EXHIBIT 4.3
EXECUTION VERSION
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of July 19, 2005 (this
"First Supplemental Indenture"), is by and among ASK JEEVES, INC., a corporation
organized and existing under the laws of the State of Delaware (the "Company"),
IAC/INTERACTIVECORP, a corporation organized and existing under the laws of the
State of Delaware ("IAC") and The Bank of New York, a New York banking
corporation, as Trustee (the "Trustee").
PRELIMINARY STATEMENT
The Company and the Trustee have entered into an Indenture, dated as
of June 4, 2003 (the "Indenture"). Capitalized terms used herein have the
meanings assigned to them in the Indenture unless otherwise indicated. In
Section 11.01 of Article XI of the Indenture it is provided that, among other
things, the Company and the Trustee, subject to the conditions and restrictions
in the Indenture contained, may from time to time and at any time enter into an
indenture or indentures supplemental thereto, and may amend or supplement the
Indenture and/or the Securities, for the following purposes, among others: (i)
to comply with Section 4.10 of the Indenture, (ii) to cure any ambiguity, defect
or inconsistency, or (iii) to make any other change that does not adverse affect
the rights of any Securityholder.
The Company created and issued under and in accordance with the
provisions of the Indenture, certain Zero Coupon Convertible Subordinated
Securities Due June 1, 2008.
The Company, IAC and AJI Acquisition Corp. ("AJI"), a wholly owned
subsidiary of IAC, are party to an Agreement and Plan of Merger and
Reorganization, dated as of March 21, 2005, pursuant to which AJI will be merged
with and into the Company, with the Company surviving the merger and becoming a
wholly-owned subsidiary of IAC (the "Merger").
The Company, the Trustee and IAC now desire to supplement the
Indenture to correct certain immaterial defects in the Indenture, to comply with
the requirements of Section 4.10 of the Indenture and to provide for the
unconditional guarantee by IAC of the obligations of the Company under the
Indenture.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
THE FOLLOWING SHALL BE ADDED AS ADDITIONAL DEFINITIONS IN SECTION 1.01 OF
ARTICLE I OF THE INDENTURE IN APPROPRIATE ALPHABETICAL SEQUENCE:
"First Supplemental Indenture" means the First Supplemental
Indenture, dated July 19, 2005, by and among the Company, IAC and the Trustee.
"IAC" means IAC/InterActiveCorp, a corporation organized and existing
under the laws of the State of Delaware.
THE DEFINITION OF THE TERM "COMMON STOCK" SHALL BE AMENDED AND RESTATED IN FULL,
AS FOLLOWS:
"Common Stock" means the common stock of IAC, $0.01 par value, as it
exists on the date of the First Supplemental Indenture and any shares of any
class or classes of capital stock of IAC 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 IAC and which are not subject to redemption by IAC;
provided, however, that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable on conversion of
Securities 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.
THE FOLLOWING SHALL BE ADDED AS AN ADDITIONAL REFERENCE IN SECTION 1.02 OF
ARTICLE I OF THE INDENTURE IN APPROPRIATE ALPHABETICAL SEQUENCE:
Term Defined in Section
----------- ------------------
"Guarantee" 12.15
THE PHRASE "WILL NOT ISSUE" CONTAINED IN SECTION 3.04(c) OF THE INDENTURE SHALL
BE AMENDED AND REPLACED BY THE FOLLOWING:
will not deliver
THE PHRASE "THROUGH THE ISSUANCE" CONTAINED IN SECTION 3.04(d) OF THE INDENTURE
SHALL BE AMENDED AND REPLACED BY THE FOLLOWING:
through the delivery
ARTICLE IV OF THE INDENTURE SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY AS SET
FORTH IN ANNEX A HERETO.
SECTION 6.02 OF THE INDENTURE SHALL BE AMENDED AND RESTATED IN FULL, AS FOLLOWS:
IAC shall file all reports and other information and documents which
it is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act, and within 15 days after it files them with the SEC, IAC shall
file copies of all such reports, information and other documents with the
Trustee.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 6.06 OF THE INDENTURE SHALL BE AMENDED AND RESTATED IN FULL, AS FOLLOWS:
Within the period prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), IAC covenants and agrees that it shall, during any period
in which it is not subject to Section 13 or 15(d) under the Exchange Act, upon
the request of any Holder or beneficial holder of the Securities make available
to such Holder or beneficial holder of Securities or any Common Stock issued
upon conversion thereof which continue to be Restricted Securities in connection
with any sale thereof and any prospective purchaser of Securities or such Common
Stock designated by such Holder of beneficial holder, the information required
pursuant to Rule 144A(d)(4) under the Securities Act and it will take such
further action as any Holder or beneficial holder of such Securities or such
Common Stock may reasonably request, all to the extent required from time to
time to enable such Holder or beneficial holder to sell its Securities or Common
Stock without registration under the Securities Act within the limitation of the
exemption provided by Rule 144A, as such Rule may be amended from time to time.
Upon the request of any Holder or any beneficial holder of the Securities or
such Common Stock, IAC will deliver to such Holder a written statement as to
whether it has complied with such requirements.
