Exhibit 1.11
NO. CUSIP NO. 524908 56 3
LEHMAN BROTHERS HOLDINGS INC.
6 1/4% Exchangeable Note Due October 15, 2007
(Premium Income Exchangeable SecuritiesSM)
(Subject to exchange into shares of common stock of General Mills, Inc.)
See Reverse for Certain Definitions
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR
IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY
OR BY A NOMINEE OF THE DEPOSITORY TO SUCH DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS SECURITY IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO LEHMAN BROTHERS HOLDINGS
INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), 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.
Lehman Brothers Holdings Inc., a corporation duly organized and
existing under the laws of Delaware (hereinafter called the "Company", which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, except as otherwise provided herein, the principal sum of
__________ DOLLARS ($__________) on the Maturity Date (subject to the second
succeeding paragraph and the reverse of this Security), and to pay coupons
thereon (subject to the reverse of this Security) at a rate of 6.25% per
annum, from the Issue Date or the most recent coupon payment date to which
coupon has been paid or duly provided for, payable quarterly in arrears on
January 15, April 15, July 15 and October 15 of each year (commencing January
15, 2005 and ending on the Maturity Date), to the persons in whose names the
Securities are registered at the close of business on the 1st day of the
calendar month of such coupon payment date (the "Regular Record Date");
provided that, if the Maturity Date is extended beyond October 15, 2007, the
Company shall pay the coupons otherwise due on October 15, 2007 on the
Maturity Date as so extended; provided further, that the coupon payable on the
Maturity Date shall be payable to the person to whom the principal is
payable. Each payment of coupons due on a coupon payment date or on the
Maturity Date (subject to the reverse of this Security) shall include coupons
accrued from the last date to which coupons have been paid or made available
for payment, or from the Issue Date, if none has been paid or made available
for payment, to the relevant payment date. The coupons shall be computed on
the basis of a 360-day year of twelve 30-day months.
This Security is one of a duly authorized issue of securities of the
Company (hereinafter called the "Securities" or the "Notes" or "PIES") issued
and to be issued in one or more series under an Indenture, dated as of
September 1, 1987, between the Company and Citibank, N.A., as Trustee (herein
called the "Trustee" which term includes any successor trustee under the
Indenture), as supplemented and amended by Supplemental Indentures dated as of
November 25, 1987, as of November 27, 1990, as of September 13, 1991, as of
October 4, 1993, as of October 1, 1995 and as of June 26, 1997 (as so
supplemented and as may be further supplemented from time to time, the
"Indenture"), to which Indenture and all other indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitation
of rights, duties and immunities thereunder of the Company, the Trustee and
the holders of the Securities and of the terms upon which the Securities are,
and are to be, authenticated and delivered. This Security is one of a series
of the Securities designated on the face hereof, limited in aggregate
principal amount to $750,000,000.
On the Maturity Date, this Security shall be mandatorily exchanged
for shares of Common Stock (as defined herein), other securities, property
and/or cash as described in the reverse of this Security.
If the Maturity Date is extended beyond October 15, 2007 as the
result of the occurrence of a Market Disruption Event, the coupons on this
Security will cease to accrue on October 15, 2007. If a coupon payment date or
the Maturity Date falls on a day that is not a Business Day, the payment to be
made on that date will be made on the next succeeding Business Day with the
same force and effect as if made on that coupon payment date, and no
additional coupons will accrue as a result of such delayed payment.
Any such coupon not so punctually paid or duly provided for shall
forthwith cease to be payable to the holder on such Regular Record Date, and
may either be paid to the person in whose name this Security is registered at
the close of business on a special record date as described in Section 307 of
the Indenture for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be given to holders of Securities of this series
not less than 10 days prior to such special record date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Payment under this Security will be made at the office or agency of
the Company maintained for that purpose in the Borough of Manhattan, The City
of New York, New York, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment is
legal tender for payment of coupons may be made by check mailed to the address
of the Person entitled thereto as such address shall appear in the Security
Register.
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Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the
Indenture, or be valid or obligatory for any purpose.
As provided in the Indenture and subject to certain limitations
therein set forth, this Security is transferable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the coupon on this Security are
payable, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar duly executed
by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
The Securities will not be redeemable prior to the Maturity Date nor
be subject to any sinking fund.
The Securities of this series are issuable in registered form in
denominations of $25. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for
a like aggregate principal amount of Securities of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
"Premium Income Exchangeable Securities" and "PIES" are service
marks owned by Lehman Brothers, Inc.
THIS SECURITY SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused this
instrument to be duly executed under its corporate seal.
Dated: LEHMAN BROTHERS HOLDINGS INC.
By: ________________________________
Name:
Title:
Attest:
Name
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CITIBANK, N.A., as Trustee
By: ________________________________
Authorized Officer
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[Reverse of Security]
LEHMAN BROTHERS HOLDINGS INC.
6 1/4% Exchangeable Note Due October 15, 2007
(Premium Income Exchangeable SecuritiesSM)
(Subject to exchange into shares of common stock of General Mills, Inc.)
