Convertible Subordinated Notes;
(g) except as permitted herein (including Section 9.01(a)),
decrease the Conversion Rate or modify the provisions contained herein relating
to conversion of the Convertible Subordinated Notes in a manner adverse to the
holders thereof;
(h) make any change to the ability of holder of Convertible
Subordinated Notes to enforce their rights under the Indenture or the provisions
of clauses (a) through (i) of Section 9.02 of the Indenture;
(i) reduce the Redemption Price, Repurchase Price or Fundamental
Change Purchase Price of the Convertible Subordinated Notes;
(j) modify the subordination provisions of this Indenture as set
forth in Article 11 a manner adverse to the holders of the Convertible
Subordinated Notes; or
(k) make any change that adversely affects the right to convert
the Convertible Subordinated Notes.
To secure a consent of the holders of Convertible Subordinated Notes
under this Section, it shall not be necessary for such holders to approve the
particular form of any proposed amendment or waiver, but it shall be sufficient
if such consent approves the substance thereof.
After an amendment or waiver under this Section becomes effective, the
Company shall mail to holders of Convertible Subordinated Notes a notice briefly
describing the amendment or waiver.
SECTION 9.03 Compliance With the Trust Indenture Act.
Every amendment to this Indenture or the Convertible Subordinated Notes
shall be set forth in a supplemental indenture that complies with the TIA as
then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
holder of a Convertible Subordinated Note is a continuing consent by the holder
and every subsequent holder of a Convertible Subordinated Note or portion of a
Convertible Subordinated Note that evidences the same debt as the consenting
holder's Convertible Subordinated Note, even if notation of the consent is not
made on any Convertible Subordinated Note. However, any such holder or
subsequent holder may revoke the consent as to his or her Convertible
Subordinated Note or portion of a Convertible Subordinated Note if the Trustee
receives the notice of revocation before the date on which the Trustee receives
an Officers' Certificate certifying that the holders of the requisite principal
amount of Convertible Subordinated Notes have consented to the amendment or
waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the holders of Convertible Subordinated Notes
entitled to consent to any amendment
47
or waiver. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those persons who were holders of Convertible
Subordinated Notes at such record date (or their duly designated proxies), and
only those persons, shall be entitled to consent to such amendment or waiver or
to revoke any consent previously given, whether or not such persons continue to
be holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consents from holders of the
principal amount of Convertible Subordinated Notes required hereunder for such
amendment or waiver to be effective shall have also been given and not revoked
within such 90-day period.
After an amendment or waiver becomes effective it shall bind every
holder of a Convertible Subordinated Note, unless it is of the type described in
clauses (a) - (j) of Section 9.02. In such case, the amendment or waiver shall
bind each holder of a Convertible Subordinated Note who has consented to it and
every subsequent holder of a Convertible Subordinated Note or portion of a
Convertible Subordinated Note that evidences the same debt as the consenting
holder's Convertible Subordinated Note.
SECTION 9.05 Notation on or Exchange of Convertible Subordinated Notes.
Convertible Subordinated Notes authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article 9 may, and
shall if required by the Trustee, bear a notation in the form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Convertible Subordinated Notes so modified as to
conform, in the opinion of the Company and the Trustee, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for outstanding Convertible Subordinated
Notes without charge to the holders of the Convertible Subordinated Notes,
except as specified in Section 2.06.
SECTION 9.06 Trustee Protected.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if such amendment or supplemental
indenture does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If such amendment or supplemental indenture does
adversely affect the rights, duties, liabilities or immunities of the Trustee,
the Trustee may, but need not, sign it. In signing such amendment or
supplemental indenture, the Trustee shall be entitled to receive, and shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel as conclusive evidence that such amendment or supplemental indenture is
authorized or permitted by this Indenture, that it is not inconsistent herewith,
and that it will be valid and binding upon the Company in accordance with its
terms.
ARTICLE 10
GENERAL PROVISIONS
SECTION 10.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), such duties imposed by such section
of the TIA shall control. If any provision of this Indenture expressly modifies
or excludes any provision of the TIA that may be so modified
48
or excluded, the Indenture provision so modifying or excluding such provision of
the TIA shall be deemed to apply.
SECTION 10.02 Notices.
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in person or mailed by first-class
mail, with postage prepaid (registered or certified, return receipt requested),
or sent by facsimile or overnight air couriers guaranteeing next day delivery,
to the other's address as stated in Section 10.10. The Company or the Trustee by
notice to the other may designate additional or different addresses for
subsequent notices or communications.
All notices and communications (other than those sent to holders of
Convertible Subordinated Notes) shall be deemed to have been duly given at the
time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when transmission is
confirmed, if transmitted by facsimile; and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.
Any notice or communication to a holder of a Convertible Subordinated
Note shall be mailed by first-class mail, with postage prepaid, to his or her
address shown on the Register kept by the Registrar. Failure to mail a notice or
communication to a holder or any defect in it shall not affect its sufficiency
with respect to other holders.
If a notice or communication to a holder of a Convertible Subordinated
Note is sent in the manner provided above within the time prescribed, it is duly
given, whether or not the addressee receives it.
If the Company sends a notice or communication to holders of
Convertible Subordinated Notes, it shall send a copy to the Trustee and each
Agent at the same time.
All notices or communications shall be in writing.
SECTION 10.03 Communication by Holders With Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other
holders with respect to their rights under this Indenture or the Convertible
Subordinated Notes. The Company, the Trustee, the Registrar and the paying agent
shall have the protection of TIA Section 312(c).
SECTION 10.04 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 in form and
substance reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 10.05) stating that, in the opinion of such
person, all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
49
(2) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 10.05) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
SECTION 10.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall include:
(1) a statement that the person making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope
of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such
person, he or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the
opinion of such person, such condition or covenant has been complied with.
Any Officers' Certificate may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel, unless such Officer knows that the opinion
with respect to the matters upon which his or her certificate may be based as
aforesaid is erroneous. Any Opinion of Counsel may be based, insofar as it
relates to factual matters, upon certificates, statements or opinions of, or
representations by an officer or officers of the Company, or other persons or
firms deemed appropriate by such counsel, unless such counsel knows that the
certificates, statements or opinions or representations with respect to the
matters upon which his or her opinion may be based as aforesaid are erroneous.
Any Officers' Certificate, statement or Opinion of Counsel may be
based, insofar as it relates to accounting matters, upon a certificate or
opinion of or representation by an accountant (who may be an employee of the
Company), or firm of accountants, unless such Officer or counsel, as the case
may be, knows that the certificate or opinion or representation with respect to
the accounting matters upon which his or her certificate, statement or opinion
may be based as aforesaid is erroneous.
SECTION 10.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by, or a meeting of,
holders of Convertible Subordinated Notes. The Registrar or Paying Agent may
make reasonable rules and set reasonable requirements for its functions.
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SECTION 10.07 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the City of New York or the city in which the Corporate Trust
Office of the Trustee is located are not required to be open, and a "Business
Day" is any day that is not a Legal Holiday. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If any date specified in this Indenture, including, without
limitation, a Redemption Date under Paragraph 6 of the Convertible Subordinated
Notes or a purchase by the Company under paragraph 7 of the Convertible
Subordinated Notes, is a Legal Holiday, then such date shall be the next
succeeding Business Day.
SECTION 10.08 No Recourse Against Others.
No director, officer, employee, shareholder or Affiliate, as such, of
the Company from time to time shall have any liability for any obligations of
the Company under the Convertible Subordinated Notes or this Indenture or for
any claim based on, in respect of, or by reason of such obligations or their
creation. Each holder by accepting a Convertible Subordinated Note waives and
releases all such liability. This waiver and release are part of the
consideration for the Convertible Subordinated Notes. Each of such directors,
officers, employees, shareholders and Affiliates is a third party beneficiary of
this Section 10.08.
SECTION 10.09 Counterparts.
This Indenture may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
SECTION 10.10 Other Provisions.
The Company initially appoints the Trustee as Paying Agent, Registrar
and authenticating agent.
The reporting date for Section 7.06 is April 30 of each year. The first
reporting date is the April 30 following the issuance of Convertible
Subordinated Notes hereunder.
The Trustee shall always have, or shall be a subsidiary of a bank or
bank holding company which has, a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition.
The Company's address is:
CKE Restaurants, Inc.
6307 Carpinteria Avenue, Suite A,
Carpinteria, CA 93013
Attention: Chief Financial Officer
Facsimile: (714) 780-6311
Telephone: (805) 745-7725
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The Trustee's address is:
J.P. Morgan Trust Company, National Association
560 Mission St., Floor 13
San Francisco, CA 94105
Attention: Mitch Gardner
Facsimile: (415) 315-7745
Telephone: (415) 315-7585
SECTION 10.11 Governing Law.
The internal laws of the State of New York shall govern this Indenture
and the Convertible Subordinated Notes, without regard to the conflict of laws
provisions thereof.
SECTION 10.12 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a subsidiary. Any such other indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 10.13 Successors.
All agreements of the Company in this Indenture and the Convertible
Subordinated Notes shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor.
SECTION 10.14 Severability.
In case any provision in this Indenture or in the Convertible
Subordinated 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 10.15 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
ARTICLE 11
SUBORDINATION
SECTION 11.01 Agreement to Subordinate.
The Company agrees, and each holder of Convertible Subordinated Notes
by accepting a Convertible Subordinated Note agrees, that the Obligations
evidenced by the Convertible Subordinated Note are subordinated in right of
payment, to the extent and in the manner provided in this Article 11, to the
prior payment in full when due, in cash or other payment satisfactory to holders
of Senior Debt of all Senior Debt (whether outstanding on the date hereof
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or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Debt.
SECTION 11.02 Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:
(1) holders of Senior Debt shall be entitled to
receive payment in full of all Obligations due or to become due in respect of
such Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) in cash or other
payment satisfactory to the holders of the Senior Debt before holders of
Convertible Subordinated Notes shall be entitled to receive any payment with
respect to the Convertible Subordinated Notes; and
(2) until all Obligations due in respect of
Senior Debt is paid in full in cash or other payment satisfactory to the holders
of the Senior Debt, any distribution to which holders of Convertible
Subordinated Notes would be entitled but for this Article 11 shall be made to
holders of Senior Debt, as their interests may appear.
SECTION 11.03 Default on Senior Debt and/or Designated Senior Indebtedness.
Anything in this Indenture to the contrary notwithstanding, no payment
on account of principal of or premium, if any, interest or Registration Default
Damages, if any, on or other amounts due on the Convertible Subordinated Notes
(including without limitation the making of a deposit pursuant to Section 3.06,
3.09 or 3.10), and no redemption, repurchase, or other acquisition of the
Convertible Subordinated Notes, shall be made by or on behalf of the Company if:
(1) a default in the payment of any Senior Debt Obligations
occurs, whether at maturity, a date is fixed for prepayment or by declaration of
acceleration or otherwise, and is continuing beyond any applicable period of
grace, unless and until such payment default shall have been cured or waived or
shall have ceased to exist; or
(2) a default, other than a payment default described in clause
(1) above, on any Designated Senior Indebtedness occurs and is continuing that
then permits holders of such Designated Senior Indebtedness to accelerate its
maturity and the Trustee receives a written notice of the default (a "Payment
Blockage Notice") from the holders of Designated Senior Indebtedness or their
representative (a "Non-Payment Default").
If the Trustee receives a Payment Blockage Notice that there has
occurred and is continuing a Non-Payment Default under a Designated Senior
Indebtedness, or any agreement under which such Designated Senior Indebtedness
is issued, no subsequent Payment Blockage Notice shall be effective for purposes
of this Section 11.03 unless and until at least 365 days shall have elapsed
since the initial effectiveness of the immediately prior Payment Blockage Notice
and all scheduled payment on the Convertible Subordinated Notes that have come
due
53
have been paid in full in cash. No Non-Payment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Notes upon the earlier of:
(1) in the case of a payment default under clause (1) above, the
date upon which any such payment default is cured or waived or ceases to exist,
or
(2) in the case of a Non-Payment Default, the earlier of (x) the
date upon which such default is cured or waived or ceases to exist or (y) 179
days after the date on which the applicable Payment Blockage Notice is received
if the maturity of such Designated Senior Indebtedness has not been accelerated.
SECTION 11.04 Acceleration of Convertible Subordinated Notes.
In the event of the acceleration of the Convertible Subordinated Notes
because of an Event of Default, the Company may not make any payment or
distribution to the Trustee or any holder of Convertible Subordinated Notes in
respect of Obligations with respect to Convertible Subordinated Notes and may
not acquire or purchase from the Trustee or any holder of Convertible
Subordinated Notes any Convertible Subordinated Notes until all of the
Obligations due in respect of Senior Debt have been paid in full in cash or
other payment satisfactory to the holders of Senior Debt or such acceleration is
rescinded in accordance with the terms of this Indenture.
If payment of the Convertible Subordinated Notes is accelerated because
of an Event of Default, the Company or the Trustee shall promptly notify holders
of Senior Debt or trustee(s) of such Senior Debt of the acceleration.
SECTION 11.05 When Distribution Must Be Paid Over.
In the event that the Trustee, any holder of Convertible Subordinated
Notes or any other person receives any payment or distributions of assets of the
Company of any kind with respect to the Convertible Subordinated Notes in
contravention of any terms contained in this Indenture, whether in cash,
property or securities, including, without limitation by way of set-off or
otherwise, then such payment shall be held by the recipient in trust for the
benefit of holders of Senior Debt, and shall be immediately paid over and
delivered to the holders of Senior Debt or their representative(s), to the
extent necessary to make payment in full of all Obligations due in respect of
Senior Debt remaining unpaid, after giving effect to any concurrent payment or
distribution or provision therefor, to or for the holders of Senior Debt;
provided that the foregoing shall apply to the Trustee only if a Trust Officer
of the Trustee has knowledge (as determined in accordance with Section 11.11)
that such payment or distribution is prohibited by this Indenture.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 11, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this
54
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt, and shall not be liable to any
such holders if the Trustee shall pay over or distribute to or on behalf of
holders of Convertible Subordinated Notes or the Company or any other person
money or assets to which any holders of Senior Debt shall be entitled by virtue
of this Article 11, except if such payment is made as a result of the willful
misconduct or gross negligence of the Trustee.
SECTION 11.06 Notice by Company.
The Company shall promptly notify the Trustee of any facts known to the
Company that would cause a payment of any Obligations with respect to the
Convertible Subordinated Notes or the purchase of any Convertible Subordinated
Notes by the Company to violate this Article, but failure to give such notice
shall not affect the subordination of the Convertible Subordinated Notes to the
Senior Debt as provided in this Article.
SECTION 11.07 Subrogation.
After all Obligations due in respect of Senior Debt are paid in full
and until the Convertible Subordinated Notes are paid in full, holders of
Convertible Subordinated Notes shall be subrogated (equally and ratably with all
other indebtedness pari passu with the Convertible Subordinated Notes) to the
rights of holders of Senior Debt to receive distributions applicable to Senior
Debt to the extent that distributions otherwise payable to the holders of
Convertible Subordinated Notes have been applied to the payment of Senior Debt.
A distribution made under this Article to holders of Senior Debt that otherwise
would have been made to holders of Convertible Subordinated Notes is not, as
between the Company and holders of Convertible Subordinated Notes, a payment by
the Company on the Convertible Subordinated Notes.
SECTION 11.08 Relative Rights.
This Article 11 defines the relative rights of holders of Convertible
Subordinated Notes and holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and holders
of Convertible Subordinated Notes, the obligation of the Company, which is
absolute and unconditional, to pay principal of, premium, if any, interest and
Registration Default Damages, if any, on the Convertible Subordinated Notes in
accordance with their terms;
(2) affect the relative rights of holders of
Convertible Subordinated Notes and creditors (other than with respect to Senior
Debt) of the Company, other than their rights in relation to holders of Senior
Debt; or
(3) prevent the Trustee or any holder of
Convertible Subordinated Notes from exercising its available remedies upon a
Default or Event of Default, subject to the rights of holders and owners of
Senior Debt to receive distributions and payments otherwise payable to holders
of Convertible Subordinated Notes.