THE PHRASE "SECTION 4.11" CONTAINED IN SECTION 11.01 OF THE INDENTURE SHALL BE
AMENDED AND REPLACED BY THE FOLLOWING:
Section 4.10
THE FOLLOWING SHALL BE ADDED AS NEW SECTION 12.15 OF ARTICLE XII OF THE
INDENTURE:
Section 12.15. GUARANTEE. Subject to the provisions of this Indenture
and any supplemental indenture hereto, IAC hereby irrevocably and
unconditionally guarantees (the "Guarantee") to each Holder of a Security
outstanding on the date of the First Supplemental Indenture or any Security
thereafter authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, that: (i) the principal of (and premium, if any) and
interest on the Securities shall be paid in full when due, whether at maturity,
by acceleration or otherwise; (ii) in case of any extension of time in payment
or renewal of any Securities or pursuant to any cure period provisions of the
Securities or the Indenture, they shall be paid in full when due in accordance
with the terms of the extension or renewal or cure period; and (iii) all other
obligations of the Company under the Securities and the Indenture shall be paid
in full when due, whether at maturity, by acceleration or otherwise. Failing
payment when due by the Company of any amount so guaranteed, IAC shall be
obligated to pay the same. IAC agrees that this is a guarantee of payment and
not a guarantee of collection. For the avoidance of doubt, the Guarantee does
not extend to nor shall it benefit the Holder of any Security issued under the
Indenture other than the Securities, including any Security authorized and
issued after the date hereof, unless the terms of such Security specifically
make this Guarantee applicable thereto and IAC consents to such application.
IAC hereby agrees that its obligations with regard to the Guarantee
shall be unconditional, irrespective of any circumstances which might otherwise
constitute a legal or equitable defense of a guarantor. In the event of a
default in the payment of principal, interest or
premium (if any) the Trustee or any Holder of Securities may seek to enforce the
Guarantee against IAC without first proceeding against the Company.
If any Holder or the Trustee is required by any court or otherwise to
return to either the Company or IAC, or any custodian acting in relation to
either the Company or IAC, any amount paid by the Company or IAC to the Trustee
or such Holder, the Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. IAC agrees that it shall not be entitled to
any right of subrogation in relation to the Holders or the Trustee in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.
The Guarantee is a continuing guarantee and shall remain in full
force and effect and shall be binding upon IAC and its successors and assigns
until full and final payment of all of principal, interest and premium (if any)
under the Securities and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
In the event the Indenture is satisfied and discharged as provided in
Article X thereof, the Trustee will execute any documents reasonably required in
order to evidence the release of IAC from its obligations under this guarantee.
PARAGRAPH 6 OF EXHIBIT A TO THE INDENTURE AND OF EACH SECURITY SHALL BE AMENDED
AND RESTATED IN ITS ENTIRETY AS SET FORTH IN ANNEX B HERETO.
EFFECT OF FIRST SUPPLEMENTAL INDENTURE
The Company, IAC and the Trustee hereby agree that by virtue of their
execution and delivery of this First Supplemental Indenture, the Securities
shall be deemed to be amended in accordance with the provisions of paragraphs 1
through 11 above and the Guarantee shall, pursuant to paragraph 4 of the
Securities, be deemed to be a part of each Security.
The provisions of paragraphs 7 and 8 of this First Supplemental
Indenture are intended to, and shall have the effect of, terminating any
obligation of the Company arising under the Indenture to prepare and/or file
with the Trustee and the SEC, in accordance with the rules and regulations
prescribed from time to time by the SEC, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13
or 15(d) of the Exchange Act.
This First Supplemental Indenture shall become effective, and the
provisions provided for in this First Supplemental Indenture shall become
operative, immediately upon consummation of the Merger. In the event the Merger
is not consummated, then this First Amendment shall be null and void and of no
force and effect.
RATIFICATION OF INDENTURE; FIRST SUPPLEMENTAL INDENTURE; PART OF INDENTURE.
Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This First Supplemental Indenture shall
form a part of the Indenture for all purposes, and every Holder of a Security
heretofore or hereafter authenticated and delivered shall be bound hereby.
MISCELLANEOUS
GOVERNING LAW. This First Supplemental Indenture shall be governed in
accordance with the internal laws of the State of New York.
TRUSTEE MAKES NO REPRESENTATIONS. The Trustee makes no representation as to the
validity or sufficiency of this First Supplemental Indenture. The recitals and
statements herein are deemed to be those of the Company and IAC and not of the
Trustee.
COUNTERPARTS. This First Supplemental Indenture may be simultaneously executed
by facsimile or electronic mail and in any number of counterparts, each of which
when so executed and delivered shall be an original; but such counterparts shall
together constitute but one and the same instrument.
EFFECT OF HEADINGS. All descriptive headings of this First Supplemental
Indenture are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
[Remainder of Page Intentionally Blank]
IN WITNESS HEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first above
written.
ASK JEEVES, INC.
By: /s/ Steve Sordello
--------------------------
Name: Steve Sordello
Title: Chief Financial Officer
IAC/INTERACTIVECORP
By: /s/ Gregory R. Blatt
--------------------------
Name: Gregory R. Blatt, Esq.