ARTICLE I.
CERTAIN PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions.
For all purposes of this Security, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article;
(2) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to the Indenture and this Security as a whole and
not to any particular Article, Section or other subdivision;
(3) Section references are to the Sections of this Security; and
(4) capitalized terms used herein but not defined herein are used
herein as they are defined in the Indenture.
"Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Adjustment Event" has the meaning provided in Section 3.02.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
first Person or is a partner in, or a director or officer of, such first
Person. For purposes of this definition, "control" (including the terms
"controlled by" or "under common control with") means, as to any Person, the
possession, direct or indirect, of the power to vote ten percent or more of
the corporate or beneficial interests of such Person (or of the securities
having ordinary voting power for the election of directors of such Person), or
the power to direct or cause the direction of the management and policies of
such Person, whether through ownership of voting securities or by contract or
otherwise.
"Bankruptcy Law" means Title 11 of the United States Code or any
similar federal, state or foreign law for the relief of debtors.
"Business Day" means any day that is not a Saturday, a Sunday or a
day on which the NYSE or banking institutions or trust companies in The City
of New York are authorized or obligated by law or executive order to close.
"Calculation Date" means each of the Trading Days for which a Daily
Amount is determined.
"Closing Price" means, for any security on any date of
determination, (i) the closing sale price for the regular trading session
(without considering after hours or other trading
outside regular trading session hours) of the security (regular way) on the
NYSE on such date (or, if no closing price is reported, the last reported sale
price during the regular trading session), (ii) if such security is not listed
for trading on the NYSE on any such date, as reported in the composite
transactions for the principal United States securities exchange on which such
security is so listed, (iii) if such security is not so listed on a United
States national or regional securities exchange, as reported by The Nasdaq
Stock Market, (iv) if such security is not so reported, the last quoted bid
price for such security in the over-the-counter market as reported by the
National Quotation Bureau or similar organization, (v) if such security is not
so quoted, the average of the mid-point of the last bid and ask prices for
such security from at least three nationally recognized investment banking
firms, which may include one or more Affiliates of the Company, selected by
the Company for such purpose, or (vi) if the bid and ask prices are not
available, the market value of the security as determined in good faith by a
nationally recognized investment banking firm, which may be an Affiliate of
the Company, selected by the Company for such purpose. The Closing Price as
determined pursuant to the foregoing shall be subject to adjustment as
provided in Section 3.01(i). The calculation of the Closing Price for purposes
of the definition of Daily Amount shall be subject to modification as provided
in the provisos to Section 3.01(d) and (e).
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Seller.
"Constituent Person" has the meaning provided in Section 3.02.
"Contract Shares" means the shares of Common Stock (and/or, if a
Significant Spin-off, a Significant Cash Distribution or an Adjustment Event
has occurred, securities, cash and/or other property, as applicable) which are
deliverable, in the aggregate, upon the exchange of all outstanding Notes
pursuant to Section 2.02.
"Current Market Price" per share of Common Stock on any date of
determination means the average of the daily Closing Prices on each of the 20
consecutive Trading Days ending on the earlier of such date of determination
and the day before the "ex date" with respect to the issuance or distribution
requiring the computation. For purposes of this paragraph, the term "ex date,"
when used with respect to any issuance or distribution, shall mean the first
date on which the Common Stock trades regular way on such exchange or in such
market without the right to receive such issuance or distribution.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"Daily Amount" means for each of the 20 Trading Days beginning on
September 10, 2007:
(i) if the Closing Price on such Trading Day is greater than the
Threshold Appreciation Price, the product of (x) 1/20th of the Share
Component multiplied by (y) 0.8333;
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(ii) if the Closing Price on such Trading Day is less than or equal
to the Threshold Appreciation Price but is greater than the Initial
Price, the product of (x) 1/20th of the Share Component multiplied by (y)
a fraction equal to the Initial Price divided by the Closing Price; and
(iii) if the Closing Price on such Trading Day is less than or equal
to $45.20, 1/20th of the Share Component;
provided that (x) if 20 Trading Days for the Common Stock have not
occurred during the period beginning on September 10, 2007 and ending on
October 24, 2007, all remaining Trading Days will be deemed to occur on
October 23, 2007 and the Closing Price for each of the remaining Trading
Days will be the Closing Price on October 23, 2007 or, if there is a
Market Disruption Event on such day, the market value per share of Common
Stock or any other applicable security on such day as determined by the
Company in its reasonable discretion and (y) if the PIES are declared or
automatically become immediately due and payable following an Event of
Default, the Daily Amount will be determined in the manner set forth
above for the date of such declaration or, if there is a Market
Disruption Event on such day, the Closing Price for determining such
Daily Amount will be the market value per share of Common Stock as
determined by the Company in its reasonable discretion.