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If the Company fails because of this Article 11 to pay principal of or
interest and Registration Default Damages, if any, on a Convertible Subordinated
Note on the due date, the failure is still a Default or Event of Default.
SECTION 11.09 Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of
the indebtedness evidenced by the Convertible Subordinated Notes as herein
provided shall be prejudiced or impaired by any act or failure to act by the
Company or any holder of Convertible Subordinated Notes or by the failure of the
Company or any such holder to comply with this Indenture, regardless of any
knowledge thereof any such holder may have or otherwise be charged with.
SECTION 11.10 Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative(s).
Upon any payment or distribution of assets of the Company referred to
in this Article 11, the Trustee and the holders of Convertible Subordinated
Notes shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the holders of Convertible Subordinated Notes for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Debt and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 11.
SECTION 11.11 Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee (other than pursuant to Section 11.04), and the
Trustee may continue to make payments on the Convertible Subordinated Notes,
unless a Trust Officer shall have received at least two Business Days prior to
the date of such payment or distribution written notice of facts that would
cause such payment or distribution with respect to the Convertible Subordinated
Notes to violate this Article. Only the Company or a Representative may give the
notice.
Nothing in this Article 11 shall impair the claims of, or payments to,
the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 11.12 Authorization to Effect Subordination.
Each holder of a Convertible Subordinated Note by the holder's
acceptance thereof authorizes and directs the Trustee on the holder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article 11, and appoints the
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Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in Section 6.09 hereof at least 30
days before the expiration of the time to file such claim, the holders of any
Senior Debt or their Representatives are hereby authorized to file an
appropriate claim for and on behalf of the holders of the Convertible
Subordinated Notes.
SECTION 11.13 Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that the second and third paragraphs of Section 11.11 shall not apply
to the Company or any subsidiary of the Company if it or such subsidiary acts as
Paying Agent.
SECTION 11.14 Senior Debt Entitled to Rely.
The holders of Senior Debt shall have the right to rely upon this
Article 11, and no amendment or modification of the provisions contained herein
shall diminish the rights of such holders unless such holders shall have agreed
in writing thereto.
SECTION 11.15 Permitted Payments.
Notwithstanding anything to the contrary in this Article 11, the
holders of Convertible Subordinated Notes may receive and retain at any time on
or prior to the Maturity Date (i) securities that are subordinated to at least
the same extent as the Convertible Subordinated Notes to (a) Senior Debt and (b)
any securities issued in exchange for Senior Debt, (ii) payments and other
distributions made from any trust created pursuant to Section 8.01 hereof and
(iii) cash payments in lieu of fractional shares pursuant to Section 12.03.
ARTICLE 12
CONVERSION OF CONVERTIBLE SUBORDINATED NOTES
SECTION 12.01 Right to Convert.
A holder of a Convertible Subordinated Note may convert such
Convertible Subordinated Note into shares of Common Stock at any time during the
periods and subject to the conditions stated in paragraph 9 of the Convertible
Subordinated Notes, subject to the provisions of this Article 12. The number of
shares of Common Stock issuable upon conversion of a Convertible Subordinated
Note per $1,000 of Principal Amount thereof (the "Conversion Rate") shall be
determined in accordance with the provisions of paragraph 9 of the Convertible
Subordinated Notes. The initial Conversion Rate shall equal 112.4859 shares of
Common Stock per $1,000 of Principal Amount of Convertible Subordinated Notes,
subject to adjustment as described in this Article 12.
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A holder may convert a portion of the Principal Amount of a
Convertible Subordinated Note if the portion is $1,000 or an integral multiple
of $1,000. Provisions of this Indenture that apply to conversion of all of a
Convertible Subordinated Note also apply to conversion of a portion of a
Convertible Subordinated Note.
The Trustee (or other conversion agent appointed by the Company) shall,
on behalf of the Company, determine whether the Convertible Subordinated Notes
shall be convertible as a result of the occurrence of an event specified above
and, if the Convertible Subordinated Notes shall be convertible, the Trustee (or
other conversion agent appointed by the Company) shall promptly deliver to the
Company and the Trustee (if the Trustee is not the conversion agent) written
notice thereof. Whenever the Convertible Subordinated Notes shall become
convertible pursuant to the foregoing condition, the Company or, at the
Company's request, the Trustee in the name and at the expense of the Company,
shall notify the holders of the event triggering such convertibility in the
manner provided herein, and, in connection with providing such notice, the
Company will issue a press release containing information regarding the event
triggering such convertibility or publish such information on the Company's then
existing website or through such other public medium as the Company shall
determine. Any notice so given shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In determining whether
the Convertible Subordinated Notes shall be convertible, the Trustee shall only
be deemed to have knowledge of any credit rating event or the occurrence of any
corporate transaction which would cause the Convertible Subordinated Notes to
become convertible pursuant to paragraph 9 of the Convertible Subordinated Notes
if it receives written notice thereof. The Company shall promptly notify the
Trustee upon the occurrence of any event described in the third and fifth
paragraph of paragraph 9 of the Convertible Subordinated Notes.
SECTION 12.02 Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion; No Adjustment for Interest or Dividends.
To convert a Convertible Subordinated Note into Common Stock
(the shares of Common Stock issuable upon such conversion, the "Conversion
Shares"), a holder must satisfy the requirements in paragraph 9 of the
Convertible Subordinated Notes. The date on which the holder satisfies all those
requirements is the conversion date (the "Conversion Date"). Following the
Conversion Date, the Company shall deliver to the holder through the Conversion
Agent, a certificate for the number of full shares of Common Stock issuable upon
the conversion and cash in lieu of any fractional share determined pursuant to
Section 12.03. The Company shall determine such full number of shares and the
amounts of the required cash with respect to any fractional share, and shall set
forth such information in an Officers' Certificate delivered to the Conversion
Agent. The Conversion Agent shall have no duties under this paragraph unless and
until it has received such certificate.
The Person in whose name the certificate is registered shall
be treated as a stockholder of record on and after the Conversion Date;
provided, however, that no surrender of a Convertible Subordinated Note on any
date when the stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the shares of
Common Stock upon such conversion as the record holder or holders of such shares
of Common Stock on such date, but such surrender shall be effective to
constitute the Person or Persons entitled to receive such shares of Common Stock
as the record holder or holders thereof
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for all purposes at the close of business on the next succeeding day on which
such stock transfer books are open; such conversion shall be at the Conversion
Rate in effect on the date that such Security shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
Upon conversion of a Convertible Subordinated Note, such Person shall no longer
be a holder of such Convertible Subordinated Note.
Holders may surrender a Convertible Subordinated Note for
conversion by means of book-entry delivery in accordance with paragraph 9 of the
Convertible Subordinated Notes and the regulations of the applicable book-entry
facility.
No payment or adjustment will be made for dividends on, or
other distributions with respect to, any Common Stock except as provided in this
Article 12. On conversion of a Convertible Subordinated Note, the increases in
Principal Amount and accrued interest attributable to the period from the Issue
Date of the Convertible Subordinated Note through the Conversion Date, with
respect to the converted Convertible Subordinated Note shall not be cancelled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
holder thereof through delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Convertible
Subordinated Note being converted pursuant to the provisions hereof; and the
fair market value of such shares of Common Stock (together with any such cash
payment in lieu of fractional shares) shall be treated as issued, to the extent
thereof, first in exchange for the increases in Principal Amount and accrued
interest through the Conversion Date, and the balance, if any, of such fair
market value of such Common Stock (and any such cash payment) shall be treated
as issued in exchange for the Issue Price of the Convertible Subordinated Note
being converted pursuant to the provisions hereof. Notwithstanding the
foregoing, accrued interest will be payable upon conversion of Convertible
Subordinated Notes made concurrently with or after acceleration of Convertible
Subordinated Notes following an Event of Default.
If the holder converts more than one Convertible Subordinated
Note at the same time, the number of shares of Common Stock issuable upon
conversion shall be based on the aggregate Principal Amount of the Convertible
Subordinated Notes converted.
A Convertible Subordinated Note surrendered for conversion
based on (a) the Common Stock price may be surrendered for conversion until the
close of business on September 30, 2023, (b) the Convertible Subordinated Note
being called for redemption may be surrendered for conversion at any time prior
to the close of business on the Business Day immediately preceding the
Redemption Date, even if it is not otherwise convertible at such time, and (c)
the occurrence of certain corporate transactions more fully described in
paragraph 9 of the Convertible Subordinated Notes under clause (a) of
"Conversion Upon Occurrence of Certain Corporate Transactions" may be
surrendered for conversion at any time from and after the date which is 15 days
prior to the anticipated effective date of such transaction until 15 days after
the actual date of such transaction, and if such day is not a Business Day, the
next occurring Business Day following such day.
Upon surrender of a Convertible Subordinated Note that is
converted in part, the Company shall execute, and the Trustee shall authenticate
and deliver to the holder, a new
59
Convertible Subordinated Note in an authorized denomination equal in Principal
Amount to the unconverted portion of the Convertible Subordinated Note
surrendered.
Convertible Subordinated Note or portion thereof surrendered
for conversion during the period from the close of business on the Regular
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date (except for Convertible Subordinated Notes to be
redeemed within the period) shall be accompanied by payment, in funds acceptable
to the Company, of an amount equal to the interest otherwise payable on such
Interest Payment Date on the Principal Amount being converted; provided however,
that no such payment need be made if (1) the Company has specified a Redemption
Date that is after a record date and on or prior to the corresponding Interest
Payment Date, (2) the Company has specified a Repurchase Date following a
Fundamental Change that is during such period, or (3) any overdue interest
exists at the time of conversion with respect to such Convertible Subordinated
Notes, to the extent of such overdue interest. The holders of the Convertible
Subordinated Notes will continue to be entitled to receive Registration Default
Damages in accordance with the Registration Rights Agreement.
SECTION 12.03 Cash Payments in Lieu of Fractional Shares.
The Company will not issue a fractional share of Common Stock upon
conversion of a Convertible Subordinated Note. Instead, the Company will deliver
cash for the current market value of the fractional share. The current market
value of a fractional share shall be determined, to the nearest 1/1,000th of a
share, by multiplying the per share Closing Sale Price of the Common Stock, on
the last trading day prior to the Conversion Date, by the fractional amount and
rounding the product to the nearest whole cent.
SECTION 12.04 Taxes on Shares Issued.
If a holder converts a Convertible Subordinated Note, the Company shall
pay any documentary, stamp or similar issue or transfer tax due on the issue of
shares of Common Stock upon the conversion. However, the holder shall pay any
such tax which is due because the holder requests the shares to be issued in a
name other than the holder's name and any income tax which is imposed on the
holder as a result of the conversion. The Conversion Agent may refuse to deliver
the certificates representing the Common Stock being issued in a name other than
the holder's name until the Conversion Agent receives a sum sufficient to pay
any tax which will be due because the shares are to be issued in a name other
than the holder's name. Nothing herein shall preclude the Company from any tax
withholding or directing the withholding of any tax required by law or
regulations.
SECTION 12.05 Reservation of Shares; Shares to Be Fully Paid; Listing of Common
Stock.
The Company shall provide, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares to
provide for the conversion of the Convertible Subordinated Notes from time to
time as such Convertible Subordinated Notes are presented for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Rate below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the
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Convertible Subordinated Notes, the Company shall take all corporate action
which may, in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue shares of such Common Stock at such adjusted
Conversion Rate.
The Company covenants that all shares of Common Stock issued upon
conversion of Convertible Subordinated Notes shall be newly issued shares or
treasury shares, shall be duly and validly issued and fully paid and
nonassessable and shall be free from preemptive rights and free of any tax, lien
or adverse claim created by the Company.
The Company further covenants that as long as the Common Stock is
listed on the New York Stock Exchange, or its successor, the Company shall cause
all Common Stock issuable upon conversion of the Convertible Subordinated Notes
to be eligible for such quotation in accordance with, and at the times required
under, the requirements of such market, and if at any time the Common Stock
becomes listed any other national securities exchange, the Company shall cause
all Common Stock issuable upon conversion of the Convertible Subordinated Notes
to be so listed and kept listed.
SECTION 12.06 Adjustment for Change in Capital Stock.
The Conversion Rate shall be subject to adjustment from time to time as
follows:
(a) In case the Company shall (1) pay a dividend in shares of
Common Stock to all holders of Common Stock, (2) make a distribution in shares
of Common Stock to all or substantially all holders of Common Stock, (3)
subdivide the outstanding shares of Common Stock into a greater number of shares
of Common Stock or (4) combine the outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (5) reclassify its outstanding
Common Stock, the Conversion Rate in effect immediately prior to such action
shall be adjusted so that the holder of any Convertible Subordinated Note
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock which he would have owned immediately following such
action had such Convertible Subordinated Notes been converted immediately prior
thereto. Any adjustment made pursuant to this Section 12.06(a) shall become
effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination, or reclassification.
(b) In case the Company shall issue rights, options or warrants to
all or substantially all holders of Common Stock, as the case may be, entitling
them (for a period commencing no earlier than the record date for the
determination of holders of Common Stock entitled to receive such rights,
options or warrants and expiring not more than 60 days after such record date)
to subscribe for or purchase shares of Common Stock (or securities convertible
into Common Stock), at a price per share less than the then current market price
(as determined pursuant to Section 12.06(h) below) of Common Stock at the time
of the announcement of the distribution, the Conversion Rate shall be increased
by multiplying the Conversion Rate in effect immediately prior to such record
date by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding on such record date, plus the number of shares of
Common Stock so offered for subscription or purchase, and the denominator of
which shall be the number of shares of Common Stock outstanding at the close of
business on such record date plus the number of shares
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of Common Stock which the aggregate of the offering price of the total number
of shares of Common Stock so offered for subscription or purchase would purchase
at such current market price. Such adjustments shall become effective
immediately after such record date. To the extent that shares of Common Stock
are not delivered pursuant to such rights, options or warrants, upon the
expiration or termination of such rights, options or warrants the Conversion
Rate shall be readjusted to be the Conversion Rate which would then be in effect
had the adjustments made upon the issuance of such rights, options or warrants
been made on the basis of delivery of only the number of shares of Common Stock
actually delivered. If such rights, options or warrants are not so issued, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such date fixed for the determination of shareholders
entitled to receive such rights, options or warrants had not been fixed. In
determining whether any rights, options or warrants entitle the holders to
subscribe for or purchase shares of Common Stock at less than such current
market price, and in determining the aggregate offering price of such shares of
Common Stock, there shall be taken into account any consideration received for
such rights, options or warrants, with the value of such consideration, if other
than cash, to be determined by the Board of Directors.