Title: Executive Vice President,
General Counsel and Secretary
THE BANK OF NEW YORK,
As Trustee
By: /s/ Sandee Sparks
--------------------------
Name: Sandee Sparks
Title: Vice President
ANNEX A
ARTICLE IV
CONVERSION
SECTION 4.01 CONVERSION PRIVILEGE.
(a) Subject to the further provisions of this Article IV and paragraph 6
of the Securities, a Holder of a Security may convert the principal amount of
such Security (or any portion thereof equal to $1,000 or any integral multiple
of $1,000 in excess thereof) into Common Stock at any time prior to the close
of business on the Final Maturity Date, at the Conversion Price then in effect.
(b) If a Security is submitted or presented for purchase pursuant to a
Change of Control Purchase Notice in accordance with Article III, such
conversion right shall terminate at the close of business on the Business Day
immediately preceding the Change in Control Purchase Date for such Security or
such earlier date as the Holder presents such Security for purchase (unless the
Holder withdraws its election pursuant to Section 4.01(e)).
(c) If IAC elects Share Settlement the number of shares of Common Stock
issuable upon conversion of a Security shall be determined by dividing the
aggregate principal amount of the Security or portion thereof surrendered for
conversion by the Conversion Price in effect on the Conversion Date. The
initial Conversion Price is set forth in paragraph 6 of the Securities and is
subject to adjustment as provided in this Article IV.
(d) Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of a Security.
(e) A Security in respect of which a Holder has delivered a Change in
Control Purchase Notice pursuant to Section 3.02(c) exercising the option of
such Holder to require the Company to purchase such Security may be converted
only (1) if such Change in Control Purchase Notice is withdrawn by a written
notice of withdrawal delivered to the Paying Agent prior to the close of
business on the Business Day immediately preceding the Change in Control
Purchase Date in accordance with Section 3.03 or (2) pursuant to the deemed
withdrawal of such notice under Section 3.02(c).
(f) A Holder of Securities is not entitled to any rights of a holder of
Common Stock until such Holder has converted its Securities to Common Stock,
and only to the extent such Securities are deemed to have been converted into
Common Stock pursuant to this Article IV.
SECTION 4.02 CONVERSION PROCEDURE.
(a) To convert a Security, a Holder must (a) complete and manually sign
he conversion notice on the back of the Security and deliver such notice to the
Conversion Agent, (b) surrender the Security to the Conversion Agent, (c)
furnish appropriate endorsements and transfer documents if required by a
Registrar or the Conversion Agent, and (d) pay any transfer or similar tax, if
required. The date on which the Holder satisfies all of those requirements is
the "Conversion Date."
(b) As soon as practicable after the Conversion Date, and subject to
paragraph (c), the Company or IAC shall satisfy all of the obligations of the
Company and IAC upon conversion of the Securities ("Conversion Obligations") by
delivering to the Holder, at IAC's option, either shares of Common Stock, cash,
or a combination of cash and shares of Common Stock, in the following manner:
(1) If IAC elects to satisfy the entire Conversion Obligation in
shares of Common Stock ("Share Settlement"), then IAC or the Company will
deliver to the Holder shares of Common Stock equal to the quotient of (A) the
aggregate principal amount of Securities to be converted by the Holder divided
by (B) the Conversion Price in effect on the Conversion Date;
(2) If IAC elects to satisfy the entire Conversion Obligation in cash
("Cash Settlement"), then IAC or the Company will deliver to the Holder cash in
an amount equal to the product of (A) a number equal to the aggregate principal
amount of Securities to be converted by such Holder divided by the Conversion
Price in effect on the Conversion Date, and (B) the arithmetic mean of the
Volume Weighted Average Prices of Common Stock on each Trading Day during the
Cash Settlement Averaging Period; or
(3) If IAC elects to satisfy a portion of the Conversion Obligation
in cash (the "Partial Cash Amount") and a portion in shares of Common Stock
(together with the Partial Cash Amount, a "Combined Settlement"), then IAC or
the Company will deliver to the Holder such Partial Cash Amount plus a number
of shares of Common Stock equal to the quotient of (A) the amount of the Cash
Settlement as set forth in clause (2) above minus such Partial Cash Amount
divided by (B) the arithmetic mean of the Volume Weighted Average Prices of
the Common Stock on each Trading Day during the applicable Cash Settlement
Averaging Period.
(c) Upon receipt of the conversion notice from a Holder by the Company,
IAC or the Conversion Agent:
(1) If IAC elects to satisfy the Conversion Obligation by Share
Settlement, then settlement in Common Stock will be made on or prior to the
fifth (5th) Trading Day following the receipt of such conversion notice.
(2) If IAC elects to satisfy the Conversion Obligation by Cash
Settlement or Combined Settlement, then IAC or the Company will notify the
Holder, through the Trustee, of the dollar amount to be satisfied in cash at
any time on or before the date that is two Business Days following receipt of
the notice of conversion (the "Settlement Notice Period"). Share Settlement
will apply automatically if neither IAC nor the Company notifies the Holder
that IAC has chosen another settlement method.