"Exchange" means the NYSE or, if the relevant security is not listed
for trading on the NYSE on the relevant day for a reason other than a Market
Disruption Event, the principal United States securities exchange on which the
relevant security is so listed or, if the relevant security is not so listed
on a United States national or regional securities exchange for a reason other
than a Market Disruption Event, The Nasdaq Stock Market or, if prices for the
relevant security are not so reported by The Nasdaq Stock Market for a reason
other than a Market Disruption Event, the over-the-counter market.
"Expiration Time" has the meaning provided in Section 3.01(f).
"Fair Market Value" means the amount that a willing buyer would pay
a willing seller in an arm's-length transaction, as determined in good faith
by a nationally recognized investment banking firm (which may be an Affiliate
of the Company retained for such purpose), whose determination shall be
conclusive; provided, however, that the Fair Market Value of any capital stock
or other equity securities distributed in a spin-off transaction (including a
Significant Spin-Off) means (i) in the event that an underwritten initial
public offering of such securities occurs simultaneously with the spin-off
transaction, the initial public offering price of such securities and (ii)
otherwise, the average of Closing Prices of such securities for the ten
Trading Days immediately succeeding the spin-off transaction.
"Initial Price" means $45.20.
"Insolvency Event" means:
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(ii) the Seller pursuant to or within the meaning of any Bankruptcy
Law (A) commences a voluntary case or proceeding, (B) consents to the
entry of a judgment, decree or order for relief against it in an
involuntary case or proceeding, (C) consents to the appointment of a
Custodian of it or for any substantial part of its property, (D) makes a
general assignment for the benefit of its creditors, (E) consents to or
acquiesces in the institution of a bankruptcy or an insolvency proceeding
against it or (F) takes any corporate action to authorize or effect any
of the foregoing; or
(iii) any Person commences a case or proceeding requesting any order
or decree under any Bankruptcy Law (A) for relief against the Seller in
an involuntary case, (B) to appoint a Custodian of the Seller for all or
substantially all of the Seller's property or (C) to order the winding up
or liquidation of the Seller and either (x) a court of competent
jurisdiction enters any such order or decree or (y) such case or
proceeding has not been dismissed prior to September 9, 2007;
provided that, if an Adjustment Event shall have occurred in which there
is an Issuing Person, the references to "Seller" in this definition shall
mean such Issuing Person.
"Issue Date" means October 8, 2004.
"Issuing Person" means any Person that issues securities or pays
other consideration deliverable in any consolidation, merger, exchange or
acquisition of assets which constitutes an Adjustment Event.
"Market Disruption Event" means any of the following events that the
Company in its reasonable discretion determines has a material effect on the
trading price of the Common Stock on such day:
(i) any suspension of or limitation imposed on trading by the
Exchange during the one-hour period prior to the close of trading for the
regular trading session on the Exchange whether by reason of movements in
price exceeding limits permitted by the Exchange or otherwise (x)
relating to the Common Stock on the Exchange or (y) in futures or options
contracts relating to the Common Stock on the Exchange;
(ii) any event (other than an event described in clause (iii)) that
disrupts or impairs (as determined by the Company in its reasonable
discretion) the ability of market participants during the one-hour period
prior to the close of trading for the regular trading session on the
Exchange in general (x) to effect transactions in, or obtain market
values for, the Common Stock on the Exchange or (y) to effect
transactions in, or obtain market values for, futures or options
contracts relating to the Common Stock on the Exchange; or
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(iii) the failure of the Exchange to be open prior to its respective
scheduled closing for the regular trading session on such day (without
regard to after hours or any other trading outside of the regular trading
session hours) unless such earlier closing time is announced by the
Exchange at least one hour prior to the earlier of (x) the actual closing
time for the regular trading session on the Exchange on such day and (y)
the submission deadline for orders to be entered into the Exchange for
execution at the actual closing time on such day.
"NYSE" means the New York Stock Exchange Inc.
"Maturity Date" means (i) other than if the PIES are declared or
automatically become immediately due and payable following an Event of
Default, October 15, 2007 or, in the event a Market Disruption Event occurs,
the seventh Trading Day following the last day of the 20 Trading Day period
for determining the Daily Amounts, but in no event later than the thirteenth
Trading Day following the last day of such 20 Trading Day period, and (ii) if
the PIES are declared or automatically become immediately due and payable
following an Event of Default, the date on which the PIES are so declared to
be or automatically become immediately due and payable.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
limited liability company, joint venture or other entity or a government or
any political subdivision or agency thereof.
"Purchased Shares" has the meaning provided in Section 3.01(f).
"Rights" means the share purchase rights or other rights issued
under the Rights Agreement in respect of the Common Stock.
"Rights Agreement" means the Rights Agreement dated as of
December 11, 1995 between the Seller and Wells Fargo Bank Minnesota, N.A., as
amended and supplemented from time to time, and any other shareholder rights
plans or agreements with respect to the Common Stock that may be in effect
from time to time.
"Seller" means General Mills, Inc.
"Share Component" means, at any time, 0.5531 share of Common Stock,
as adjusted from time to time in accordance with Article III.
"Significant Cash Distribution" has the meaning provided in Section
3.01(e).