(c) In case the Company shall distribute to all holders of Common
Stock shares of capital stock of the Company, evidences of indebtedness or other
assets (including cash and securities), or shall distribute to all holders of
Common Stock rights, options or warrants to subscribe for securities (in each
case other than those referred to in Section 12.06(a) and (b) above and Section
12.06(d) and Section 12.14 below), then in each such case the Conversion Rate
shall be increased by multiplying the Conversion Rate in effect immediately
prior to the close of business on the record date for the determination of
shareholders entitled to such distribution by a fraction of which the numerator
shall be the current market price of Common Stock (determined as provided in
Section 12.06(h) below) on such date and the denominator shall be such current
market price less the fair market value (as determined by the Board of Directors
whose determination shall be conclusive and described in a Board Resolution) on
such date of the portion of the evidences of indebtedness, shares of capital
stock, cash and other assets to be distributed or of such subscription rights,
options or warrants applicable to one share of Common Stock, such increase to
become effective immediately prior to the opening of business on the day
following such record date. Notwithstanding the foregoing, in the event that the
Company shall distribute rights, options or warrants (other than those referred
to in Section 12.06(b) above) ("Rights") pro rata to holders of Common Stock,
the Company may, in lieu of making any adjustment pursuant to this Section
12.06(c), make proper provision so that each holder of a Convertible
Subordinated Note who converts such Convertible Subordinated Note (or any
portion thereof) after the record date for such distribution and prior to the
expiration or redemption of the Rights shall be entitled to receive upon such
conversion, in addition to the Conversion Shares, a number of Rights to be
determined as follows: (i) if such conversion occurs on or prior to the date for
the distribution to the holders of Rights of separate certificates evidencing
such Rights (the "Distribution Date"), the same number of Rights to which a
holder of a number of shares of Common Stock equal to the number of shares of
Conversion Shares is entitled at the time of such conversion in accordance with
the terms and provisions of and applicable to the Rights; and (ii) if such
conversion occurs after the Distribution Date, the same number of Rights to
which a holder of the number of shares of Common Stock into which the principal
amount of the Convertible Subordinated Note so converted was convertible
immediately prior to the Distribution Date
62
would have been entitled on the Distribution Date in accordance with the terms
and provisions of and applicable to the Rights.
(d) In case the Company shall make a distribution consisting
exclusively of cash to all or substantially all holders of Common Stock, then
the Conversion Rate shall be increased by multiplying the Conversion Rate in
effect immediately prior to the close of business on the record date for the
determination of shareholders entitled to such distribution by a fraction of
which the numerator shall be the current market price of Common Stock
(determined as provided in Section 12.06(h) below) on such date and the
denominator shall be such current market price less the amount of cash to be
distributed per share of Common Stock, such increase to become effective
immediately prior to the opening of business on the day following such record
date.
(e) If, after the Issue Date of the Convertible Subordinated
Notes, the Company or any subsidiary of the Company pays holders of the
Company's Common Stock in respect of a repurchase of (including a tender or
exchange offer for) the Company's Common Stock consideration per share of Common
Stock having a fair market value, as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive, in excess of
the current market price of the Common Stock as of the first Business Day (the
"Measurement Date") next succeeding the last Business Day tenders or exchanges
may be made pursuant to the offer (the "Expiration Time"), the Conversion Rate
shall be increased so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to the effectiveness
of the Conversion Rate adjustment contemplated by this Section 12.06(e) by a
fraction, the numerator of which shall be the sum of (x) the fair market value
of the aggregate consideration payable to stockholders based on the acceptance
of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time up to the maximum specified in the tender or exchange offer (the
"Purchased Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the Closing
Sale Price of a share of Common Stock on the Measurement Date, and the
denominator of which shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time (including
the Purchased Shares) multiplied by the Closing Sale Price of one share of
Common Stock on the Measurement Date. Such reduction shall become effective
immediately prior to the opening of business on the day following the
Measurement Date.
To the extent such repurchase or such tender or exchange offer
described in Section 12.06(e) does not occur, the Conversion Rate shall be
readjusted to eliminate any adjustment made to the Conversion Rate on account of
such purchase pursuant to such tender or exchange offer. If the application of
this Section 12.06(e) to any repurchase (including by way of tender offer or
exchange offer) would result in a decrease in the Conversion Rate, no adjustment
shall be made for such repurchase under this Section 12.06(e).
(f) In case of a tender or exchange offer made by a Person other
than the Company or any of its subsidiaries for an amount which increases the
offeror's ownership of Common Stock to more than 35% of the Common Stock
outstanding and shall involve the payment by such Person of consideration per
share of Common Stock having a fair market value (as determined by the Board of
Directors, or to the extent permitted by applicable law, a duly authorized
committee thereof, whose determination shall be conclusive, and described in a
resolution of the
63
Board of Directors) at 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 current market price of the Common Stock on
the Trading Day next succeeding the Offer Expiration Time, and in which, as of
the Offer Expiration Time the Board of Directors is not recommending rejection
of the offer, the Conversion Rate shall be increased so that the same shall
equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the Offer Expiration Time by a fraction of which the
numerator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Offer Expiration Time (the shares deemed so accepted, up to any such maximum
being referred to as the "Accepted Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Accepted Purchased
Shares) on the Offer Expiration Time and the current market price of the Common
Stock on the Trading Day next succeeding the Offer Expiration Time, and the
denominator shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Offer Expiration Time multiplied by the
current market price of the Common Stock on the Trading Day next succeeding the
Offer Expiration Time, such increase to become effective immediately prior to
the opening of business on the day following the Offer Expiration Time. In the
event that 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 which would
then be in effect if such tender or exchange offer had not been made.
Notwithstanding the foregoing, the adjustment described in this subsection (f)
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 a consolidation or merger involving the Company or a sale of all or
substantially all of its assets.
(g) In case the Company shall issue Common Stock or securities
convertible into, or exchangeable for, Common Stock at a price per share (or
having a conversion or exchange price per share) that is less than the then
current market price of the Common Stock (but excluding, among other things,
issuances: (i) pursuant to any bona fide plan for the benefit of employees,
directors, consultants or other individuals in connection with employee
incentive plans of the Company now or hereafter in effect; (ii) to acquire all
or any portion of a business in an arm's-length transaction between the Company
and an unaffiliated third party including, if applicable, issuances upon
exercise of options or warrants assumed in connection with such an acquisition;
(iii) in a bona fide public offering pursuant to a firm commitment underwriting
(or a similar type of offering made pursuant to Rule 144A and/or Regulation S
under the Securities Act) or sales at the market pursuant to a continuous
offering stock program; (iv) pursuant to the exercise of warrants, rights
(including, without limitation, earnout rights) or options, or upon the
conversion of convertible securities, which are issued and outstanding on the
date hereof, or which may be issued in the future at fair value and with an
exercise price or conversion price at least equal to the current market price of
the Common Stock at the time of issuance of such warrant, right, option or
convertible security; and (v) pursuant to a dividend reinvestment plan or other
plan hereafter adopted for the reinvestment of dividends or interest provided
that such Common Stock is issued at a price at least equal to current market
price of the Common Stock at the time of such issuance.) The Conversion Rate
shall be increased so that the holder of each Convertible
64
Subordinated Note shall be entitled to receive, upon the conversion thereof, the
number of shares of Common Stock determined by multiplying (i) the Conversion
Rate on the day immediately prior to such date of issuance by (ii) a fraction,
the numerator of which shall be the sum of (A) the number of shares of Common
Stock outstanding on such date and (B) the number of additional shares of Common
Stock issued (or into which the convertible securities may convert) and the
denominator of which shall be the sum of (x) the number of shares of Common
Stock outstanding on such date and (y) the number of shares of Common Stock
which the aggregate consideration receivable by the Company for the total number
of shares of Common Stock so issued (or into which the convertible securities
may convert) would purchase at the current market price on such date. An
adjustment made pursuant to this subsection (g) shall be made on the next
Business Day following the date on which any such issuance is made and shall be
effective retroactively immediately after the close of business on such date.
For purposes of this subsection (g), the aggregate consideration receivable by
the Company in connection with the issuance of shares of Common Stock or of
securities convertible into shares of Common Stock shall be deemed to be equal
to the sum of the aggregate offering price (before deduction of underwriting
discounts or commissions and expenses payable to third parties) of all such
securities plus the minimum aggregate amount, if any, payable upon conversion of
any such convertible securities into shares of Common Stock.
(h) For the purpose of any computation under subsections (a), (b),
(c), (d) and (g) above of this Section 12.06, the "current market price" per
share of Common Stock on the date fixed for determination of the stockholders
entitled to receive the issuance or distribution requiring such computation (the
"Determination Date") shall be deemed to be the average of the Closing Sale
Price for the ten consecutive trading days immediately preceding the
Determination Date; provided, however, that (i) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Rate pursuant to subsection (a), (b),
(c), (d), (e), (f) or (g) above occurs on or after the tenth trading day prior
to the Determination Date and prior to the "ex" date for the issuance or
distribution requiring such computation, the Closing Sale Price for each trading
day prior to the "ex" date for such other event shall be adjusted by multiplying
such Closing Sale Price by the reciprocal of the fraction by which the
Conversion Rate is so required to be adjusted as a result of such other event,
(ii) if the "ex" date for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion Rate
pursuant to subsection (a), (b), (c), (d), (e), (f) or (g) above occurs on or
after the "ex" date for the issuance or distribution requiring such computation
and on or prior to the Determination Date, the Closing Sale Price for each
Business Day on and after the "ex" date for such other event shall be adjusted
by multiplying such Closing Sale Price by the same fraction by which the
Conversion Rate is so required to be adjusted as a result of such other event,
and (iii) if the "ex" date for the issuance or distribution requiring such
computation is on or prior to the Determination Date, after taking into account
any adjustment required pursuant to clause (i) or (ii) of this proviso, the
Closing Sale Price for each trading day on and after the "ex" date shall be
adjusted by adding thereto the amount of any cash and the fair market value (as
determined by the Board of Directors in a manner consistent with any
determination of such value for the purposes of this Section 12.06, whose
determination shall be conclusive and described in a Resolution of the Board of
Directors) of the evidences of indebtedness, shares of capital stock or other
securities or assets being distributed (in the distribution requiring such
computation) applicable to one share of Common Stock as of the close of business
on the day before such "ex" date. For the purpose of any
65
computation under subsection (e) and (f) of this Section 12.06, the current
market price per share of Common Stock at the expiration time for the repurchase
or tender or exchange offer, as the case may be, requiring such computation
shall be deemed to be the average of the Closing Sale Price for the ten
consecutive trading days commencing on the Business Day immediately following
the expiration time of such repurchase or exchange or tender offer, as the case
may be (the "Commencement Date"); provided, however, that if the "ex" date for
any event (other than the repurchase requiring such computation) that requires
an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d),
(e), (f) or (g) above occurs on or after the expiration time for the repurchase
requiring such computation and prior to the day in question, the Closing Sale
Price for each trading day on or after the "ex" date for such other event shall
be adjusted by multiplying such Closing Sale Price by the same fraction by which
the Conversion Rate is so required to be adjusted as a result of such other
event. For purposes of this subsection, the term "ex" date, (i) when used with
respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Sale Price was obtained without the right to
receive such issuance or distribution, (ii) when used with respect to any
subdivision or combination of shares of Common Stock, means the first date on
which the Common Stock trades regular way on such exchange or in such market
after the time at which such subdivision or combination becomes effective, and
(iii) when used with respect to any repurchase means the first date on which the
Common Stock trades regular way on such exchange or in such market after the
expiration time of such repurchase (as it may be amended or extended).
(i) In case the Company shall have a rights plan in effect, upon
conversion of the Convertible Subordinated Notes into Common Stock, holders will
receive, in addition to the Common Stock, the rights under the rights plan,
unless the rights have separated from the Common Stock at the time of
conversion, in which case the Conversion Rate will be adjusted as if the Company
distributed to all holders of Common Stock shares of the Company's Capital
Stock, evidence of the Company's indebtedness or other assets, subject to
readjustment in the event of the expiration, termination or redemption of such
rights.
SECTION 12.07 [Reserved].
SECTION 12.08 [Reserved].
SECTION 12.09 When Adjustment May Be Deferred.
No adjustment in the Conversion Rate need be made unless the adjustment
would require an increase or decrease of at least 1% in the Conversion Rate. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment and all adjustments that are made and carried forward
shall be taken in the aggregate in order to determine if the 1% threshold is
met.
All calculations under this Article 12 shall be made to the nearest
cent or to the nearest 1/1,000th of a share, as the case may be.
66
SECTION 12.10 When No Adjustment is Required.
No adjustment need be made for a transaction referred to in Section
12.06 or 12.14 if Convertible Subordinated Note holders are to participate in
the transaction on a basis and with notice that the Board of Directors
determines to be fair and appropriate in light of the basis and notice on which
holders of Common Stock participate in the transaction. Such participation by
holders may include participation upon conversion provided that an adjustment
shall be made at such time as the holders are no longer entitled to participate.
No adjustment need be made for rights to purchase Common Stock pursuant
to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value of the Common
Stock.
No adjustment will be made pursuant to this Article 12 that would
result, through the application of two or more provisions hereof, in the
duplication of any adjustment.
SECTION 12.11 Notice of Adjustment.
Whenever the Conversion Rate is adjusted, the Company shall promptly
mail to Convertible Subordinated Note holders and the Trustee a notice of the
adjustment. The Company shall file with the Trustee and the Conversion Agent
such notice and a certificate from the Company's independent public accountants
briefly stating the facts requiring the adjustment and the manner of computing
it. Upon receipt by it of such notice, and at the written request of the
Company, the Conversion Agent will promptly mail such notice to Convertible
Subordinated Note holders at the Company's expense. The certificate shall be
conclusive evidence that the adjustment is correct. Neither the Trustee nor any
Conversion Agent shall be under any duty or responsibility with respect to any
such certificate except to exhibit the same to any holder desiring inspection
thereof.
SECTION 12.12 Voluntary Increase.
The Company from time to time may increase the Conversion Rate by any
amount for any period of time. Whenever the Conversion Rate is increased, the
Company shall mail to Convertible Subordinated Note holders and deliver to the
Trustee and the Conversion Agent a notice of the increase. The Company shall
mail the notice at least 20 days before the date the increased Conversion Rate
takes effect. The notice shall state the increased Conversion Rate and the
period it will be in effect.
A voluntary increase of the Conversion Rate does not change or adjust
the Conversion Rate otherwise in effect for purposes of Section 12.06 or 12.14.
SECTION 12.13 Notice of Certain Transactions.
If:
(a) the Company takes any action that would require an adjustment
in the Conversion Rate pursuant to Section 12.06 (unless no adjustment is to
occur pursuant to Section 12.10); or
67
(b) the Company takes any action that would require a supplemental
indenture pursuant to Section 12.14; or
(c) there is a liquidation or dissolution of the Company;
then the Company shall mail to Convertible Subordinated Note holders and deliver
to the Trustee and the Conversion Agent a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, binding share
exchange, transfer, liquidation or dissolution. The Company shall so deliver and
mail the notice at least 20 days before such date. Failure to deliver or mail
the notice or any defect in it shall not affect the validity of the transaction,
but the Trustee and the Conversion Agent shall not be deemed to have notice of
the above transaction until they receive such notice.
SECTION 12.14 Reorganization of Company; Special Distributions.
If the Company is a party to a transaction subject to Article 5 (other
than a sale of all or substantially all of the assets of the Company in a
transaction in which the holders of Common Stock immediately prior to such
transaction do not receive securities, cash, property or other assets of the
Company or any other Person) or a merger or binding share exchange which
reclassifies or changes its outstanding Common Stock, the Person obligated to
deliver securities, cash or other assets upon conversion of Securities shall
enter into a supplemental indenture. If the issuer of securities deliverable
upon conversion of Convertible Subordinated Notes is an Affiliate of the
successor Company, that issuer shall join in the supplemental indenture.
The supplemental indenture shall provide that the holder of a
Convertible Subordinated Note may convert it into the kind and amount of
securities, cash or other assets which such holder would have received
immediately after the consolidation, merger, binding share exchange or transfer
if such holder had converted the Convertible Subordinated Note immediately
before the effective date of the transaction, assuming (to the extent
applicable) that such holder (i) was not a constituent Person or an Affiliate of
a constituent Person to such transaction; (ii) made no election with respect
thereto; and (iii) was treated alike with the plurality of non-electing holders.
The supplemental indenture shall provide for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Article 12. The successor Company shall mail to Convertible Subordinated Note
holders a notice briefly describing the supplemental indenture.