(3) If IAC timely elects Cash Settlement or Combined Settlement, then
the Holder may retract the conversion notice at any time during the two (2)
Business Day period beginning on the day after the Settlement Notice Period
(the "Conversion Retraction Period") by notice to the Trustee. The Holder
cannot retract the conversion notice (and the conversion notice therefore will
be irrevocable) if IAC elects Share Settlement. If the Holder has not retracted
the conversion notice during the Conversion Retraction Period, then Cash
Settlement or Combined Settlement will occur on the first Trading Day following
the Cash Settlement Averaging Period.
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(d) If an Event of Default (other than an Event of Default in a cash
payment upon conversion of the Securities) has occurred and is continuing, IAC
and/or the Company may not pay cash upon conversion of any Security or portion
of a Security (other than cash for fractional shares).
(e) The person in whose name the Common Stock certificate is registered
shall be deemed to be a stockholder of record on the Conversion Date; provided,
however, that no surrender of a Security on any date when the stock transfer
books of IAC shall be closed shall be effective to constitute the person or
persons entitled to receive the shares of Common Stock upon such conversion as
the record holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the person or persons entitled
to receive such shares of Common Stock as the record holder or holders thereof
for all purposes at the close of business on the next succeeding day on which
such stock transfer books are open; provided, further, that such conversion
shall be at the Conversion Price in effect on the Conversion Date as if the
stock transfer books of IAC had not been closed. Upon conversion of a Security,
such person shall no longer be a Holder of such Security. No payment or
adjustment will be made for dividends or distributions on shares of Common
Stock issued upon conversion of a Security.
(f) Anything herein to the contrary notwithstanding, in the case of Global
Securities, conversion notices may be delivered and such Securities may be
surrendered for conversion in accordance with the Applicable Procedures as in
effect from time to time.
(g) Upon surrender of a Security that is converted in part, IAC and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, a new Security equal in principal amount to the unconverted portion of
the Security surrendered.
SECTION 4.03 FRACTIONAL SHARES.
The Company and/or IAC will not deliver fractional shares of Common Stock
upon conversion of Securities. In lieu thereof, IAC or the Company will pay an
amount in cash for the fractional shares equal to the Volume Weighted Average
Price of the Common Stock determined during the Cash Settlement Averaging
Period multiplied by the fractional share and rounding the product to the
nearest whole cent.
SECTION 4.04 TAXES ON CONVERSION.
If a Holder converts a Security, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon such conversion. However, the Holder shall pay any such tax which is
due because the Holder requests the shares to be issued in a name other than
the Holder's name. The Conversion Agent may refuse to deliver the certificate
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 any tax withholding required by
law or regulation.
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SECTION 4.05 IAC TO PROVIDE STOCK.
IAC shall, from time to time as may be necessary, reserve, out of its
authorized but unissued Common Stock, a sufficient number of shares of Common
Stock to permit the conversion of all outstanding Securities into shares of
Common Stock. All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares, shall be duly authorized, validly
issued, fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
IAC will endeavor promptly to comply with all federal and state securities
laws regulating the offer and delivery of shares of Common Stock upon
conversion of Securities, if any, and will list or cause to have quoted such
shares of Common Stock on each national securities exchange or on the Nasdaq
National Market or other over-the-counter market or such other market on which
the Common Stock is then listed or quoted; provided, however, that if rules of
such automated quotation system or exchange permit IAC to defer the listing of
such Common Stock until the first conversion of the Securities into Common
Stock in accordance with the provisions of this Indenture, IAC covenants to
list such Common Stock issuable upon conversion of the Securities in accordance
with the requirements of such automated quotation system or exchange at such
time. Any Common Stock issued upon conversion of a Security hereunder which at
the time of conversion was a Restricted Security will also be a Restricted
Security.
SECTION 4.06 ADJUSTMENT OF CONVERSION PRICE.
The conversion price as stated in paragraph 6 of the Securities (the
"Conversion Price") shall be adjusted from time to time by IAC and the Company
as follows:
(a) In case IAC shall (i) pay a dividend on its Common Stock in shares of
Common Stock, (ii) make a distribution on its Common Stock in shares of Common
Stock, (iii) subdivide its outstanding Common Stock into a greater number of
shares, or (iv) combine its outstanding Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior thereto shall be
adjusted so that the Holder of any Security thereafter surrendered for
conversion shall be entitled to receive that number of shares of Common Stock
which it would have owned had such Security been converted immediately prior to
the happening of such event. An adjustment made pursuant to this subsection (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 subdivision or combination.
(b) In case IAC shall issue rights or warrants to all or substantially all
holders of its Common Stock entitling them (for a period commencing no earlier
than the record date described below 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 (or having a
conversion price per share) less than the Current Market Price per share of
Common Stock on the record date for the determination of stockholders entitled
to receive such rights or warrants, the Conversion Price in effect immediately
prior thereto shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction of which the numerator shall be the number
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of shares of Common Stock outstanding on such record date plus the number of
shares which the aggregate offering price of the total number of shares of
Common Stock so offered (or the aggregate conversion price of the convertible
securities so offered, which shall be determined by multiplying the number of
shares of Common Stock issuable upon conversion of such convertible securities
by the conversion price per share of Common Stock pursuant to the terms of such
convertible securities) would purchase at the Current Market Price per share of
Common Stock on such record date, and of which the denominator shall be the
number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock offered (or into which the
convertible securities so offered are convertible). Such adjustment shall be
made successively whenever any such rights or warrants are issued, and shall
become effective immediately after such record date. If at the end of the
period during which such rights or warrants are exercisable not all rights or
warrants shall have been exercised, the adjusted Conversion Price shall be
immediately readjusted to what it would have been based upon the number of
additional shares of Common Stock actually issued (or the number of shares of
Common Stock issuable upon conversion of convertible securities actually
issued).