"Significant Spin-Off" has the meaning provided in Section 3.01(d).
"Subsidiary" means as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening of
a contingency) to elect a majority of the board of directors or other managers
of such corporation, partnership or other entity are at the time owned, or the
5
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person.
"Threshold Appreciation Price" means $54.24.
"Total Exchange Shares" means, subject to Section 3.02, (i) an
amount equal to the sum of the Daily Amounts for each of the 20 Trading Days
beginning on September 10, 2007 or (ii) if the PIES are declared or
automatically become immediately due and payable following an Event of
Default, an amount equal to 20 times the Daily Amount on the date on which the
PIES are so declared to be or automatically become immediately due and
payable.
"Trading Day" means a day on which the Exchange is open for trading
and, subject to the proviso to the definition of Daily Amount, there has not
occurred or does not exist a Market Disruption Event.
"Trigger Event" has the meaning provided in Section 3.01(j).
ARTICLE II.
THE NOTES
Section 2.01 Deferral and Cancellation of Coupons.
In the event that Seller (or, if an Adjustment Event has occurred in
which there is an Issuing Person, such Issuing Person) does not set a record
date for payment of a dividend on the Common Stock (or, if any Adjustment
Event has occurred in which there is an Issuing Person, the common stock of
such Issuing Person) in respect of any quarterly period at least five Business
Days prior to a Regular Record Date, the Company shall have the option to
defer the coupon payment immediately following such Regular Record Date until
the Maturity Date. Upon the Maturity Date, the Company may elect to cancel
such deferred coupons. Any coupons which have been so deferred shall not
accrue further coupons thereon. In the event of any such deferral or
cancellation, the Company shall give notice thereof to the Trustee and each
Holder of the Notes at least 3 Business Days prior to the relevant coupon
payment date.
Section 2.02 Mandatory Exchange.
On the Maturity Date, each $25 principal amount of the Notes shall
be mandatorily exchanged for a number of shares of Common Stock (and/or, if a
Significant Spin-off, a Significant Cash Distribution or an Adjustment Event
has occurred, securities, cash and/or other property, as applicable) equal to
the Total Exchange Shares; provided, however, that, pursuant to Section 2.04,
no fractional shares of Common Stock shall be issued. The Holders of the Notes
shall be responsible for the payment of any and all brokerage costs upon the
subsequent sale of such shares.
In lieu of delivering some or all of the Total Exchange Shares, the
Company may, at the Company's election, pay to the Holder surrendering such
Notes an amount in cash equal to the number of Total Exchange Shares subject
to such election multiplied by the average Closing Price of such securities
over the 20 Trading Day period referred to in the definition of Daily Amount.
To exercise this election, the Company shall notify the Trustee and each Holder
of the Notes of its election on or before the beginning of such 20 Trading Day
period, and if the Company is electing to pay cash
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instead of delivering a portion of the Total Exchange Shares the Company is
otherwise required to deliver, the Company shall specify the portion of the
Total Exchange Shares in respect of which the Company will deliver cash.
Section 2.03 Procedure for Exchange.
In order to receive the shares of Common Stock (and/or, if a
Significant Spin-off, a Significant Cash Distribution or an Adjustment Event
has occurred, securities, cash and/or other property, as applicable) pursuant
to Section 2.02, the Holder of any Note must surrender such Note to the
Company (or its agent appointed for such purpose), at its office maintained
for such purpose in New York, New York. Delivery of the certificates and of
any check for any cash may be delayed for a reasonable period of time at the
request of the Company in order to effectuate the calculation of the
adjustments under Article III, to obtain any certificate representing
securities to be delivered, or to complete any reapportionment of securities
to be delivered which is required by the Indenture or this Note or to comply
with any applicable law.
Section 2.04 No Fractional Shares.
If more than one Note shall be surrendered for exchange pursuant to
Section 2.03 at one time by the same holder, the number of full shares of
Common Stock or other securities which shall be delivered upon such exchange,
in whole or in part, as the case may be, shall be computed on the basis of the
aggregate number of Notes surrendered. No fractional shares or scrip
representing fractional shares of Common Stock or other securities shall be
issued or delivered pursuant to Section 2.02. In lieu of any fractional shares
of Common Stock or other securities which, but for the immediately preceding
sentence, would otherwise be deliverable pursuant to Section 2.02, the Company
shall pay cash for such fractional share of security equal to the applicable
fraction of the Closing Price of such share or security on the Trading Day
immediately preceding the Maturity Date.
Section 2.05 Taxes.
The Company will pay any and all documentary, stamp, transfer or
similar taxes that may be payable in respect of the transfer and delivery of
Common Stock (and/or, if a Significant Spin-off, a Significant Cash
Distribution or an Adjustment Event has occurred, securities, cash and/or
other property, as applicable) pursuant hereto; provided, however, that the
Company shall not be required to pay any such tax which may be payable in
respect of any transfer involved in the delivery of Common Stock (and/or, if a
Significant Spin-off, a Significant Cash Distribution or an Adjustment Event
has occurred, securities, cash and/or other property, as applicable) in a name
other than that in which the Notes so exchanged were registered, and no such
transfer or delivery shall be made unless and until the person requesting such
transfer has paid to the Company the amount of any such tax, or has
established, to the satisfaction of the Company, that such tax has been paid.