If this Section applies, Section 12.06 does not apply. If the Company
makes a distribution to all holders of its Common Stock of any of its assets, or
debt securities or any rights, warrants or options to purchase securities of the
Company that would otherwise result in an adjustment in the Conversion Rate
pursuant to the provisions of Section 12.06, then, from and after the record
date for determining the holders of Common Stock entitled to receive the
distribution, a holder of a Convertible Subordinated Note that converts such
Convertible Subordinated Note in accordance with the provisions of this
Indenture shall upon such conversion be entitled to receive, in addition to the
shares of Common Stock into which the Convertible Subordinated Note is
convertible, the kind and amount of securities, cash or other assets comprising
the distribution that such holder would have received if such holder had
68
converted the Convertible Subordinated Note immediately prior to the record date
for determining the holders of Common Stock entitled to receive the
distribution.
SECTION 12.15 Company Determination Final.
Any determination that the Company or the Board of Directors must make
pursuant to Section 12.03, 12.06, 12.09, 12.10, 12.14 or 12.17 is conclusive.
SECTION 12.16 Trustee's Adjustment Disclaimer.
The Trustee has no duty to determine when an adjustment under this
Article 12 should be made, how it should be made or what it should be. The
Trustee has no duty to determine whether a supplemental indenture under Section
12.14 need be entered into or whether any provisions of any supplemental
indenture are correct. The Trustee shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Convertible Subordinated Notes. The Trustee shall not be
responsible for the Company's failure to comply with this Article 12. Each
Conversion Agent (other than the Company or an Affiliate of the Company) shall
have the same protection under this Section 12.16 as the Trustee.
SECTION 12.17 Simultaneous Adjustments.
In the event that this Article 12 requires adjustments to the
Conversion Rate under more than one clause of Section 12.06, and the record
dates for the distributions giving rise to such adjustments shall occur on the
same date, then such adjustments shall be made by applying, first, the
provisions of clause (a), second, the provisions of clause (c) and, third, the
provisions of Section clause (b).
SECTION 12.18 Successive Adjustments.
After an adjustment to the Conversion Rate under this Article 12, any
subsequent event requiring an adjustment under this Article 12 shall cause an
adjustment to the Conversion Rate as so adjusted.
SECTION 12.19 Restriction on Common Stock Issuable Upon Conversion.
(a) Shares of Common Stock to be issued upon conversion of the
Convertible Subordinated Notes prior to the effectiveness of a Shelf
Registration Statement shall be physically delivered in certificated form to the
holders converting such Convertible Subordinated Notes, and the certificate
representing such shares of Common Stock shall bear the following legend (the
"Restricted Common Stock Legend") unless removed in accordance with Section
12.19(c):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY
MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE
SECOND ANNIVERSARY OF THE
69
ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY
HOLDER THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER
THE SECURITIES ACT) OF THE ISSUER AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO
THE ISSUER, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S
UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE (5) ABOVE), THE HOLDER OF THIS SECURITY
MUST FURNISH TO THE ISSUER AND THE TRANSFER AGENT SUCH CERTIFICATES AND
OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY
TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUER THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER
THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR
INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT.
(b) If (i) shares of Common Stock to be issued upon conversion of
a Convertible Subordinated Note prior to the effectiveness of a Shelf
Registration Statement are to be registered in a name other than that of the
holder of such Convertible Subordinated Note or (ii) shares of Common Stock
represented by a certificate bearing the Restricted Common Stock Legend are
transferred subsequently by such holder, then, unless the Shelf Registration
Statement has become effective and such shares are being transferred pursuant to
the Shelf Registration Statement, the holder must deliver to the transfer agent
for the Common Stock a certificate in substantially the form of Exhibit B as to
compliance with the restrictions on transfer applicable to such shares of Common
Stock, and neither the transfer agent nor the registrar for the Common Stock
shall be required to register any transfer of such Common Stock not so
accompanied by a properly completed certificate.
70
(c) Except for transfers in connection with a Shelf Registration
Statement, if certificates representing shares of Common Stock are issued upon
the registration of transfer, exchange or replacement of any other certificate
representing shares of Common Stock bearing the Restricted Common Stock Legend,
or if a request is made to remove such Restricted Common Stock Legend from
certificates representing shares of Common Stock, the certificates so issued
shall bear the Restricted Common Stock Legend, or the Restricted Common Stock
Legend shall not be removed, as the case may be, unless there is delivered to
the Company, the Conversion Agent and the Transfer Agent such satisfactory
evidence, which, in the case of a transfer made pursuant to Rule 144 under the
Securities Act, may include an opinion of counsel as may be reasonably required
by the Company, that neither the legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act or
that such shares of Common Stock are securities that are not "restricted" within
the meaning of Rule 144 under the Securities Act. Upon provision to the Company
of such reasonably satisfactory evidence, the Company shall cause the transfer
agent for the Common Stock to countersign and deliver certificates representing
shares of Common Stock that do not bear the legend.
71
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed and attested, all as of the date first above written, signifying their
agreements contained in this Indenture.
CKE RESTAURANTS, INC.
By ___________________________
Name: _____________________
Title: ____________________
J.P. MORGAN TRUST COMPANY,
NATIONAL ASSOCIATION
By ___________________________
Name: _____________________
Title: ____________________
72
EXHIBIT A
(Face of Security)
The following legend shall appear on the face of each Global Security:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
NOTES REPRESENTED HEREBY, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.
The following legend shall appear on the face of each Global Security
for which The Depository Trust Company is to be the Depositary:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER 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 DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES
ACT) OF THE ISSUER AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF
SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE ISSUER, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATIONS
A-1
UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. PRIOR TO A TRANSFER OF THIS SECURITY, (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE (5) ABOVE) THE HOLDER OF THIS SECURITY MUST FURNISH TO THE ISSUER AND THE
TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE
TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND
AGREES FOR THE BENEFIT OF THE ISSUER THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER
HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH
REGARD TO THIS SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT.
A-2
CKE RESTAURANTS, INC.
4% Convertible Subordinated Note due 2023
No. ___ CUSIP: 12561E AF 2
Issue Date: September 29, 2003 Principal Amount: $__________
Issue Price: $1,000.00
(for each $1,000
Principal Amount)
CKE Restaurants, Inc., a Delaware corporation, promises to pay to
______________ or registered assigns, on October 1, 2023, the Principal Amount
of this Convertible Subordinated Note on such date. This Convertible
Subordinated Note is issued with a Principal Amount of ________________________
DOLLARS ($____________).
This Convertible Subordinated Note shall not bear interest except as
specified on the other side of this Convertible Subordinated Note. The Principal
Amount of this Convertible Subordinated Note will accrue as specified on the
other side of this Convertible Subordinated Note. This Convertible Subordinated
Note is convertible as specified on the other side of this Convertible
Subordinated Note.
Additional provisions of this Convertible Subordinated Note are set
forth on the other side of this Convertible Subordinated Note.
A-3
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed.
Dated:
CKE Restaurants, Inc.
By: _______________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
J.P. Morgan Trust Company, National Association as Trustee, certifies that this
is one of the Convertible Subordinated Notes referred to in the within-mentioned
Indenture.
By:________________________
Authorized Officer
Dated:
A-4
(Back of Security)
4% CONVERTIBLE SUBORDINATED NOTE DUE 2023
1. Interest.
(a) The Convertible Subordinated Notes will bear interest on the
Principal Amount at the rate of 4% per year from the Issue Date, or from the
most recent date to which interest has been paid or provided for, until October
1, 2023. During such period, the Company will pay interest semiannually in
arrears on each Interest Payment Date to holders of record at the close of
business on each Regular Record Date immediately preceding such Interest Payment
Date. Each payment of interest on the Convertible Subordinated Notes will
include interest and Registration Default Damages, if any, accrued through the
day immediately preceding the most recent Interest Payment Date (or the
Repurchase Date, Redemption Date, the Fundamental Change Payment Date or, in
certain circumstances, the Conversion Date, as the case may be). Any payment
required to be made on any day that is not a Business Day will be made on the
next succeeding Business Day.
(b) Interest on any Convertible Subordinated Note that is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the person in whose name that Convertible Subordinated Note is
registered at the close of business on the Regular Record Date for such
interest, at the office or agency of the Company maintained for such purpose.
(c) The amount of interest payable for any period shall be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any partial period shall be computed on the basis of a
360-day year of twelve 30-day months and the days elapsed in any partial month.
In the event that any date on which interest is payable on a Convertible
Subordinated Note is not a Business Day, then a payment of the interest payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay) with
the same force and effect as if made on the date the payment was originally
payable.
2. Method of Payment.
Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of Principal Amount, Redemption Prices, Repurchase
Prices, Fundamental Change Payment and on the Maturity Date to holders who
surrender Convertible Subordinated Notes to a Paying Agent to collect such
payments in respect of the Convertible Subordinated Notes. In addition, the
Company will pay interest beginning September 29, 2003 until October 1, 2023, as
more fully described in paragraph 1 hereof. The Company will pay any 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.
3. Paying Agent, Conversion Agent and Registrar.
Initially, J.P. Morgan Trust Company, National Association (the
"Trustee") will act as Paying Agent, Conversion Agent and Registrar. The Company
may appoint and change any
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Paying Agent, Conversion Agent and 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 York, Borough of
Manhattan, which shall initially be an office or agency of the Trustee located
at 4 New York Plaza, 15th Floor, New York, New York 10004. The Company or any of
its subsidiaries or any of their Affiliates may act as Paying Agent, Conversion
Agent, Registrar or co-registrar.
4. Indenture.
The Company issued the Convertible Subordinated Notes pursuant to an
Indenture dated as of September 29, 2003 (the "Indenture"), between the Company
and the Trustee. The terms of the Convertible Subordinated Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Convertible Subordinated Notes themselves and 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. The
Convertible Subordinated Notes are subject to all such terms, and Convertible
Subordinated Note holders are referred to the Indenture and the TIA for a
statement of those terms. In the event of any inconsistency between the terms
hereof and the terms of the Indenture, the terms of the Indenture shall prevail.
The Convertible Subordinated Notes are unsecured and subordinated
obligations of the Company limited to $90,000,000 aggregate Principal Amount
(plus up to $15,000,000 aggregate Principal Amount that may be sold by the
Company to the Initial Purchasers pursuant to the option to purchase additional
Convertible Subordinated Notes granted to the Initial Purchasers pursuant to the
Purchase Agreement). The Indenture does not limit other indebtedness of the
Company, secured or unsecured.
5. [Reserved].
6. Redemption at the Option of the Company.
No sinking fund is provided for the Convertible Subordinated Notes. The
Convertible Subordinated Notes are redeemable as a whole, or from time to time
in part, at any time at the option of the Company in accordance with the
Indenture at 100% of the Principal Amount of such Convertible Subordinated
Notes, plus accrued and unpaid interest and Registration Default Damages, if
any, to but not including the Redemption Dates, provided that the Convertible
Subordinated Notes are not redeemable prior to October 1, 2008.
7. Purchase by the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the holder, the Convertible
Subordinated Notes held by such holder on October 1 of 2008, 2013 and 2018 at a
Repurchase Price equal to 100% of the Principal Amount of such Convertible
Subordinated Notes on the applicable Repurchase Date plus accrued and unpaid
interest and Registration Default Damages, if any, to but not including the
Repurchase Date, upon delivery of a Repurchase Notice containing the information
set forth in the Indenture at any time from the opening of business on the date
that is 20 Business Days prior to such Repurchase Date until the close of
business on the Business Day prior to such
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Repurchase Date and upon delivery of the Convertible Subordinated Notes to the
Paying Agent by the holder as set forth in the Indenture.
At the option of the holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase in cash all or a
portion of the Convertible Subordinated Notes in integral multiples of $1,000
Principal Amount held by such holder no later than 60 Business Days after the
occurrence of a Fundamental Change of the Company for a Fundamental Change
Payment equal to 100% of the Principal Amount of such Convertible Subordinated
Notes plus accrued and unpaid interest and Registration Default Damages, if any,
to but not including the Fundamental Change Payment Date, which Fundamental
Change Payment shall be paid in cash.
Holders have the right to withdraw any Repurchase Notice or Fundamental
Change notice, as the case may be, by delivering to the Paying Agent a written
notice of withdrawal in accordance with the provisions of the Indenture.
Payment of the Repurchase Price for a Convertible Subordinated Note for
which a Repurchase Notice has been delivered and not withdrawn is conditioned
upon book-entry transfer or delivery of such Convertible Subordinated Note,
together with any necessary endorsements, to the Paying Agent at its office in
the Borough of Manhattan, The City of New York, or any other office or the
Paying Agent, at any time after delivery of the Repurchase Notice.
If cash sufficient to pay the Repurchase Price or Fundamental Change
Payment, as the case may be, of all Convertible Subordinated Notes or portions
thereof to be purchased as of the Repurchase Date or the Fundamental Change
Payment Date, as the case may be, is deposited with the Paying Agent on the
Business Day immediately following the Repurchase Date or on the Fundamental
Change Payment Date, as the case may be, such Convertible Subordinated Notes (or
portions thereof) will cease to be outstanding, the Principal Amount shall cease
to increase, and interest and Registration Default Damages, if any, shall cease
to accrue on such Convertible Subordinated Notes (or portions thereof) on such
Repurchase Date or Fundamental Change Payment Date, as the case may be, and the
holder thereof shall have no other rights as such (other than the right to
receive the Repurchase Price or Fundamental Change Payment, as the case may be,
if any, upon surrender of such Convertible Subordinated Notes). This will be the
case whether or not book-entry transfer of the Convertible Subordinated Note has
been made or the Convertible Subordinated Note has been delivered to the Paying
Agent.
8. [Reserved].
9. Conversion.
Conversion Based on Common Stock Price. Subject to the provisions of
this paragraph 9 and notwithstanding the fact that any other condition to
conversion described below has not been satisfied, holders may convert the
Convertible Subordinated Notes into Common Stock on a Conversion Date at any
time starting with the first day of any calendar quarter commencing after
December 31, 2003 if the Closing Sale Price of the Common Stock for at least 20
trading days in a period of 30 consecutive trading days ending on the last
trading day of the calendar quarter
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prior to such calendar quarter is greater than 110% of the conversion price per
share of Common Stock on the last trading day of the prior calendar quarter. If
the foregoing condition is satisfied, then the Convertible Subordinated Notes
will be convertible at any time at the option of the holder, through their
maturity.
The "conversion price" per share of Common Stock as of any day equals
the quotient of $1,000 divided by the Conversion Rate in effect at that time.
Conversion Based on Trading Price of Convertible Subordinated Notes.
Subject to the provisions of this paragraph 9 and notwithstanding the fact that
any other condition to conversion described below has not been satisfied,
Holders may convert the Convertible Subordinated Notes into Common Stock during
each of the five Business Day periods after any ten consecutive trading day
period in which the Trading Price per $1,000 Principal Amount of the Convertible
Subordinated Notes for each day of such ten day period was less than 98% of the
product of (i) the average of the Closing Sale Price of the Common Stock over
the same ten trading day period and (ii) the number of shares of Common Stock
issuable upon conversion of $1,000 Principal Amount of the Convertible
Subordinated Notes.
The "Trading Price" means, on any date of determination, the average of
the secondary market bid quotations for the Convertible Subordinated Notes
obtained by the Trustee per $1,000 Principal Amount of the Convertible
Subordinated Notes for $5,000,000 Principal Amount of Convertible Subordinated
Notes at approximately 3:30 p.m., New York City time, on such determination date
from three independent nationally recognized securities dealers selected by the
Company; provided that if at least three such bids cannot reasonably be obtained
by the Trustee, but two such bids are obtained, then the average of the two bids
shall be used, and if only one such bid can reasonably be obtained by the
Trustee, one bid shall be used; and provided further that if the Trustee cannot
reasonably obtain at least one bid for $5,000,000 Principal Amount of
Convertible Subordinated Notes from a nationally recognized securities dealer or
in the Company's reasonable judgment, the bid quotations are not indicative of
the secondary market value of the Convertible Subordinated Notes, then the
Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes
shall be deemed to be less than 98% of the product of (a) the number of shares
of Common Stock issuable upon conversion of $1,000 Principal Amount of
Convertible Subordinated Notes and (b) the Closing Sale Price on such date.