(c) In case IAC shall distribute to all or substantially all holders of
its Common Stock any shares of capital stock of IAC (other than Common Stock),
evidences of indebtedness or other non-cash assets (including securities of any
person other than IAC but excluding (1) dividends or distributions paid
exclusively in cash or (2) dividends or distributions referred to in subsection
(a) of this Section 4.06), or shall distribute to all or substantially all
holders of its Common Stock rights or warrants to subscribe for or purchase any
of its securities (excluding those rights and warrants referred to in
subsection (b) of this Section 4.06 and also excluding the distribution of
rights to all holders of Common Stock pursuant to the adoption of a stockholders
rights plan or the detachment of such rights under the terms of such stockholder
rights plan), then in each such case the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the current
Conversion Price by a fraction of which the numerator shall be the Current
Market Price per share of the Common Stock on the record date mentioned below
less the fair market value on such record date (as determined by the Board of
Directors, whose determination shall be conclusive evidence of such fair
market value and which shall be evidenced by an Officers' Certificate delivered
to the Trustee) of the portion of the capital stock, evidences of indebtedness
or other non-cash assets so distributed or of such rights or warrants
applicable to one share of Common Stock (determined on the basis of the number
of shares of Common Stock outstanding on the record date), and of which the
denominator shall be the Current Market Price per share of the Common Stock on
such record date. Such adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of shareholders entitled to receive such
distribution.
In the event the then fair market value (as so determined) of the portion
of the capital stock, evidences of indebtedness or other non-cash assets so
distributed or of such rights or warrants applicable to one share of Common
Stock is equal to or greater than the Current Market Price per share of the
Common Stock on such record date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of a Security shall have the right
to receive upon conversion the amount of capital stock, evidences of
indebtedness or other non-cash assets so distributed or of such rights or
warrants such holder would have received had such holder converted each
Security on such record date. In the event that such dividend or distribution
is not
5
so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or distribution
had not been declared. If the Board of Directors determines the fair market
value of any distribution for purposes of this Section 4.06(c) by reference to
the actual or when issued trading market for any securities, it must in doing
so consider the prices in such market over the same period used in computing
the Current Market Price of the Common Stock. In the event that IAC has or
implements a preferred shares rights plan ("Rights Plan"), upon conversion of
the Securities into Common Stock, to the extent that any such Rights Plan is
still in effect upon such conversion, the holders of Securities will receive,
in addition to the Common Stock, the rights described therein (whether or not
the rights have separated from the Common Stock at the time of conversion),
subject to the limitations set forth in the Rights Plan. Any distribution of
rights or warrants pursuant to a Rights Plan complying with the requirements
set forth in the immediately preceding sentence of this paragraph shall not
constitute a distribution of rights or warrants pursuant to this Section
4.06(c). Rights or warrants distributed by IAC to all holders of Common Stock
entitling the holders thereof to subscribe for or purchase shares of IAC'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 Common
Stock, shall be deemed not to have been distributed for purposes of this Section
4.06 (and no adjustment to the Conversion Price under this Section 4.06 will be
required) until the occurrence of the earliest Trigger Event, whereupon such
rights and warrants shall be deemed to have been distributed and an appropriate
adjustment (if any is required) to the Conversion Price shall be made under this
Section 4.06(c). If any such right or warrant, including any such existing
rights or warrants distributed prior to the date of this Indenture, are subject
to events, upon the occurrence of which such rights or warrants become
exercisable to purchase different securities, evidences of indebtedness or other
assets, then the date of the occurrence of any and each such event shall be
deemed to be the date of distribution and record date with respect to new rights
or warrants with such rights (and a termination or expiration of the existing
rights or warrants without exercise by any of the holders thereof). In addition,
in the event of any distribution (or deemed distribution) of rights or warrants,
or any Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Price under this
Section 4.06 was made, (1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Common Stock with respect to
such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of such redemption
or repurchase, and (2) in the case of such rights or warrants which shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Price shall be readjusted as if such rights and warrants had not been
issued.