The Company shall not be obligated to pay any additional amount on
the Notes in respect of taxes, except as otherwise provided in this Section
2.05 and in Section 4.01 hereof.
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Section 2.06 Delivery of Securities upon Maturity.
All shares of Common Stock deliverable to Holders upon exchange of
the Notes shall be delivered to such Holders, whenever practicable, in such
manner (such as by book-entry transfer) so as to assure same-day transfer of
such shares to Holders and otherwise in the manner customary at such time for
delivery of such shares and shares of the same type.
Section 2.07 Insolvency.
In the event an Insolvency Event occurs prior to or on the Maturity
Date, all of the Company's obligations under the Notes shall immediately and
automatically terminate, without the necessity of any notice, payment or
action by the Company or the Trustee. Following such termination, the Holders
of the Note shall not receive any further coupon payments and no principal
payments, shares of Common Stock, cash in lieu of such shares or any other
property shall be delivered to the Holders of the Notes.
Section 2.08 Calculations.
The Company shall be responsible for the calculation in good faith
of any amounts pursuant hereto (other than the amount of coupons, for which
the Trustee shall be the calculation agent), including, but not limited to,
the determination of the Closing Prices of the Common Stock, the calculation
of the Daily Amounts and the calculation of any adjustments required to be
made pursuant to Article III. All calculations made by the Company, absent
manifest error, shall be final and binding upon the Holders of the Notes. The
Company shall provide a schedule of such calculations to the Trustee, and the
Trustee shall be entitled to rely conclusively on the accuracy of such
calculations without independent verification.
Section 2.09 Modification.
In addition to the matters set forth in Section 9.02 of the
Indenture, no supplemental indenture to the Indenture shall, without the
consent of each Holder of each Outstanding Note affected thereby, change the
manner in which the Total Exchange Shares is determined.
ARTICLE III.
ADJUSTMENT OF DAILY AMOUNT AND CLOSING PRICE
Section 3.01 Adjustments for Dividends, Distributions, Stock Splits,
Etc.
(a) Stock Dividends. If the Seller shall, after the Issue Date, pay
or make a dividend or other distribution on Common Stock in Common Stock, the
Share Component in effect at the close of business on the date fixed for the
determination of holders of Common Stock entitled to receive such dividend or
distribution shall be increased by multiplying such Share Component by a
fraction of which:
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(i) the numerator shall be the sum of the number of shares
of Common Stock outstanding at the close of business on the date
fixed for such determination and the total number of shares
constituting such dividend or other distribution; and
(ii) the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination,
such increase to become effective immediately at the opening of business on
the day following the date fixed for such determination. For the purposes of
this Section 3.01(a), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Seller but
shall include any shares issuable in respect of any scrip certificates issued
in lieu of fractions of shares of Common Stock.
(b) Rights, Warrants or Options. If the Seller shall, after the
Issue Date, issue rights, warrants or options, other than pursuant to any
dividend reinvestment plans, to all holders of Common Stock entitling such
holders, for a period expiring within 45 days after the record date for the
determination of holders of Common Stock entitled to receive such rights,
warrants or options, to subscribe for or purchase shares of Common Stock at an
offering price per share less than the Current Market Price of the Common
Stock on the date of announcement of such issuance, the Share Component in
effect at the close of business on the date of such announcement shall be
increased by multiplying such Share Component by the following fraction of
which:
(i) the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date of such announcement
plus the total number of shares of Common Stock so offered for
subscription or purchase; and
(ii) the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date of such announcement
plus the total number of shares of Common Stock that 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 increase to become effective immediately after the opening of business on
the Business Day following the date of such announcement. To the extent that
shares of Common Stock are not delivered pursuant to such rights, warrants or
options, the Share Component shall be readjusted to be the Share Component
that would then be in effect had the adjustments made upon the issuance of
such rights, warrants and options been made on the basis of delivery of only
the number of shares of Common Stock actually delivered. For the purposes of
this Section 3.01(b), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Seller but
shall include any shares issuable in respect of any scrip certificates issued
in lieu of fractions of shares of Common Stock.
(c) Stock Subdivisions, Splits or Combinations. If outstanding
shares of Common Stock shall be subdivided or split, after the Issue Date,
into a greater number of shares of Common Stock, the Share Component in effect
at the close of business on the day preceding the day upon which such
subdivision or split becomes effective shall be proportionately
9
increased, and conversely, in case outstanding shares of Common Stock shall be
combined, after the Issue Date, into a smaller number of shares of Common
Stock, the Share Component in effect at the close of business on the day
preceding the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately at the opening of business on the day following
the day upon which such subdivision, split or combination becomes effective.