The Trustee (or other conversion agent appointed by the Company) shall
have no obligation to determine the Trading Price unless the Company has
requested such a determination; and the Company shall have no obligation to make
such request unless a holder provides it with reasonable evidence that the
Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes
would be less than 98% of the product of the Closing Sale Price of Common Stock
and the number of shares of Common Stock issuable upon conversion of $1,000
Principal Amount of Convertible Subordinated Notes. If such evidence is
provided, the Company shall instruct the Trustee (or other conversion agent) to
determine the Trading Price of the Convertible Subordinated Notes beginning on
the next trading day and on each successive trading day until the Trading Price
per $1,000 Principal Amount of Convertible Subordinated Notes is greater than
98% of the product of the average of the Closing Sale Price of the Common Stock
over a ten trading day period and the number of shares issuable upon conversion
of $1,000 Principal Amount of the Convertible Subordinated Notes.
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Conversion upon Credit Rating Event. Subject to the provisions of this
paragraph 9 and notwithstanding the fact that any other condition described
herein to conversion has not been satisfied, a holder may convert the
Convertible Subordinated Notes into Common Stock during any period in which the
Convertible Subordinated Notes are rated below CCC by Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., and its successors, or
below Caa1 by Moody's Investors Services and its successors, or the notes are no
longer rated by either one of these ratings services, or if the ratings for the
notes have been withdrawn or been suspended by either one of these ratings
services.
Conversion upon Redemption. Subject to the provisions of this paragraph
9 and notwithstanding the fact that any other condition described herein to
conversion has not been satisfied, a holder may convert into Common Stock a
Convertible Subordinated Note or portion of a Convertible Subordinated Note
which has been called for redemption pursuant to paragraph 6 hereof, provided
such Convertible Subordinated Notes are surrendered for conversion prior to the
close of business on the Business Day immediately preceding the Redemption Date.
Conversion Upon Occurrence of Certain Corporate Transactions. (a)
Subject to the provisions of this paragraph 9 and notwithstanding the fact that
any other condition described herein to conversion has not been satisfied, in
the event the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of the Company's assets
pursuant to which the Common Stock would be converted into cash, securities or
other property as set forth in Section 12.14 of the Indenture, the Convertible
Subordinated Notes may be surrendered for conversion at any time from and after
the date which is 15 days prior to the date announced by the Company as the
anticipated effective time until 15 days after the actual effective date of such
transaction, and at the effective time of such transaction the right to convert
a Convertible Subordinated Note into Common Stock will be deemed to have changed
into a right to convert it into the kind and amount of cash, securities or other
assets of the Company or another person which the holder would have received if
the holder had converted its Convertible Subordinated Note into Common Stock
immediately prior to the transaction. If such transaction also constitutes a
Fundamental Change, a holder will be able to require the Company to purchase all
or a portion of such holder's Convertible Subordinated Notes pursuant to
Paragraph 7 and Section 3.10 of the Indenture.
(a) Subject to the provisions of this paragraph 9 and
notwithstanding the fact that any other condition to conversion has not been
satisfied, in the event that the Company declares a dividend or distribution
described in Section 12.06(b) of the Indenture, or a dividend or a distribution
described in Section 12.06(c) of the Indenture where, the fair market value, per
share, of such dividend or distribution per share of Common Stock, as determined
in the Indenture, exceeds 10% of the Closing Sale Price of the Common Stock on
the Business Day immediately preceding the date of declaration for such dividend
or distribution or a Fundamental Change occurs other than pursuant to a
transaction described in clause (a) hereof, the Convertible Subordinated Notes
may be surrendered for conversion beginning on the date the Company gives notice
to the holders of such right, which shall not be less than 20 days prior to the
Ex-Dividend Date for such dividend or distribution or which shall be within 20
days of the occurrence of such Fundamental Change, as the case may be, and
Convertible Subordinated Notes may be surrendered for conversion at any time
thereafter until the earlier of the close of business on the Business Day prior
to the Ex-Dividend Date or until the Company announces that such dividend
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or distribution will not take place, with respect to a dividend or distribution,
or within 30 days of such Fundamental Change notice, in the case of such a
Fundamental Change. No adjustment to the Conversion Rate or the ability of the
holders to convert this Convertible Subordinated Note will be made if the
Company provides, as permitted in the Indenture, for holders to participate in
the transaction without conversion or in other cases specified in the Indenture.
A Convertible Subordinated Note in respect of which a holder has
delivered a Repurchase Notice or notice of a Fundamental Change exercising the
option of such holder to require the Company to purchase such Convertible
Subordinated Note may be converted only if such notice of exercise is withdrawn
in accordance with the terms of the Indenture.
The initial Conversion Rate is 112.4859 shares of Common Stock per
$1,000 Principal Amount of each Convertible Subordinated Note, subject to
adjustment for certain events described in the Indenture. The Company will
deliver cash or a check in lieu of any fractional share of Common Stock. The
ability to surrender Convertible Subordinated Notes for conversion will expire
at the close of business on September 30, 2023.
Increases in the Principal Amount and interest will not be paid on
Convertible Subordinated Notes that are converted, except accrued interest will
be payable upon conversion of Convertible Subordinated Notes made concurrently
with or after acceleration of Convertible Subordinated Notes following an Event
of Default. Holders of Convertible Subordinated Notes at the close of business
on a Regular Record Date will receive payments of interest payable on the
corresponding Interest Payment Date notwithstanding the conversion of such notes
at any time after the close of business on such Regular Record Date. Notes
surrendered for conversion by a holder during the period from the close of
business on any Regular Record Date to the opening of business on the
corresponding Interest Payment Date must be accompanied by payment of an amount
equal to the interest that the holder is to receive on the Convertible
Subordinated Notes; provided, however, that no such payment need be made if (1)
the Company has specified a Redemption Date that is after a Regular Record Date
and on or prior to the corresponding Interest Payment Date, (2) the Company has
specified a Repurchase Date following a Fundamental Change that is during such
period, or (3) any overdue interest exists at the time of conversion with
respect to such Convertible Subordinated Notes, to the extent of such overdue
interest. The holders of the Convertible Subordinated Notes will continue to be
entitled to receive Registration Default Damages in accordance with the
Registration Rights Agreement.
To exercise its conversion right, a holder must (1) complete and
manually sign the conversion notice (or complete and manually sign a facsimile
of such notice) and deliver such notice to the Conversion Agent, (2) surrender
the Convertible Subordinated 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 taxes, if
required.
A holder may convert a portion of a Convertible Subordinated Note if
the Principal Amount of such portion is $1,000 or an integral multiple of
$1,000. No payment or adjustment will be made for dividends on the Common Stock
except as provided in the Indenture. On conversion of a Convertible Subordinated
Note, increases in the Principal Amount or interest attributable to the period
from the Issue Date through the Conversion Date shall not be cancelled,
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extinguished or forfeited, but rather shall be deemed to be paid in full to the
holder thereof through the delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Convertible
Subordinated Note being converted pursuant to the terms hereof; and the fair
market value of such shares of Common Stock (together with any such cash payment
in lieu of fractional shares) shall be treated as issued, to the extent thereof,
first in exchange for increases in the Principal Amount or interest accrued
through the Conversion Date, and the balance, if any, of such fair market value
of such Common Stock (and any such cash payment) shall be treated as issued in
exchange for the Issue Price of the Convertible Subordinated Note being
converted pursuant to the provisions hereof.
The Conversion Rate will be adjusted for dividends or distributions on
Common Stock payable in Common Stock or other Capital Stock of the Company;
subdivisions, combinations or certain reclassifications of Common Stock;
distributions to all holders of Common Stock of certain rights to purchase
Common Stock for a period expiring within 60 days of the record date for such
distribution at less than the current market price of the Common Stock at the
time of the announcement of the distribution; distributions to such holders of
assets or debt securities of the Company or certain rights to purchase
securities of the Company (including cash dividends or distributions); payments
in respect of a repurchase of (including a tender offer or exchange offer for)
the Company's Common Stock; payments in respect of a tender offer or exchange
offer made by a Person other than the Company or any of its subsidiaries which
increases the offeror's ownership of Common Stock to more than 35% of the Common
Stock outstanding; and any issuance by the Company of Common Stock or securities
convertible into, or exchangeable for, Common Stock at a price per share (or
having a conversion or exchange price per share) that is less than the then
current market price of the Common Stock (but excluding without limitation those
exceptions listed in Section 12.06(g). However, no adjustment need be made if
Convertible Subordinated Note holders may participate in the transaction or in
certain other cases. The Company from time to time may voluntarily increase the
Conversion Rate.
If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Convertible Subordinated Note into Common Stock may be changed into a right to
convert it into securities, cash or other assets of the Company or another
person.
The Conversion Rate will not be adjusted for increases in the Principal
Amount or accrued interest or Registration Default Damages, if any.
10. Conversion Arrangement on Call for Redemption.
Any Convertible Subordinated Notes called for redemption, unless
surrendered for conversion before the close of business on the Redemption Date,
may be deemed to be purchased from the holders of such Convertible Subordinated
Notes at an amount not less than the Redemption Price, by one or more investment
bankers or other purchasers who may agree with the Company to purchase such
Convertible Subordinated Notes from the holders, to convert them into Common
Stock of the Company and to make payment for such Convertible Subordinated Notes
to the Trustee in trust for such holders.
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11. [Reserved]
12. Defaulted Interest.
Except as otherwise specified with respect to the Convertible
Subordinated Notes, any defaulted interest on any Convertible Subordinated Note
shall forthwith cease to be payable to the registered holder thereof on the
relevant Regular Record Date or accrual date, as the case may be, by virtue of
having been such holder, and such defaulted interest may be paid by the Company
as provided for in Section 2.12 of the Indenture.
13. Denominations; Transfer; Exchange.
The Convertible Subordinated Notes are in fully registered form,
without coupons, in denominations of $1,000 of Principal Amount and integral
multiples of $1,000. A holder may transfer or exchange Convertible Subordinated
Notes in accordance with the Indenture. The Registrar may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Convertible Subordinated Notes
selected for redemption (except, in the case of a Convertible Subordinated Note
to be redeemed in part, the portion of the Convertible Subordinated Note not to
be redeemed) or any Convertible Subordinated Notes in respect of which a
Repurchase Notice or Fundamental Change notice has been given and not withdrawn
(except, in the case of a Convertible Subordinated Note to be purchased in part,
the portion of the Convertible Subordinated Note not to be purchased) or any
Convertible Subordinated Notes for a period of 15 days before the mailing of a
notice of redemption of Convertible Subordinated Notes to be redeemed.
14. Persons Deemed Owners.
The registered holder of this Convertible Subordinated Note may be
treated as the owner of this Convertible Subordinated Note for all purposes.
15. Unclaimed Money or Securities.
The Trustee and the Paying Agent shall return to the Company, upon
written request any money or securities held by them for the payment of any
amount with respect to the Convertible Subordinated Notes that remains unclaimed
for two years, subject to applicable unclaimed property laws. After return to
the Company holders entitled to the money or securities must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another person.
16. Amendment; Waiver.
Subject to certain exceptions, the Indenture or the Convertible
Subordinated Notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the then outstanding
Convertible Subordinated Notes, and any existing default may be waived with the
consent of the holders of a majority in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes.
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Without the consent of any holder, the Indenture or the Convertible
Subordinated Notes may be amended to: (a) cure any ambiguity or correct or
supplement any defective or inconsistent provision contained in the Indenture,
or make any other changes in the provisions of the Indenture which the Company
and the Trustee may deem necessary or desirable provided such amendment does not
materially and adversely affect the legal rights under the Indenture of the
holders of Convertible Subordinated Notes; (b) provide for uncertificated
Convertible Subordinated Notes in addition to or in place of certificated
Convertible Subordinated Notes; (c) evidence the succession of another person to
the Company and providing for the assumption by such successor of the covenants
and obligations of the Company thereunder and in the Convertible Subordinated
Notes as permitted by Section 5.01 of the Indenture; (d) provide for exchange
rights of holders of Convertible Subordinated Notes in the event of
consolidation, merger, share exchange or sale of all or substantially all of the
assets of the Company as required to comply with Sections 5.01 and/or 12.14 of
the Indenture; (e) increase the Conversion Rate; (f) evidence and provide for
the acceptance of the appointment under the Indenture of a successor Trustee;
(g) make any change that would provide any additional rights or benefits to the
holders of Convertible Subordinated Notes or that does not adversely affect the
legal rights under the Indenture of any such holder; or (h) comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.
Without the consent of each holder affected, an amendment or waiver may
not (with respect to any Convertible Subordinated Notes held by a non-consenting
holder): (a) reduce the principal amount of Convertible Subordinated Notes whose
holders must consent to an amendment, supplement or waiver; (b) reduce the
principal of or change the fixed maturity of any Convertible Subordinated Note;
(c) reduce the rate of or change the time for payment of interest on any
Convertible Subordinated Notes; (d) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest or Registration Default
Damages, if any, on the Convertible Subordinated Notes (except a rescission of
acceleration of the Convertible Subordinated Notes by the holders of at least a
majority in aggregate Principal Amount of the Convertible Subordinated Notes and
a waiver of the payment default that resulted from such acceleration); (e) make
any Convertible Subordinated Note payable in money other than as provided for in
the Indenture and in the Convertible Subordinated Notes; (f) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of holders of Convertible Subordinated Notes to receive payments of
principal of or interest or Registration Default Damages, if any, on the
Convertible Subordinated Notes; (g) except as permitted by the Indenture
(including Section 9.01(a)), decrease the Conversion Rate or modify the
provisions of the Indenture relating to conversion of the Convertible
Subordinated Notes in a manner adverse to the holders thereof; (h) make any
change to the ability of holder of Convertible Subordinated Notes to enforce
their rights under the Indenture or the provisions of clauses (a) through (i) of
Section 9.02 of the Indenture; (i) reduce the Redemption Price, purchase price
or Fundamental Change purchase price of the Convertible Subordinated Notes; (j)
modify the subordination provisions of the Indenture in a manner adverse to the
holders of the Convertible Subordinated Notes; or (k) make any change that
adversely affects the right to convert the Convertible Subordinated Notes.
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17. Defaults and Remedies.