(1) In case IAC shall, by dividend or otherwise, at any time
distribute (a "Triggering Distribution") to all or substantially all holders of
its Common Stock cash in an aggregate amount that, together with the aggregate
amount of (A) any cash and the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive evidence thereof and which
shall be evidenced by an Officers' Certificate delivered to the
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Trustee) of any other consideration payable in respect of any tender offer by
IAC or a Subsidiary of IAC for Common Stock consummated within the 12 months
preceding the date of payment of the Triggering Distribution and in respect of
which no Conversion Price adjustment pursuant to this Section 4.06 has been made
and (B) all other cash distributions to all or substantially all holders of its
Common Stock made within the 12 months preceding the date of payment of the
Triggering Distribution and in respect of which no Conversion Price adjustment
pursuant to this Section 4.06 has been made, exceeds an amount equal to 10.0%
of the product of the Current Market Price per share of Common Stock on the
Business Day (the "Determination Date") immediately preceding the day on which
such Triggering Distribution is declared by IAC multiplied by the number of
shares of Common Stock outstanding on the Determination Date (excluding shares
held in the treasury of IAC), the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying such Conversion Price in
effect immediately prior to the Determination Date by a fraction of which the
numerator shall be the Current Market Price per share of the Common Stock on
the Determination Date less the sum of the aggregate amount of cash and the
aggregate fair market value (determined as aforesaid in this Section 4.06(c)(1))
of any such other consideration so distributed, paid or payable within such 12
months (including, without limitation, the Triggering Distribution) applicable
to one share of Common Stock (determined on the basis of the number of shares
of Common Stock outstanding on the Determination Date) and the denominator
shall be such Current Market Price per share of the Common Stock on the
Determination Date, such reduction to become effective immediately prior to
the opening of business on the day following the date on which the Triggering
Distribution is paid.
(2) In case any tender offer made by IAC or any of its Subsidiaries
for Common Stock shall expire and such tender offer (as amended upon the
expiration thereof) shall involve the payment of aggregate consideration in an
amount (determined as the sum of the aggregate amount of cash consideration and
the aggregate fair market value (as determined by the Board of Directors, whose
determination shall be conclusive evidence thereof and which shall be evidenced
by an Officers' Certificate delivered to the Trustee thereof) of any other
consideration) that, together with the aggregate amount of (A) any cash and the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive evidence thereof and which shall be evidenced by an
Officers' Certificate delivered to the Trustee) of any other consideration
payable in respect of any other tender offers by IAC or any Subsidiary of IAC
for Common Stock consummated within the 12 months preceding the date of the
Expiration Date (as defined below) and in respect of which no Conversion Price
adjustment pursuant to this Section 4.06 has been made and (B) all cash
distributions to all or substantially all holders of its Common Stock made
within the 12 months preceding the Expiration Date and in respect of which no
Conversion Price adjustment pursuant to this Section 4.06 has been made,
exceeds an amount equal to 10.0% of the product of the Current Market Price per
share of Common Stock as of the last date (the "Expiration Date") tenders could
have been made pursuant to such tender offer (as it may be amended) (the last
time at which such tenders could have been made on the Expiration Date is
hereinafter sometimes called the "Expiration Time") multiplied by the number of
shares of Common Stock outstanding (including tendered shares but excluding any
shares held in the treasury of IAC) at the Expiration Time, then, immediately
prior to the opening of business on the day after the Expiration Date, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on the Expiration Date by a fraction of which the
numerator shall
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be the product of the number of shares of Common Stock outstanding (including
tendered shares but excluding any shares held in the treasury of IAC) at the
Expiration Time multiplied by the Current Market Price per share of the Common
Stock on the Trading Day next succeeding the Expiration Date and the denominator
shall be the sum of (x) the aggregate consideration (determined as aforesaid)
payable to stockholders based on the acceptance (up to any maximum specified in
the terms of the tender offer) 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 (y) the product of
the number of shares of Common Stock outstanding (less any Purchased Shares and
excluding any shares held in the treasury of IAC) at the Expiration Time and
the Current Market Price per share of Common Stock on the Trading Day next
succeeding the Expiration Date, such reduction to become effective immediately
prior to the opening of business on the day following the Expiration Date. In
the event that IAC is obligated to purchase shares pursuant to any such tender
offer, but IAC is permanently prevented by applicable law from effecting any or
all such purchases or any or all such purchases are rescinded, the Conversion
Price shall again be adjusted to be the Conversion Price which would have been
in effect based upon the number of shares actually purchased. If the
application of this Section 4.06(c)(2) to any tender offer would result in an
increase in the Conversion Price, no adjustment shall be made for such tender
offer under this Section 4.06(c)(2).
(3) For purposes of this Section 4.06(c), the term "tender offer"
shall mean and include both tender offers and exchange offers, all references
to "purchases" of shares in tender offers (and all similar references) shall
mean and include both the purchase of shares in tender offers and the
acquisition of shares pursuant to exchange offers, and all references to
"tendered shares" (and all similar references) shall mean and include shares
tendered in both tender offers and exchange offers.
(d) For the purpose of any computation under subsections (b) and (c) of
this Section 4.06, the current market price (the "Current Market Price") per
share of Common Stock on any date shall be deemed to be the average of the
Sales Prices for the 30 consecutive Trading Days commencing 45 Trading Days
before (i) the Determination Date or the Expiration Date, as the case may be,
with respect to distributions or tender offers under subsection (c) of this
Section 4.06 or (ii) the record date with respect to distributions, issuances
or other events requiring such computation under subsection (b) or (c) of this
Section 4.06.