(d) Distribution of Indebtedness or Assets. If the Seller shall,
after the Issue Date, by dividend or otherwise, distribute to all holders of
Common Stock evidences of its indebtedness or assets (including shares of
capital stock, securities, cash and property, but excluding any rights,
warrants or options referred to in Section 3.01(b), any dividend or
distribution paid exclusively in cash and any dividend or distribution
referred to in Section 3.01(a) or in connection with the liquidation,
dissolution or winding up of the Seller), the Share Component in effect at the
close of business on the date fixed for the determination of holders of Common
Stock entitled to receive such distribution shall be adjusted by multiplying
such Share Component by a fraction of which:
(i) the numerator shall be the Current Market Price of the Common
Stock on the date fixed for such determination; and
(ii) the denominator shall be such Current Market Price of the
Common Stock less the then Fair Market Value of the portion of the assets
or evidences of indebtedness so distributed applicable to one share of
Common Stock,
such adjustment to become effective at the opening of business on the day
following the date fixed for such determination of holders of Common Stock
entitled to receive such distribution; provided, however, that in the event
the Fair Market Value of the portion of any capital stock or other equity
securities so distributed applicable to one share of Common Stock is equal to
or greater than 40% of the Current Market Price of the Common Stock on such
determination date (such distribution, a "Significant Spin-Off"), in lieu of
the foregoing adjustment, (x) for the purpose of calculating the number of
Contract Shares receivable by the Holders of the Notes with respect to each
Calculation Date, the references to "Closing Price" in the definition of Daily
Amount shall mean the Closing Price plus the Fair Market Value of such capital
stock or other equity securities so distributed per share of Common Stock and
(y) in addition to the Company delivering the shares of Common Stock to be
delivered hereunder, the Company shall make adequate provisions to provide for
the delivery on the Maturity Date the number of shares of such capital stock
or other equity securities the Holders of the Notes would have received had
the Holders of the Notes held on the determination date for the Significant
Spin-Off the number of shares of Common Stock required to be delivered
hereunder as determined in accordance with clause (x) above. In any case in
which this Section 3.01(d) is applicable, Section 3.01(b) shall not be
applicable. In the event that such dividend or distribution is not so paid or
made, each Share Component shall again be adjusted to be the Share Component
that would then be in effect if such dividend or distribution had not been
declared (and no such adequate provision described in the proviso above shall
be made).
(e) Cash Distributions. In case the Seller shall, after the Issue
Date, distribute cash to all holders of Common Stock, excluding (A) any
dividend or distribution in connection
10
with the liquidation, dissolution or winding up of the Seller or (B) any
quarterly cash dividend on the Common Stock to the extent that the cash
dividend per share of Common Stock does not exceed $0.31 per share, as
adjusted to reflect subdivisions or combinations of the Common Stock after the
Issue Date, then the Share Component in effect at the close of business on
such record date shall be adjusted by multiplying such Share Component by a
fraction of which:
(i) the numerator shall be the Current Market Price of the Common
Stock on such record date; and
(ii) the denominator shall be such Current Market Price of the
Common Stock less the amount of cash so distributed (in excess of the
amount excluded as provided above) applicable to one share of Common
Stock,
such adjustment to become effective at the opening of business on the day
following such record date; provided, however, that in the event the portion
of cash so distributed applicable to one share of Common Stock is greater than
25% (but less than 75%) of the Current Market Price of the Common Stock on
such record date, in lieu of the foregoing adjustment, (x) for the purpose of
calculating the number of Contract Shares receivable by the Holders of the
Notes with respect to each Calculation Date, the references to "Closing Price"
in the definition of Daily Amount shall mean the Closing Price plus the amount
of cash so distributed per share of Common Stock and (y) in addition to the
Company delivering the shares of Common Stock to be delivered hereunder, the
Company shall make adequate provisions to provide for the delivery on the
Maturity Date the amount of cash the Holders of the Notes would have received
had the Holders of the Notes held on the record date for such distribution the
number of shares of Common Stock required to be delivered hereunder as
determined in accordance with clause (x) above; provided, further, that in the
event the portion of cash so distributed applicable to one share of Common
Stock is equal to or greater than 75% of the Current Market Price of the
Common Stock on such record date, in lieu of the foregoing adjustment, such
distribution will be treated as an Adjustment Event under Section 3.02 (a cash
distribution referred to in either of the two preceding provisos, a
"Significant Cash Distribution"). If such dividend or distribution is not so
paid or made, each Share Component shall again be adjusted to be the Share
Component that would then be in effect if such dividend or distribution had
not been declared (and no such adequate provision or adjustment under Section
3.02 shall be made).