An Event of Default is: (a) default for 30 days or more in payment of
any installment of interest or Registration Default Damages, if any, on the
Convertible Subordinated Notes, whether or not such payment is prohibited by the
subordination provisions of the Indenture; (b) default in payment of the
principal of or premium, if any, on the Convertible Subordinated Notes, when due
and payable, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (c) default in the payment of the Fundamental
Change Payment in respect of the Convertible Subordinated Notes on the date
therefor, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (d) failure to provide timely notice of a
Fundamental Change; a default in the Company's obligation to redeem the
Convertible Subordinated Notes after it has exercised its redemption option,
whether or not such payment is prohibited by the subordination provisions of the
indenture; (e) a default in its obligation to satisfy its conversion obligation
upon exercise of a holder's conversion right; (f) the Company defaults (other
than a default set forth in clauses (a), (b), (c) and (d) above) in the
performance of, or breaches, any other covenant or warranty of the Company set
forth in this Indenture or the Convertible Subordinated Notes and fails to
remedy such default or breach within a period of 30 days after the receipt of
written notice from the Trustee or the holders of at least 25% in aggregate
Principal Amount of the then outstanding Convertible Subordinated Notes; (g) a
default under any credit agreement, mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any subsidiary of the Company
(or the payment of which is guaranteed by the Company or any of its
subsidiaries), whether such Indebtedness or guarantee exists on the date of this
Indenture or is created thereafter, which default (i) is caused by a Payment
Default or (ii) results in the acceleration of such Indebtedness prior to its
express maturity (without such acceleration being rescinded or annulled) and, in
each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates $5,000,000
or more; (h) a final, non-appealable judgment or final, non-appealable judgments
(other than any judgment as to which a reputable insurance company has accepted
full liability) for the payment of money are entered by a court or courts of
competent jurisdiction against the Company or any subsidiaries of the Company
and remain unstayed, unbonded or undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate amount of all such judgments exceeds $5,000,000; (i) the Company or
any subsidiary, pursuant to or within the meaning of any Bankruptcy Law
commences a voluntary case, consents to the entry of an order for relief against
it in an involuntary case, consents to the appointment of a Custodian of it or
for all or substantially all of its property, makes a general assignment for the
benefit of its creditors, makes the admission in writing that it generally is
unable to pay its debts as the same become due; (j) a court of competent
jurisdiction enters a judgment, order or decree under any Bankruptcy Law that is
for relief against the Company or any subsidiary in an involuntary case,
appoints a Custodian of the Company or any subsidiary, and the order or decree
remains unstayed and in effect for 90 days or orders the liquidation of the
Company or any subsidiary, and the order or decree remains unstayed and in
effect for 90 days. If an Event of Default occurs and is continuing, the Trustee
or the holders of at least 25% in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes may declare the unpaid principal of,
premium, if any, and accrued and unpaid interest and Registration Default
Damages, if any, on all Convertible Subordinated Notes then outstanding to be
due and payable
A-14
immediately, except that in the case of an Event of Default
arising from certain events of bankruptcy, insolvency, or reorganization with
respect to the Company or any of its subsidiaries, all outstanding Convertible
Subordinated Notes become due and payable without further action or notice.
Holders of Convertible Subordinated Notes may not enforce the Indenture or the
Convertible Subordinated Notes except as provided in the Indenture. The Trustee
may require an indemnity satisfactory to it before it enforces the Indenture or
the Convertible Subordinated Notes. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding Convertible Subordinated
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from holders notice of any continuing default (except a default in
payment of principal, premium, if any, or interest or Registration Default
Damages, if applicable) if it determines that withholding notice is in their
interests. The Company must furnish annual compliance certificates to the
Trustee.
18. Registration Rights Agreement.
The holder of this Convertible Subordinated Note is entitled to the
benefits of a Registration Rights Agreement, dated September 29, 2003, between
the Company and the Initial Purchasers (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement the Company has agreed for the
benefit of the holders of the Convertible Subordinated Notes and the Common
Stock issued and issuable upon conversion of the Convertible Subordinated Notes,
that (i) it will, at its cost, within 90 days after the Issue Date, file a shelf
registration statement (the "Shelf Registration Statement") with the Securities
and Exchange Commission (the "Commission") with respect to resales of the
Convertible Subordinated Notes and the Common Stock issuable upon conversion
thereof, (ii) the Company will use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission under
the Securities Act within 180 days after the Issue Date and (iii) subject to its
rights to suspend use of the shelf registration statement and prospectus under
certain circumstances described below, the Company will use its reasonable best
efforts to keep such Shelf Registration Statement continuously effective under
the Securities Act until the earliest of (a) the second anniversary of the Issue
Date or, if later, the second anniversary of the last date on which any
Convertible Subordinated Notes are issued upon exercise of the Initial
Purchasers' option to purchase additional Convertible Subordinated Notes, (b)
the date on which the Convertible Subordinated Notes or the Common Stock
issuable upon conversion thereof may be sold to persons who are not "affiliates"
(as defined in Rule 144) of the Company pursuant to paragraph (k) of Rule 144
(or any successor provision) promulgated by the Commission under the Securities
Act and (c) the date as of which all the Convertible Subordinated Notes or the
Common Stock issuable upon conversion thereof have been sold pursuant to such
Shelf Registration Statement.
If the Shelf Registration Statement (i) is not filed with the
Commission on or prior to 90 days, or has not been declared effective by the
Commission within 180 days, after the Issue Date or (ii) is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by a replacement shelf registration statement filed and declared
effective) or cease to be usable (including, without limitation, as a result of
a Suspension Period as defined below) for the offer and sale of Registrable
Securities (as defined below) for a period of time (including any Suspension
Period) which shall exceed 30 days within any three-month period or 60 days in
the aggregate in any 12-month period (each such event referred to in clauses
A-15
(i) and (ii) being referred to herein as a "Registration Default"), the Company
will pay liquidated damages ("Registration Default Damages") to each holder of
Registrable Securities which has complied with its obligations under the
Registration Rights Agreement. The amount of Registration Default Damages
payable during any period in which a Registration Default shall have occurred
and be continuing is that amount which is equal to one-quarter of one percent
(25 basis points) per annum per $1,000 principal amount of Securities or $2.50
per annum per 112.4859 shares of Common Stock (subject to adjustment from time
to time in the event of a stock split, stock recombination, stock dividend and
the like) constituting Registrable Securities for the first 90 days during which
a Registration Default has occurred and is continuing and one-half of one
percent (50 basis points) per annum per $1,000 principal amount of Securities
and $5.00 per annum per 112.4859 shares of Common Stock (subject to adjustment
as set forth above) constituting Registrable Securities for any additional days
during which such Registration Default has occurred and is continuing. The
Company will pay all accrued Registration Default Damages by wire transfer of
immediately available funds or by federal funds check on each Damages Payment
Date (as defined in the Registration Rights Agreement), and Registration Default
Damages will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Following the cure of a Registration Default, Registration
Default Damages will cease to accrue with respect to such Registration Default.
"Registrable Securities" means each Convertible Subordinated Note and the Common
Stock issuable or issued upon conversion thereof until the date on which such
Convertible Subordinated Note or Common Stock (i) has been transferred pursuant
to the shelf registration statement or another registration statement covering
such note or share of common stock which has been filed with the SEC pursuant to
the Securities Act, in either case after such registration statement has become,
and while such registration statement is, effective under the Securities Act,
(ii) has been transferred pursuant to Rule 144 under the Securities Act (or any
similar provision then in force), or (iii) may be sold or transferred by
non-affiliates of the Company's pursuant to paragraph (k) of Rule 144 under the
Securities Act (or any successor provision promulgated by the SEC)).
Pursuant to the Registration Rights Agreement, the Company may suspend
the use of the prospectus which is a part of the Shelf Registration Statement
for a period not to exceed 30 days in any three-month period or an aggregate of
60 days in any twelve-month period under certain circumstances (each, a
"Suspension Period"); provided that the existence of a Suspension Period will
not prevent the occurrence of a Registration Default or otherwise limit the
obligation of the Company to pay Registration Default Damages.
The above description of certain provisions of the Registration Rights
Agreement is qualified by reference to, and is subject in its entirety to, the
more complete description thereof contained in the Registration Rights
Agreement.
19. 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 Convertible Subordinated 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.
A-16
20. No Recourse Against Others.
A director, officer, employee, agent, representative, stockholder or
equity holder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Subordinated 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 Convertible Subordinated Note,
each Convertible Subordinated Note holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Convertible Subordinated Notes.
21. Authentication.
This Convertible Subordinated Note shall not be valid until an
authorized signatory of the Trustee manually signs the Trustee's Certificate of
Authentication on the other side of this Convertible Subordinated Note.
22. Abbreviations.
Customary abbreviations may be used in the name of a Convertible
Subordinated Note holder or an assignee, such as TEN COM (=tenants in common),
TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
23. GOVERNING LAW.
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
CONVERTIBLE SUBORDINATED NOTE.
A-17
The Company will furnish to any Convertible Subordinated Note holder
upon written request and without charge a copy of the Indenture that has in it
the text of this Convertible Subordinated Note in larger type. Requests may be
made to:
CKE Restaurants, Inc.
6307 Carpinteria Avenue, Suite A,
Carpinteria, CA 93013
Attention: Chief Financial Officer
A-18
ASSIGNMENT FORM CONVERSION NOTICE
To assign this Convertible Subordinated Note, To convert this Convertible Subordinated
fill in the form below: Note into Common Stock of the Company,
check the box: [ ]
I or we assign and transfer this Convertible
Subordinated Note to:
____________________________________________ To convert only part of this Convertible
Subordinated Note, state the Original
____________________________________________ Principal Amount to be converted (which
must be $1,000 or an integral multiple of
(Insert assignee's soc. sec. or tax ID no.) $1,000):
____________________________________________ $ _________________________________________
____________________________________________ If you want the stock certificate made out
in another person's name, fill in the form
____________________________________________ below:
(Print or type assignee's name, address and ___________________________________________
zip code) ___________________________________________
(Insert other person's soc. sec. or tax ID
no.)
and irrevocably appoint
__________________________ agent to transfer ___________________________________________
this Convertible Subordinated Note on the
books of the Company. The agent may ___________________________________________
substitute another to act for him.
___________________________________________
___________________________________________
(Print or type other person's name, address
and zip code)
___________________________________________
___________________________________________
Date: ____________________________ Your Signature: _____________________________
________________________________________________________________________________
(Sign exactly as your name appears on the other side of this Convertible
Subordinated Note)
A-19
OPTION OF HOLDER TO ELECT REPURCHASE
If you wish to have this Convertible Subordinated Note repurchased by
the Company pursuant to Section 3.09 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Convertible Subordinated Note
purchased by the Company pursuant to Section 3.09 of the Indenture, state the
amount (in multiples of $1,000): $_____.
Date: ___________ Your Signature: ____________________________________________
(Sign exactly as your name appears on the other side of
this Convertible Subordinated Note)
Medallion Signature Guarantee: _________________________________________________
A-20
EXHIBIT B
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
OF RESTRICTED COMMON STOCK
(Transfers pursuant to Section 12.19(c) of the Indenture)
[NAME AND ADDRESS OF COMMON STOCK TRANSFER AGENT]
Re: CKE Restaurants, Inc. 4% Convertible Subordinated Notes due
2023 (the "Convertible Subordinated Notes")
Reference is hereby made to the Indenture dated as of September 29,
2003 (the "Indenture") between CKE Restaurants, Inc. and J.P. Morgan Trust
Company, National Association, as Trustee. Capitalized terms used but not
defined herein shall have the meanings given them in the Indenture.
This letter relates to _________ shares of Common Stock represented by
the accompanying certificate(s) that were issued upon conversion of Convertible
Subordinated Notes and which are held in the name of [name of transferor] (the
"Transferor") to effect the transfer of such Common Stock.
In connection with the transfer of such shares of Common Stock, the
undersigned confirms that such shares of Common Stock are being transferred:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) [ ] pursuant to and in compliance with Regulation S under
the Securities Act of 1933; or
(4) [ ] pursuant to an exemption from registration under the
Securities Act of 1933 provided by Rule 144
thereunder.
B-1
Unless one of the boxes is checked, the transfer agent will refuse to
register any of the Common Stock evidenced by this certificate in the name of
any person other than the registered holder thereof; provided, however, that if
box (3) or (4) is checked, the transfer agent may require, prior to registering
any such transfer of the Common Stock such certifications and other information,
and if box (4) is checked such legal opinions, as the Company has reasonably
requested in writing, by delivery to the transfer agent of a standing letter of
instruction, to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933.
[Name of Transferor],
By ___________________________________
Name: ________________________________
Title: _______________________________
Dated:
B-2
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
NOTES REPRESENTED HEREBY, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR AN NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER 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 DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES
ACT) OF THE ISSUER AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF
SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE ISSUER, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. PRIOR TO A TRANSFER OF THIS SECURITY, (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE (5) ABOVE) THE HOLDER OF THIS SECURITY MUST FURNISH TO THE ISSUER AND THE
TRUSTEE SUCH CERTIFICATES AND OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF
THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUER
THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR (2) NOT A U.S. PERSON AND IS
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE
SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY,
ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY OR ANY COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT AS PERMITTED BY THE
SECURITIES ACT.
CKE RESTAURANTS, INC.
4% Convertible Subordinated Note due 2023
No. 1 CUSIP: 12561E AF 2
Issue Date: September 29, 2003 Principal Amount: $105,000,000
Issue Price: $1,000.00
(for each $1,000 Principal Amount)
CKE Restaurants, Inc., a Delaware corporation, promises to pay to CEDE
& CO. or registered assigns, on October 1, 2023, the Principal Amount of this
Convertible Subordinated Note on such date. This Convertible Subordinated Note
is issued with a Principal Amount of ONE HUNDRED AND FIVE MILLION DOLLARS
($105,000,000).
This Convertible Subordinated Note shall not bear interest except as
specified on the other side of this Convertible Subordinated Note. The Principal
Amount of this Convertible Subordinated Note will accrue as specified on the
other side of this Convertible Subordinated Note. This Convertible Subordinated
Note is convertible as specified on the other side of this Convertible
Subordinated Note.
Additional provisions of this Convertible Subordinated Note are set
forth on the other side of this Convertible Subordinated Note.
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed.
Dated:
CKE Restaurants, Inc.
By:______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
J.P. Morgan Trust Company, National Association
as Trustee, certifies that this
is one of the Convertible Subordinated Notes referred
to in the within-mentioned Indenture.
By:_____________________________
Authorized Officer
Dated:
(Back of Security)
4% CONVERTIBLE SUBORDINATED NOTE DUE 2023
1. Interest.
(a) The Convertible Subordinated Notes will bear interest on the
Principal Amount at the rate of 4% per year from the Issue Date, or from the
most recent date to which interest has been paid or provided for, until October
1, 2023. During such period, the Company will pay interest semiannually in
arrears on each Interest Payment Date to holders of record at the close of
business on each Regular Record Date immediately preceding such Interest Payment
Date. Each payment of interest on the Convertible Subordinated Notes will
include interest and Registration Default Damages, if any, accrued through the
day immediately preceding the most recent Interest Payment Date (or the
Repurchase Date, Redemption Date, the Fundamental Change Payment Date or, in
certain circumstances, the Conversion Date, as the case may be). Any payment
required to be made on any day that is not a Business Day will be made on the
next succeeding Business Day.
(b) Interest on any Convertible Subordinated Note that is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the person in whose name that Convertible Subordinated Note is
registered at the close of business on the Regular Record Date for such
interest, at the office or agency of the Company maintained for such purpose.
(c) The amount of interest payable for any period shall be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any partial period shall be computed on the basis of a
360-day year of twelve 30-day months and the days elapsed in any partial month.
In the event that any date on which interest is payable on a Convertible
Subordinated Note is not a Business Day, then a payment of the interest payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay) with
the same force and effect as if made on the date the payment was originally
payable.
2. Method of Payment.
Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of Principal Amount, Redemption Prices, Repurchase
Prices, Fundamental Change Payment and on the Maturity Date to holders who
surrender Convertible Subordinated Notes to a Paying Agent to collect such
payments in respect of the Convertible Subordinated Notes. In addition, the
Company will pay interest beginning September 29, 2003 until October 1, 2023, as
more fully described in paragraph 1 hereof. The Company will pay any 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.
3. Paying Agent, Conversion Agent and Registrar.
Initially, J.P. Morgan Trust Company, National Association (the
"Trustee") will act as Paying Agent, Conversion Agent and Registrar. The Company
may appoint and change any
1
Paying Agent, Conversion Agent and 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 York, Borough of
Manhattan, which shall initially be an office or agency of the Trustee located
at 4 New York Plaza, 15th Floor, New York, New York 10004. The Company or any of
its subsidiaries or any of their Affiliates may act as Paying Agent, Conversion
Agent, Registrar or co-registrar.
4. Indenture.
The Company issued the Convertible Subordinated Notes pursuant to an
Indenture dated as of September 29, 2003 (the "Indenture"), between the Company
and the Trustee. The terms of the Convertible Subordinated Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Convertible Subordinated Notes themselves and 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. The
Convertible Subordinated Notes are subject to all such terms, and Convertible
Subordinated Note holders are referred to the Indenture and the TIA for a
statement of those terms. In the event of any inconsistency between the terms
hereof and the terms of the Indenture, the terms of the Indenture shall prevail.