(e) In any case in which this Section 4.06 shall require that an adjustment
be made following a record date or a Determination Date or Expiration Date, as
the case may be, established for purposes of this Section 4.06, IAC and the
Company may elect to defer (but only until five Business Days following the
filing by IAC with the Trustee of the certificate described in Section 4.09)
delivery to the Holder of any Security converted after such record date or
Determination Date or Expiration Date the shares of Common Stock and other
capital stock of IAC issuable upon such conversion over and above the shares of
Common Stock and other capital stock of IAC issuable upon such conversion only
on the basis of the Conversion Price prior to adjustment; and, in lieu of the
shares the issuance of which is so deferred, IAC and/or the Company shall issue
or cause its transfer agents to issue due bills or other appropriate evidence
prepared by IAC and/or the Company of the right to receive such shares. If any
distribution in respect of which an adjustment to the Conversion Price is
required to be made as of the record date or Determination Date or Expiration
Date therefor is not thereafter made or paid by IAC
8
and/or the Company for any reason, the Conversion Price shall be readjusted to
the Conversion Price which would then be in effect if such record date had not
been fixed or such effective date or Determination Date or Expiration Date had
not occurred.
SECTION 4.07 NO ADJUSTMENT.
(a) No adjustment in the Conversion Price shall be required:
(1) unless the adjustment would require an increase or decrease of at
least 1% in the Conversion Price as last adjusted; provided, however, that any
adjustments which by reason of this Section 4.07 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment;
(2) for issuances of Common Stock pursuant to a plan for reinvestment
of dividends or interest or for a change in the par value or a change to no par
value of the Common Stock; or
(3) if the Holders participate in the transactions that would
otherwise lead to an adjustment in the Conversion Price pursuant to Section
4.06. To the extent that the Securities become convertible into the right to
receive cash, no adjustment need be made thereafter as to the cash. Interest
will not accrue on the cash. All calculations under this Article IV shall be
made to the nearest cent or to the nearest one-hundredth of a share, as the
case may be.
SECTION 4.08 ADJUSTMENT FOR TAX PURPOSES.
IAC shall be entitled to make such reductions in the Conversion Price, in
addition to those required by Section 4.06, as it in its discretion shall
determine to be advisable in order that any stock dividends, subdivisions of
shares, distributions of rights to purchase stock or securities or
distributions of securities convertible into or exchangeable for stock
hereafter made by IAC to its stockholders shall not be taxable.
SECTION 4.09 NOTICE OF ADJUSTMENT.
Whenever the Conversion Price or conversion privilege is adjusted, IAC or
the Company shall promptly mail to Securityholders a notice of the adjustment
and file with the Trustee an Officers' Certificate briefly stating the facts
requiring the adjustment and the manner of computing it. Unless and until the
Trustee shall receive an Officers' Certificate setting forth an adjustment of
the Conversion Price, the Trustee may assume without inquiry that the
Conversion Price has not been adjusted and that the last Conversion Price of
which it has knowledge remains in effect.
SECTION 4.10 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE
ON CONVERSION PRIVILEGE.
If any of the following shall occur, namely: (a) any reclassification or
change of shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination, or
any other change for which an adjustment is provided in Section 4.06); (b)
9
any consolidation or merger or combination to which IAC is a party other than a
merger in which IAC is the continuing corporation and which does not result in
any reclassification of, or change (other than in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of Common Stock; or (c) any
sale or conveyance as an entirety or substantially as an entirety of the
property and assets of IAC, directly or indirectly, to any person as a result
of which holders of Common Stock shall be entitled to receive stock, securities
or other property or assets (including cash) with respect to or in exchange for
Common Stock, then the Company and IAC, or such successor, purchasing or
transferee corporation, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture providing that the Holder of each Security
then outstanding shall have the right to convert such Security into the kind
and amount of shares of stock and other securities and property (including
cash) receivable upon such reclassification, change, combination, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
deliverable upon conversion of such Security immediately prior to such
reclassification, change, combination, consolidation, merger, sale or
conveyance. Such supplemental indenture shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article IV. If, in
the case of any such consolidation, merger, combination, sale or conveyance,
the stock or other securities and property (including cash) receivable
thereupon by a holder of Common Stock include shares of stock or other
securities and property of a person other than the successor, purchasing or
transferee corporation, as the case may be, in such consolidation, merger,
combination, sale or conveyance, then such supplemental indenture shall also be
executed by such other person and shall contain such additional provisions to
protect the interests of the Holders of the Securities as the Board of
Directors and the Trustee shall reasonably consider necessary by reason of the
foregoing. The provisions of this Section 4.10 shall similarly apply to
successive reclassifications, changes, combinations, consolidations, mergers,
sales or conveyances.
In the event the Company and IAC shall execute a supplemental indenture
pursuant to this Section 4.10, IAC or the Company shall promptly file with the
Trustee (x) an Officers' Certificate briefly stating the reasons therefor, the
kind or amount of shares of stock or other securities or property (including
cash) receivable by Holders of the Securities upon the conversion of their
Securities after any such reclassification, change, combination, consolidation,
merger, sale or conveyance, any adjustment to be made with respect thereto and
that all conditions precedent have been complied with and (y) an Opinion of
Counsel that all conditions precedent have been complied with, and shall
promptly mail notice thereof to all Holders.