(f) Tender or Exchange Offer. If, after the Issue Date, the Seller
or any Subsidiary of the Seller shall make a tender or exchange offer (other
than any odd-lot tender offer) for all or any portion of the Common Stock and
upon expiration of such tender or exchange offer (as amended upon the
expiration thereof) the Seller or its Subsidiary shall be required to pay to
holders of Common Stock based on the acceptance (up to any maximum specified
in the terms of the tender or exchange offer) of Purchased Shares any
consideration, then if the cash and Fair Market Value of the aggregate
consideration per share of Common Stock to be paid in such tender or exchange
offer exceeds the Current Market Price of the Common Stock as of the last time
(the "Expiration Time") tenders could have been made pursuant to such tender
or exchange offer (as it may be amended), then, the Share Component in effect
at the close of business on the day of the Expiration Time shall be adjusted
by multiplying such Share Component by a fraction of which:
11
(i) the numerator shall be equal to the product of (A) the Current
Market Price of the Common Stock as of the Expiration Time and (B) the
number of shares of Common Stock outstanding (including any tendered
shares) at the close of business on the date of the Expiration Time less
the number of all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares"); and
(ii) the denominator shall be equal to (A) the product of (x) the
Current Market Price of the Common Stock as of the Expiration Time and
(y) the number of shares of Common Stock outstanding (including any
tendered shares) at the close of business on the date of the Expiration
Time less (B) the amount of cash plus the Fair Market Value of the
aggregate consideration payable to holders of Common Stock in such tender
or exchange offer (assuming the acceptance, up to any maximum specified
in the terms of the tender or exchange offer, of Purchased Shares),
such adjustment to become effective at the opening of business on the date
following the date of the Expiration Time.
(g) Reclassification of Common Stock. If the Seller, after the Issue
Date, reclassifies the Common Stock into securities, including securities
other than Common Stock (other than any reclassification upon an Adjustment
Event to which Section 3.02 applies), such reclassification shall be deemed to
involve:
(i) to the extent such securities are securities other than Common
Stock, a distribution of such securities to all holders of Common Stock
under Section 3.01(d) (and the effective date of such reclassification
shall be deemed to be "the date fixed for the determination of holders of
Common Stock entitled to receive such distribution" and the "date fixed
for such determination" within the meaning of Section 3.01(d)); and
(ii) to the extent such securities are Common Stock, a subdivision,
split or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such reclassification into
the number of shares of Common Stock outstanding immediately thereafter
under Section 3.01(c) (and the effective date of such reclassification
shall be deemed to be "the day upon which such subdivision or split
becomes effective" or "the day upon which such combination becomes
effective", as the case may be, and "the day upon which such subdivision,
split or combination becomes effective" within the meaning of Section
3.01(c)).
(h) Rounding. All adjustments to the Share Component shall be
calculated to the nearest 0.0001 of a share of Common Stock (or if there is
not a nearest 0.0001 of a share, to the next lower 0.0001 of a share). No
adjustment in the Share Component shall be required unless such adjustment
would require an increase or decrease of at least one percent thereof;
provided, however, that any adjustments that by reason of this Section 3.01(h)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment.
(i) Corresponding Adjustments to Closing Price. If any adjustment is
made to the Share Component pursuant to paragraphs (a)-(g) of this Section
3.01 (other than paragraphs
12
(d) and (e) of this Section 3.01 as they relate to any Significant Spin-Off
and Significant Cash Distribution, respectively, except as expressly provided
therein), an adjustment will also be made to the Closing Price as such term is
used throughout the definition of Daily Amount (so as to maintain the intended
proportional relationship between the Closing Price and Initial Price and
Threshold Appreciation Price) to determine which of the three clauses in the
definition of Daily Amount will be applicable on the relevant Trading Day and
in the calculation required to be made pursuant to clause (ii) of the
definition of Daily Amount. The required adjustment to the Closing Price will
be made on each day for which a Daily Amount is calculated by multiplying the
Closing Price by the same factor by which the Share Component was adjusted
pursuant to the procedures described above in paragraphs (a)-(g).
(j) Rights Agreement. Each share of Common Stock issued pursuant
hereto shall be entitled to receive the appropriate number of Rights, if any,
and the certificates representing such shares shall bear such legends, if any,
in each case as provided by and subject to the terms of the Rights Agreement
as in effect on the date of such issuance. Rights or warrants (including the
Rights) distributed by the Seller to all holders of its Common Stock entitling
them to subscribe for or purchase shares of the Seller's capital stock (either
initially or under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"), (i) are deemed to
be transferred with such shares of Common Stock, (ii) are not exercisable and
(iii) are also issued in respect of future issuances of shares of Common Stock
shall be deemed not to have been distributed for purposes of Section 3.01 (and
no adjustment to the Share Component under Section 3.01 will be required)
until the occurrence of the earliest Trigger Event. Upon the occurrence of a
Trigger Event, such rights or warrants shall be deemed to have been
distributed for purposes of Section 3.01 (and an adjustment under Section 3.01
shall be required). If such right or warrant is subject to subsequent events,
upon the occurrence of which such right or warrant shall become exercisable to
purchase different distributed assets, evidences of indebtedness or other
assets, or entitle the holder to purchase a different number or amount of the
foregoing or to purchase any of the foregoing at a different purchase price,
then the occurrence of each such event shall be deemed to be the date of
issuance and record date with respect to a new right or warrant (and a
termination or expiration of the existing right or warrant without exercise by
the holder thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of
the type described in the preceding sentence) with respect thereto, that
resulted in an adjustment to the Share Component under Section 3.01:
(x) in the case of any such rights or warrants that shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Share Component shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the
case may be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder of shares of
Common Stock with respect to such rights or warrants (assuming such
holder had retained such rights or warrants), made to all holders of
shares of Common Stock as of the date of such redemption or repurchase;
and
(y) in the case of such rights or warrants that shall have expired
or been terminated without exercise, the Share Component shall be
readjusted as if such rights and warrants had never been issued.