The Convertible Subordinated Notes are unsecured and subordinated
obligations of the Company limited to $90,000,000 aggregate Principal Amount
(plus up to $15,000,000 aggregate Principal Amount that may be sold by the
Company to the Initial Purchasers pursuant to the option to purchase additional
Convertible Subordinated Notes granted to the Initial Purchasers pursuant to the
Purchase Agreement). The Indenture does not limit other indebtedness of the
Company, secured or unsecured.
5. [Reserved].
6. Redemption at the Option of the Company.
No sinking fund is provided for the Convertible Subordinated Notes. The
Convertible Subordinated Notes are redeemable as a whole, or from time to time
in part, at any time at the option of the Company in accordance with the
Indenture at 100% of the Principal Amount of such Convertible Subordinated
Notes, plus accrued and unpaid interest and Registration Default Damages, if
any, to but not including the Redemption Dates, provided that the Convertible
Subordinated Notes are not redeemable prior to October 1, 2008.
7. Purchase by the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the holder, the Convertible
Subordinated Notes held by such holder on October 1 of 2008, 2013 and 2018 at a
Repurchase Price equal to 100% of the Principal Amount of such Convertible
Subordinated Notes on the applicable Repurchase Date plus accrued and unpaid
interest and Registration Default Damages, if any, to but not including the
Repurchase Date, upon delivery of a Repurchase Notice containing the information
set forth in the Indenture at any time from the opening of business on the date
that is 20 Business Days prior to such Repurchase Date until the close of
business on the Business Day prior to such
2
Repurchase Date and upon delivery of the Convertible Subordinated Notes to the
Paying Agent by the holder as set forth in the Indenture.
At the option of the holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase in cash all or a
portion of the Convertible Subordinated Notes in integral multiples of $1,000
Principal Amount held by such holder no later than 60 Business Days after the
occurrence of a Fundamental Change of the Company for a Fundamental Change
Payment equal to 100% of the Principal Amount of such Convertible Subordinated
Notes plus accrued and unpaid interest and Registration Default Damages, if any,
to but not including the Fundamental Change Payment Date, which Fundamental
Change Payment shall be paid in cash.
Holders have the right to withdraw any Repurchase Notice or Fundamental
Change notice, as the case may be, by delivering to the Paying Agent a written
notice of withdrawal in accordance with the provisions of the Indenture.
Payment of the Repurchase Price for a Convertible Subordinated Note for
which a Repurchase Notice has been delivered and not withdrawn is conditioned
upon book-entry transfer or delivery of such Convertible Subordinated Note,
together with any necessary endorsements, to the Paying Agent at its office in
the Borough of Manhattan, The City of New York, or any other office or the
Paying Agent, at any time after delivery of the Repurchase Notice.
If cash sufficient to pay the Repurchase Price or Fundamental Change
Payment, as the case may be, of all Convertible Subordinated Notes or portions
thereof to be purchased as of the Repurchase Date or the Fundamental Change
Payment Date, as the case may be, is deposited with the Paying Agent on the
Business Day immediately following the Repurchase Date or on the Fundamental
Change Payment Date, as the case may be, such Convertible Subordinated Notes (or
portions thereof) will cease to be outstanding, the Principal Amount shall cease
to increase, and interest and Registration Default Damages, if any, shall cease
to accrue on such Convertible Subordinated Notes (or portions thereof) on such
Repurchase Date or Fundamental Change Payment Date, as the case may be, and the
holder thereof shall have no other rights as such (other than the right to
receive the Repurchase Price or Fundamental Change Payment, as the case may be,
if any, upon surrender of such Convertible Subordinated Notes). This will be the
case whether or not book-entry transfer of the Convertible Subordinated Note has
been made or the Convertible Subordinated Note has been delivered to the Paying
Agent.
8. [Reserved].
9. Conversion.
Conversion Based on Common Stock Price. Subject to the provisions of
this paragraph 9 and notwithstanding the fact that any other condition to
conversion described below has not been satisfied, holders may convert the
Convertible Subordinated Notes into Common Stock on a Conversion Date at any
time starting with the first day of any calendar quarter commencing after
December 31, 2003 if the Closing Sale Price of the Common Stock for at least 20
trading days in a period of 30 consecutive trading days ending on the last
trading day of the calendar quarter
3
prior to such calendar quarter is greater than 110% of the conversion price per
share of Common Stock on the last trading day of the prior calendar quarter. If
the foregoing condition is satisfied, then the Convertible Subordinated Notes
will be convertible at any time at the option of the holder, through their
maturity.
The "conversion price" per share of Common Stock as of any day equals
the quotient of $1,000 divided by the Conversion Rate in effect at that time.
Conversion Based on Trading Price of Convertible Subordinated Notes.
Subject to the provisions of this paragraph 9 and notwithstanding the fact that
any other condition to conversion described below has not been satisfied,
Holders may convert the Convertible Subordinated Notes into Common Stock during
each of the five Business Day periods after any ten consecutive trading day
period in which the Trading Price per $1,000 Principal Amount of the Convertible
Subordinated Notes for each day of such ten day period was less than 98% of the
product of (i) the average of the Closing Sale Price of the Common Stock over
the same ten trading day period and (ii) the number of shares of Common Stock
issuable upon conversion of $1,000 Principal Amount of the Convertible
Subordinated Notes.
The "Trading Price" means, on any date of determination, the average of
the secondary market bid quotations for the Convertible Subordinated Notes
obtained by the Trustee per $1,000 Principal Amount of the Convertible
Subordinated Notes for $5,000,000 Principal Amount of Convertible Subordinated
Notes at approximately 3:30 p.m., New York City time, on such determination date
from three independent nationally recognized securities dealers selected by the
Company; provided that if at least three such bids cannot reasonably be obtained
by the Trustee, but two such bids are obtained, then the average of the two bids
shall be used, and if only one such bid can reasonably be obtained by the
Trustee, one bid shall be used; and provided further that if the Trustee cannot
reasonably obtain at least one bid for $5,000,000 Principal Amount of
Convertible Subordinated Notes from a nationally recognized securities dealer or
in the Company's reasonable judgment, the bid quotations are not indicative of
the secondary market value of the Convertible Subordinated Notes, then the
Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes
shall be deemed to be less than 98% of the product of (a) the number of shares
of Common Stock issuable upon conversion of $1,000 Principal Amount of
Convertible Subordinated Notes and (b) the Closing Sale Price on such date.
The Trustee (or other conversion agent appointed by the Company) shall
have no obligation to determine the Trading Price unless the Company has
requested such a determination; and the Company shall have no obligation to make
such request unless a holder provides it with reasonable evidence that the
Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes
would be less than 98% of the product of the Closing Sale Price of Common Stock
and the number of shares of Common Stock issuable upon conversion of $1,000
Principal Amount of Convertible Subordinated Notes. If such evidence is
provided, the Company shall instruct the Trustee (or other conversion agent) to
determine the Trading Price of the Convertible Subordinated Notes beginning on
the next trading day and on each successive trading day until the Trading Price
per $1,000 Principal Amount of Convertible Subordinated Notes is greater than
98% of the product of the average of the Closing Sale Price of the Common Stock
over a ten trading day period and the number of shares issuable upon conversion
of $1,000 Principal Amount of the Convertible Subordinated Notes.
4
Conversion upon Credit Rating Event. Subject to the provisions of this
paragraph 9 and notwithstanding the fact that any other condition described
herein to conversion has not been satisfied, a holder may convert the
Convertible Subordinated Notes into Common Stock during any period in which the
Convertible Subordinated Notes are rated below CCC by Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., and its successors, or
below Caa1 by Moody's Investors Services and its successors, or the notes are no
longer rated by either one of these ratings services, or if the ratings for the
notes have been withdrawn or been suspended by either one of these ratings
services.
Conversion upon Redemption. Subject to the provisions of this paragraph
9 and notwithstanding the fact that any other condition described herein to
conversion has not been satisfied, a holder may convert into Common Stock a
Convertible Subordinated Note or portion of a Convertible Subordinated Note
which has been called for redemption pursuant to paragraph 6 hereof, provided
such Convertible Subordinated Notes are surrendered for conversion prior to the
close of business on the Business Day immediately preceding the Redemption Date.
Conversion Upon Occurrence of Certain Corporate Transactions. (a)
Subject to the provisions of this paragraph 9 and notwithstanding the fact that
any other condition described herein to conversion has not been satisfied, in
the event the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of the Company's assets
pursuant to which the Common Stock would be converted into cash, securities or
other property as set forth in Section 12.14 of the Indenture, the Convertible
Subordinated Notes may be surrendered for conversion at any time from and after
the date which is 15 days prior to the date announced by the Company as the
anticipated effective time until 15 days after the actual effective date of such
transaction, and at the effective time of such transaction the right to convert
a Convertible Subordinated Note into Common Stock will be deemed to have changed
into a right to convert it into the kind and amount of cash, securities or other
assets of the Company or another person which the holder would have received if
the holder had converted its Convertible Subordinated Note into Common Stock
immediately prior to the transaction. If such transaction also constitutes a
Fundamental Change, a holder will be able to require the Company to purchase all
or a portion of such holder's Convertible Subordinated Notes pursuant to
Paragraph 7 and Section 3.10 of the Indenture.
(a) Subject to the provisions of this paragraph 9 and
notwithstanding the fact that any other condition to conversion has not been
satisfied, in the event that the Company declares a dividend or distribution
described in Section 12.06(b) of the Indenture, or a dividend or a distribution
described in Section 12.06(c) of the Indenture where, the fair market value, per
share, of such dividend or distribution per share of Common Stock, as determined
in the Indenture, exceeds 10% of the Closing Sale Price of the Common Stock on
the Business Day immediately preceding the date of declaration for such dividend
or distribution or a Fundamental Change occurs other than pursuant to a
transaction described in clause (a) hereof, the Convertible Subordinated Notes
may be surrendered for conversion beginning on the date the Company gives notice
to the holders of such right, which shall not be less than 20 days prior to the
Ex-Dividend Date for such dividend or distribution or which shall be within 20
days of the occurrence of such Fundamental Change, as the case may be, and
Convertible Subordinated Notes may be surrendered for conversion at any time
thereafter until the earlier of the close of business on the Business Day prior
to the Ex-Dividend Date or until the Company announces that such dividend
5
or distribution will not take place, with respect to a dividend or distribution,
or within 30 days of such Fundamental Change notice, in the case of such a
Fundamental Change. No adjustment to the Conversion Rate or the ability of the
holders to convert this Convertible Subordinated Note will be made if the
Company provides, as permitted in the Indenture, for holders to participate in
the transaction without conversion or in other cases specified in the Indenture.
A Convertible Subordinated Note in respect of which a holder has
delivered a Repurchase Notice or notice of a Fundamental Change exercising the
option of such holder to require the Company to purchase such Convertible
Subordinated Note may be converted only if such notice of exercise is withdrawn
in accordance with the terms of the Indenture.
The initial Conversion Rate is 112.4859 shares of Common Stock per
$1,000 Principal Amount of each Convertible Subordinated Note, subject to
adjustment for certain events described in the Indenture. The Company will
deliver cash or a check in lieu of any fractional share of Common Stock. The
ability to surrender Convertible Subordinated Notes for conversion will expire
at the close of business on September 30, 2023.
Increases in the Principal Amount and interest will not be paid on
Convertible Subordinated Notes that are converted, except accrued interest will
be payable upon conversion of Convertible Subordinated Notes made concurrently
with or after acceleration of Convertible Subordinated Notes following an Event
of Default. Holders of Convertible Subordinated Notes at the close of business
on a Regular Record Date will receive payments of interest payable on the
corresponding Interest Payment Date notwithstanding the conversion of such notes
at any time after the close of business on such Regular Record Date. Notes
surrendered for conversion by a holder during the period from the close of
business on any Regular Record Date to the opening of business on the
corresponding Interest Payment Date must be accompanied by payment of an amount
equal to the interest that the holder is to receive on the Convertible
Subordinated Notes; provided, however, that no such payment need be made if (1)
the Company has specified a Redemption Date that is after a Regular Record Date
and on or prior to the corresponding Interest Payment Date, (2) the Company has
specified a Repurchase Date following a Fundamental Change that is during such
period, or (3) any overdue interest exists at the time of conversion with
respect to such Convertible Subordinated Notes, to the extent of such overdue
interest. The holders of the Convertible Subordinated Notes will continue to be
entitled to receive Registration Default Damages in accordance with the
Registration Rights Agreement.
To exercise its conversion right, a holder must (1) complete and
manually sign the conversion notice (or complete and manually sign a facsimile
of such notice) and deliver such notice to the Conversion Agent, (2) surrender
the Convertible Subordinated 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 taxes, if
required.
A holder may convert a portion of a Convertible Subordinated Note if
the Principal Amount of such portion is $1,000 or an integral multiple of
$1,000. No payment or adjustment will be made for dividends on the Common Stock
except as provided in the Indenture. On conversion of a Convertible Subordinated
Note, increases in the Principal Amount or interest attributable to the period
from the Issue Date through the Conversion Date shall not be cancelled,
6
extinguished or forfeited, but rather shall be deemed to be paid in full to the
holder thereof through the delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Convertible
Subordinated Note being converted pursuant to the terms hereof; and the fair
market value of such shares of Common Stock (together with any such cash payment
in lieu of fractional shares) shall be treated as issued, to the extent thereof,
first in exchange for increases in the Principal Amount or interest accrued
through the Conversion Date, and the balance, if any, of such fair market value
of such Common Stock (and any such cash payment) shall be treated as issued in
exchange for the Issue Price of the Convertible Subordinated Note being
converted pursuant to the provisions hereof.
The Conversion Rate will be adjusted for dividends or distributions on
Common Stock payable in Common Stock or other Capital Stock of the Company;
subdivisions, combinations or certain reclassifications of Common Stock;
distributions to all holders of Common Stock of certain rights to purchase
Common Stock for a period expiring within 60 days of the record date for such
distribution at less than the current market price of the Common Stock at the
time of the announcement of the distribution; distributions to such holders of
assets or debt securities of the Company or certain rights to purchase
securities of the Company (including cash dividends or distributions); payments
in respect of a repurchase of (including a tender offer or exchange offer for)
the Company's Common Stock; payments in respect of a tender offer or exchange
offer made by a Person other than the Company or any of its subsidiaries which
increases the offeror's ownership of Common Stock to more than 35% of the Common
Stock outstanding; and any issuance by the Company of Common Stock or securities
convertible into, or exchangeable for, Common Stock at a price per share (or
having a conversion or exchange price per share) that is less than the then
current market price of the Common Stock (but excluding without limitation those
exceptions listed in Section 12.06(g). However, no adjustment need be made if
Convertible Subordinated Note holders may participate in the transaction or in
certain other cases. The Company from time to time may voluntarily increase the
Conversion Rate.
If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Convertible Subordinated Note into Common Stock may be changed into a right to
convert it into securities, cash or other assets of the Company or another
person.
The Conversion Rate will not be adjusted for increases in the Principal
Amount or accrued interest or Registration Default Damages, if any.
10. Conversion Arrangement on Call for Redemption.
Any Convertible Subordinated Notes called for redemption, unless
surrendered for conversion before the close of business on the Redemption Date,
may be deemed to be purchased from the holders of such Convertible Subordinated
Notes at an amount not less than the Redemption Price, by one or more investment
bankers or other purchasers who may agree with the Company to purchase such
Convertible Subordinated Notes from the holders, to convert them into Common
Stock of the Company and to make payment for such Convertible Subordinated Notes
to the Trustee in trust for such holders.