13
Section 3.02 Adjustment for Consolidation, Merger or Other
Adjustment Event. In the event of:
(a) any consolidation or merger of the Seller with or into another
Person (other than a merger or consolidation in which the Seller is the
continuing or surviving corporation and in which the shares of Common
Stock outstanding immediately prior to the merger or consolidation are
not exchanged for cash, securities or other property of the Seller or
another Person);
(b) any sale, transfer, lease or conveyance to one or more Persons
of all or substantially all of the property of the Seller (other than any
such event that constitutes a Significant Spin-Off);
(c) any statutory share exchange of the Seller with another Person;
(d) any Significant Cash Distribution referred to in the second
proviso of Section 3.01(e); or
(e) any liquidation, dissolution or winding up of the Seller other
than as a result of or after the occurrence of a Insolvency Event (any
event described in clauses (a), (b), (c), (d) and (e), an "Adjustment
Event");
the Daily Amount will be adjusted to provide that the Holders of the Notes
will receive pursuant hereto the kind and amount of securities, cash and other
property receivable upon, or in connection with, such Adjustment Event
(without any interest thereon and without any right to dividends or
distribution thereon that have a record date that is prior to the Maturity
Date) by a holder (including any shares of Common Stock retained by such
holder in connection with such Adjustment Event) of the number of Contract
Shares that would otherwise be issuable hereunder if the Calculation Dates had
occurred immediately prior to such Adjustment Event (and the Total Exchange
Shares were calculated based on the Daily Amounts for the 20 Trading Days
immediately prior to the effective date of the initial Adjustment Event),
assuming that such holder of Common Stock is not a Person with which the
Seller consolidated or into which the Seller merged or that merged into the
Seller or to which such sale or transfer was made, as the case may be (any
such Person, a "Constituent Person"), or an Affiliate of a Constituent Person
to the extent such Adjustment Event provides for different treatment of Common
Stock held by Affiliates of the Seller and non-affiliates and such holder of
Common Stock failed to exercise its rights of election, if any, as to the kind
or amount of securities, cash and other property receivable upon such
Adjustment Event (provided that if the kind or amount of the securities, cash
and other property receivable upon such Adjustment Event is not the same for
each share of Common Stock held immediately prior to such Adjustment Event by
other than a Constituent Person or an Affiliate thereof and in respect of
which such rights of election shall not have been exercised ("non-electing
share"), then for the purpose of this Section 3.02 the kind and amount of
securities, cash and other property receivable upon such Adjustment Event by
each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares).
14
If such an Adjustment Event occurs, the Company shall execute and
deliver an agreement supplemental hereto providing that the Holders of the
Notes shall have the rights provided by this Section 3.02. Such supplemental
agreement shall provide for adjustments that, for events subsequent to the
effective date of such supplemental agreement, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Article III. The
above provisions of this Article III shall similarly apply to successive
Adjustment Events.
Section 3.03 Notice of Adjustments and Certain other Events.
The Company shall, upon being notified of the occurrence of an event
that requires an adjustment to the Daily Amount or the occurrence of an
Adjustment Event (or, in either case, if the Company is not aware of such
occurrence, as soon as practicable after becoming so aware), promptly notify
the Trustee and each Holder of Notes in writing of the occurrence of such
event including a statement setting forth the factors by which the Closing
Price and the Share Component used in the calculation of the Daily Amount are
to be adjusted in order to determine which clause of the Daily Amount
definition will apply on each day on which a Daily Amount is required to be
calculated.
Section 3.04 Tax Treatment.
The Company intends to treat and, by purchasing this Note, the
Holder hereof agrees to treat, for all tax purposes, this Note as a financial
contract rather than as a debt instrument.
15
ABBREVIATIONS
-----------------------
The following abbreviations, when used in the inscription on the
face of the within Security, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - _______ Custodian ________
Cust (Minor)
under Uniform Gifts to Minors Act ________
State
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants in
common
- -------------------------
Additional abbreviations may also be used though not in the above
list.
---------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________
(Name and Address of Assignee, including zip code, must be printed or
typewritten.)
_______________________________________________________________________________
the within Security, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________________________________________________
to transfer the said Security on the books of the Company, with full power of
substitution in the premises.
Dated: _________________________
NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Security in every particular,
without alteration or enlargement or any change whatever.
Signature(s) Guaranteed:
- ----------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY A MEMBER OF AN APPROVED SIGNATURE
GUARANTY MEDALLION PROGRAM.
16