7
11. [Reserved]
12. Defaulted Interest.
Except as otherwise specified with respect to the Convertible
Subordinated Notes, any defaulted interest on any Convertible Subordinated Note
shall forthwith cease to be payable to the registered holder thereof on the
relevant Regular Record Date or accrual date, as the case may be, by virtue of
having been such holder, and such defaulted interest may be paid by the Company
as provided for in Section 2.12 of the Indenture.
13. Denominations; Transfer; Exchange.
The Convertible Subordinated Notes are in fully registered form,
without coupons, in denominations of $1,000 of Principal Amount and integral
multiples of $1,000. A holder may transfer or exchange Convertible Subordinated
Notes in accordance with the Indenture. The Registrar may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Convertible Subordinated Notes
selected for redemption (except, in the case of a Convertible Subordinated Note
to be redeemed in part, the portion of the Convertible Subordinated Note not to
be redeemed) or any Convertible Subordinated Notes in respect of which a
Repurchase Notice or Fundamental Change notice has been given and not withdrawn
(except, in the case of a Convertible Subordinated Note to be purchased in part,
the portion of the Convertible Subordinated Note not to be purchased) or any
Convertible Subordinated Notes for a period of 15 days before the mailing of a
notice of redemption of Convertible Subordinated Notes to be redeemed.
14. Persons Deemed Owners.
The registered holder of this Convertible Subordinated Note may be
treated as the owner of this Convertible Subordinated Note for all purposes.
15. Unclaimed Money or Securities.
The Trustee and the Paying Agent shall return to the Company, upon
written request any money or securities held by them for the payment of any
amount with respect to the Convertible Subordinated Notes that remains unclaimed
for two years, subject to applicable unclaimed property laws. After return to
the Company holders entitled to the money or securities must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another person.
16. Amendment; Waiver.
Subject to certain exceptions, the Indenture or the Convertible
Subordinated Notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the then outstanding
Convertible Subordinated Notes, and any existing default may be waived with the
consent of the holders of a majority in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes.
8
Without the consent of any holder, the Indenture or the Convertible
Subordinated Notes may be amended to: (a) cure any ambiguity or correct or
supplement any defective or inconsistent provision contained in the Indenture,
or make any other changes in the provisions of the Indenture which the Company
and the Trustee may deem necessary or desirable provided such amendment does not
materially and adversely affect the legal rights under the Indenture of the
holders of Convertible Subordinated Notes; (b) provide for uncertificated
Convertible Subordinated Notes in addition to or in place of certificated
Convertible Subordinated Notes; (c) evidence the succession of another person to
the Company and providing for the assumption by such successor of the covenants
and obligations of the Company thereunder and in the Convertible Subordinated
Notes as permitted by Section 5.01 of the Indenture; (d) provide for exchange
rights of holders of Convertible Subordinated Notes in the event of
consolidation, merger, share exchange or sale of all or substantially all of the
assets of the Company as required to comply with Sections 5.01 and/or 12.14 of
the Indenture; (e) increase the Conversion Rate; (f) evidence and provide for
the acceptance of the appointment under the Indenture of a successor Trustee;
(g) make any change that would provide any additional rights or benefits to the
holders of Convertible Subordinated Notes or that does not adversely affect the
legal rights under the Indenture of any such holder; or (h) comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.
Without the consent of each holder affected, an amendment or waiver may
not (with respect to any Convertible Subordinated Notes held by a non-consenting
holder): (a) reduce the principal amount of Convertible Subordinated Notes whose
holders must consent to an amendment, supplement or waiver; (b) reduce the
principal of or change the fixed maturity of any Convertible Subordinated Note;
(c) reduce the rate of or change the time for payment of interest on any
Convertible Subordinated Notes; (d) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest or Registration Default
Damages, if any, on the Convertible Subordinated Notes (except a rescission of
acceleration of the Convertible Subordinated Notes by the holders of at least a
majority in aggregate Principal Amount of the Convertible Subordinated Notes and
a waiver of the payment default that resulted from such acceleration); (e) make
any Convertible Subordinated Note payable in money other than as provided for in
the Indenture and in the Convertible Subordinated Notes; (f) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of holders of Convertible Subordinated Notes to receive payments of
principal of or interest or Registration Default Damages, if any, on the
Convertible Subordinated Notes; (g) except as permitted by the Indenture
(including Section 9.01(a)), decrease the Conversion Rate or modify the
provisions of the Indenture relating to conversion of the Convertible
Subordinated Notes in a manner adverse to the holders thereof; (h) make any
change to the ability of holder of Convertible Subordinated Notes to enforce
their rights under the Indenture or the provisions of clauses (a) through (i) of
Section 9.02 of the Indenture; (i) reduce the Redemption Price, purchase price
or Fundamental Change purchase price of the Convertible Subordinated Notes; (j)
modify the subordination provisions of the Indenture in a manner adverse to the
holders of the Convertible Subordinated Notes; or (k) make any change that
adversely affects the right to convert the Convertible Subordinated Notes.
9
17. Defaults and Remedies.
An Event of Default is: (a) default for 30 days or more in payment of
any installment of interest or Registration Default Damages, if any, on the
Convertible Subordinated Notes, whether or not such payment is prohibited by the
subordination provisions of the Indenture; (b) default in payment of the
principal of or premium, if any, on the Convertible Subordinated Notes, when due
and payable, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (c) default in the payment of the Fundamental
Change Payment in respect of the Convertible Subordinated Notes on the date
therefor, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (d) failure to provide timely notice of a
Fundamental Change; a default in the Company's obligation to redeem the
Convertible Subordinated Notes after it has exercised its redemption option,
whether or not such payment is prohibited by the subordination provisions of the
indenture; (e) a default in its obligation to satisfy its conversion obligation
upon exercise of a holder's conversion right; (f) the Company defaults (other
than a default set forth in clauses (a), (b), (c) and (d) above) in the
performance of, or breaches, any other covenant or warranty of the Company set
forth in this Indenture or the Convertible Subordinated Notes and fails to
remedy such default or breach within a period of 30 days after the receipt of
written notice from the Trustee or the holders of at least 25% in aggregate
Principal Amount of the then outstanding Convertible Subordinated Notes; (g) a
default under any credit agreement, mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any subsidiary of the Company
(or the payment of which is guaranteed by the Company or any of its
subsidiaries), whether such Indebtedness or guarantee exists on the date of this
Indenture or is created thereafter, which default (i) is caused by a Payment
Default or (ii) results in the acceleration of such Indebtedness prior to its
express maturity (without such acceleration being rescinded or annulled) and, in
each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates $5,000,000
or more; (h) a final, non-appealable judgment or final, non-appealable judgments
(other than any judgment as to which a reputable insurance company has accepted
full liability) for the payment of money are entered by a court or courts of
competent jurisdiction against the Company or any subsidiaries of the Company
and remain unstayed, unbonded or undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate amount of all such judgments exceeds $5,000,000; (i) the Company or
any subsidiary, pursuant to or within the meaning of any Bankruptcy Law
commences a voluntary case, consents to the entry of an order for relief against
it in an involuntary case, consents to the appointment of a Custodian of it or
for all or substantially all of its property, makes a general assignment for the
benefit of its creditors, makes the admission in writing that it generally is
unable to pay its debts as the same become due; (j) a court of competent
jurisdiction enters a judgment, order or decree under any Bankruptcy Law that is
for relief against the Company or any subsidiary in an involuntary case,
appoints a Custodian of the Company or any subsidiary, and the order or decree
remains unstayed and in effect for 90 days or orders the liquidation of the
Company or any subsidiary, and the order or decree remains unstayed and in
effect for 90 days. If an Event of Default occurs and is continuing, the Trustee
or the holders of at least 25% in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes may declare the unpaid principal of,
premium, if any, and accrued and unpaid interest and Registration Default
Damages, if any, on all Convertible Subordinated Notes then outstanding to be
due and payable
10
immediately, except that in the case of an Event of Default arising from certain
events of bankruptcy, insolvency, or reorganization with respect to the Company
or any of its subsidiaries, all outstanding Convertible Subordinated Notes
become due and payable without further action or notice. Holders of Convertible
Subordinated Notes may not enforce the Indenture or the Convertible Subordinated
Notes except as provided in the Indenture. The Trustee may require an indemnity
satisfactory to it before it enforces the Indenture or the Convertible
Subordinated Notes. Subject to certain limitations, holders of a majority in
principal amount of the then outstanding Convertible Subordinated Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from holders notice of any continuing default (except a default in
payment of principal, premium, if any, or interest or Registration Default
Damages, if applicable) if it determines that withholding notice is in their
interests. The Company must furnish annual compliance certificates to the
Trustee.
18. Registration Rights Agreement.
The holder of this Convertible Subordinated Note is entitled to the
benefits of a Registration Rights Agreement, dated September 29, 2003, between
the Company and the Initial Purchasers (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement the Company has agreed for the
benefit of the holders of the Convertible Subordinated Notes and the Common
Stock issued and issuable upon conversion of the Convertible Subordinated Notes,
that (i) it will, at its cost, within 90 days after the Issue Date, file a shelf
registration statement (the "Shelf Registration Statement") with the Securities
and Exchange Commission (the "Commission") with respect to resales of the
Convertible Subordinated Notes and the Common Stock issuable upon conversion
thereof, (ii) the Company will use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission under
the Securities Act within 180 days after the Issue Date and (iii) subject to its
rights to suspend use of the shelf registration statement and prospectus under
certain circumstances described below, the Company will use its reasonable best
efforts to keep such Shelf Registration Statement continuously effective under
the Securities Act until the earliest of (a) the second anniversary of the Issue
Date or, if later, the second anniversary of the last date on which any
Convertible Subordinated Notes are issued upon exercise of the Initial
Purchasers' option to purchase additional Convertible Subordinated Notes, (b)
the date on which the Convertible Subordinated Notes or the Common Stock
issuable upon conversion thereof may be sold to persons who are not "affiliates"
(as defined in Rule 144) of the Company pursuant to paragraph (k) of Rule 144
(or any successor provision) promulgated by the Commission under the Securities
Act and (c) the date as of which all the Convertible Subordinated Notes or the
Common Stock issuable upon conversion thereof have been sold pursuant to such
Shelf Registration Statement.
If the Shelf Registration Statement (i) is not filed with the
Commission on or prior to 90 days, or has not been declared effective by the
Commission within 180 days, after the Issue Date or (ii) is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by a replacement shelf registration statement filed and declared
effective) or cease to be usable (including, without limitation, as a result of
a Suspension Period as defined below) for the offer and sale of Registrable
Securities (as defined below) for a period of time (including any Suspension
Period) which shall exceed 30 days within any three-month period or 60 days in
the aggregate in any 12-month period (each such event referred to in clauses
11
(i) and (ii) being referred to herein as a "Registration Default"), the Company
will pay liquidated damages ("Registration Default Damages") to each holder of
Registrable Securities which has complied with its obligations under the
Registration Rights Agreement. The amount of Registration Default Damages
payable during any period in which a Registration Default shall have occurred
and be continuing is that amount which is equal to one-quarter of one percent
(25 basis points) per annum per $1,000 principal amount of Securities or $2.50
per annum per 112.4859 shares of Common Stock (subject to adjustment from time
to time in the event of a stock split, stock recombination, stock dividend and
the like) constituting Registrable Securities for the first 90 days during which
a Registration Default has occurred and is continuing and one-half of one
percent (50 basis points) per annum per $1,000 principal amount of Securities
and $5.00 per annum per 112.4859 shares of Common Stock (subject to adjustment
as set forth above) constituting Registrable Securities for any additional days
during which such Registration Default has occurred and is continuing. The
Company will pay all accrued Registration Default Damages by wire transfer of
immediately available funds or by federal funds check on each Damages Payment
Date (as defined in the Registration Rights Agreement), and Registration Default
Damages will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Following the cure of a Registration Default, Registration
Default Damages will cease to accrue with respect to such Registration Default.
"Registrable Securities" means each Convertible Subordinated Note and the Common
Stock issuable or issued upon conversion thereof until the date on which such
Convertible Subordinated Note or Common Stock (i) has been transferred pursuant
to the shelf registration statement or another registration statement covering
such note or share of common stock which has been filed with the SEC pursuant to
the Securities Act, in either case after such registration statement has become,
and while such registration statement is, effective under the Securities Act,
(ii) has been transferred pursuant to Rule 144 under the Securities Act (or any
similar provision then in force), or (iii) may be sold or transferred by
non-affiliates of the Company's pursuant to paragraph (k) of Rule 144 under the
Securities Act (or any successor provision promulgated by the SEC)).
Pursuant to the Registration Rights Agreement, the Company may suspend
the use of the prospectus which is a part of the Shelf Registration Statement
for a period not to exceed 30 days in any three-month period or an aggregate of
60 days in any twelve-month period under certain circumstances (each, a
"Suspension Period"); provided that the existence of a Suspension Period will
not prevent the occurrence of a Registration Default or otherwise limit the
obligation of the Company to pay Registration Default Damages.
The above description of certain provisions of the Registration Rights
Agreement is qualified by reference to, and is subject in its entirety to, the
more complete description thereof contained in the Registration Rights
Agreement.
19. 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 Convertible Subordinated 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.
12
20. No Recourse Against Others.
A director, officer, employee, agent, representative, stockholder or
equity holder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Subordinated 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 Convertible Subordinated Note,
each Convertible Subordinated Note holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Convertible Subordinated Notes.
21. Authentication.
This Convertible Subordinated Note shall not be valid until an
authorized signatory of the Trustee manually signs the Trustee's Certificate of
Authentication on the other side of this Convertible Subordinated Note.
22. Abbreviations.
Customary abbreviations may be used in the name of a Convertible
Subordinated Note holder or an assignee, such as TEN COM (=tenants in common),
TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
23. GOVERNING LAW.
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
CONVERTIBLE SUBORDINATED NOTE.
13
The Company will furnish to any Convertible Subordinated Note holder
upon written request and without charge a copy of the Indenture that has in it
the text of this Convertible Subordinated Note in larger type. Requests may be
made to:
CKE Restaurants, Inc.
6307 Carpinteria Avenue, Suite A,
Carpinteria, CA 93013
Attention: Chief Financial Officer
14
ASSIGNMENT FORM CONVERSION NOTICE
To assign this Convertible Subordinated To convert this Convertible
Note, fill in the form below: Subordinated Note into Common Stock of
the Company, check the box: [ ]
I or we assign and transfer this
Convertible Subordinated Note to:
_______________________________________ To convert only part of this
Convertible Subordinated Note, state
_______________________________________ the Original Principal Amount to be
converted (which must be $1,000 or an
(Insert assignee's soc. sec. or tax ID integral multiple of $1,000):
no.)
_______________________________________ $______________________________________
_______________________________________ If you want the stock certificate made
out in another person's name, fill in
_______________________________________ the form below:
(Print or type assignee's name, address _______________________________________
and zip code) _______________________________________
(Insert other person's soc. sec. or tax
ID no.)
and irrevocably appoint
_______________________________________
_____________________ agent to transfer
this Convertible Subordinated Note on _______________________________________
the books of the Company. The agent may
substitute another to act for him.
_______________________________________
_______________________________________
(Print or type other person's name,
address and zip code)
_______________________________________
_______________________________________
Date:______________________________ Your Signature: ____________________________
________________________________________________________________________________
(Sign exactly as your name appears on the other side of this Convertible
Subordinated Note)
15
OPTION OF HOLDER TO ELECT REPURCHASE
If you wish to have this Convertible Subordinated Note repurchased by
the Company pursuant to Section 3.09 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Convertible Subordinated Note
purchased by the Company pursuant to Section 3.09 of the Indenture, state the
amount (in multiples of $1,000): $_____.
Date: _____________ Your Signature:_____________________________________________
(Sign exactly as your name appears on the other side of
this Convertible Subordinated Note)
Medallion Signature Guarantee:__________________________________________________
16