SECTION 4.11 TRUSTEE'S DISCLAIMER.
The Trustee shall have no duty to determine when an adjustment under this
Article IV should be made, how it should be made or what such adjustment should
be, but may accept as conclusive evidence of that fact or the correctness of
any such adjustment, and shall be protected in conclusively relying upon, an
Officers' Certificate including the Officers' Certificate with respect thereto
which IAC or the Company is obligated to file with the Trustee pursuant to
Section 4.09. The Trustee makes no representation as to the validity or value
of any securities or assets issued upon conversion of Securities, and the
Trustee shall not be responsible for the failure of IAC or the Company to
comply with any provisions of this Article IV.
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The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.10, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in conclusively relying upon,
the Officers' Certificate with respect thereto which IAC or the Company is
obligated to file with the Trustee pursuant to Section 4.10.
SECTION 4.12 VOLUNTARY REDUCTION.
The Company and IAC from time to time may reduce the Conversion Price by
any amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period if the Board of Directors of IAC
determines that such reduction would be in the best interest of IAC or to avoid
or diminish income tax to holders of shares of Common Stock in connection with
a dividend or distribution of stock or similar event, and IAC or the Company
provides 15 days prior notice of any reduction in the Conversion Price;
provided, however, that in no event may the Conversion Price be reduced to be
less than the par value of a share of Common Stock.
ANNEX B
6. CONVERSION
A Holder of a Note may convert the principal amount of such Note (or any
portion thereof equal to $1,000 or any integral multiple of $1,000 in excess
thereof) into shares of Common Stock at any time prior to the close of business
on June 1, 2008; provided, however, that if the Note is submitted or presented
for purchase pursuant to a Change in Control Notice, the conversion right will
terminate at the close of business on the Business Day immediately preceding the
Change in Control Purchase Date for such Note or such earlier date as the Holder
presents such Note for purchase (unless the Holder withdraws its election
pursuant to the Indenture).
The initial Conversion Price is $13.34 per share, subject to adjustment
under certain circumstances as provided in the Indenture. The number of shares
of Common Stock issuable upon conversion of a Note is determined by dividing the
principal amount of the Note or portion thereof converted by the Conversion
Price in effect on the Conversion Date.
To convert a Note, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Note to the Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by a Registrar or the Conversion
Agent, and (d) pay any transfer or similar tax, if required. A Holder may
convert a portion of a Note equal to $1,000 or any integral multiple thereof.
A Note in respect of which a Holder had delivered a Change in Control
Purchase Notice exercising the option of such Holder to require the Company to
purchase such Note may be converted only if the Change in Control Purchase
Notice is withdrawn in accordance with the terms of the Indenture.
As soon as practicable after the Conversion Date, the Company and IAC
shall satisfy all of their Conversion Obligations by delivering to the Holder,
at IAC's option, either shares of Common Stock, cash, or a combination of cash
and shares of Common Stock. If IAC elects to satisfy the entire Conversion
Obligation by Share Settlement, then IAC or the Company will deliver to the
Holder shares of Common Stock equal to the quotient of (A) the aggregate
principal amount of Notes to be converted by the Holder divided by (B) the
Conversion Price in effect on the Conversion Date. If IAC elects to satisfy the
entire Conversion Obligation by Cash Settlement, then the Company or IAC will
deliver to the Holder cash in an amount equal to the product of (A) a number
equal to the aggregate principal amount of Notes to be converted by such Holder
divided by the Conversion Price in effect on the Conversion Date, and (B) the
arithmetic mean of the Volume Weighted Average Prices of the Common Stock on
each Trading Day during the Cash Settlement Averaging Period. If IAC elects to
satisfy the Conversion Obligation in a Combined Settlement, then the Company or
IAC will deliver to the Holder a Partial Cash Amount plus a number of shares of
Common Stock equal to the quotient of (A) the amount of the Cash Settlement
minus such Partial Cash Amount divided by (B) the arithmetic mean of the Volume
Weighted Average Prices of the Common Stock on each Trading Day during the
applicable Cash Settlement Averaging Period.
Upon receipt of the conversion notice from a Holder by the Company, IAC or
the Conversion Agent, (1) if IAC elects to satisfy the Conversion Obligation by
Share Settlement, then settlement in Common Stock will be made on or prior to
the fifth (5th) Trading Day following receipt of such conversion notice; or (2)
if IAC elects to satisfy the Conversion Obligation by Cash Settlement or
Combined Settlement, then the Company or IAC will notify the Holder, through the
Conversion Agent, of the dollar amount to be satisfied in cash at any time
during the Settlement Notice Period. Share Settlement will apply automatically
if the Company or IAC does not notify the Holder that IAC has chosen another
settlement method.
If IAC timely elects Cash Settlement or Combined Settlement, then the
Holder may retract the conversion notice at any time during the Conversion
Retraction Period by notice to the Conversion Agent. The Holder cannot retract
the conversion notice (and the conversion notice therefore will be irrevocable)
if IAC elects Share Settlement. If the Holder has not retracted the conversion
notice during the Conversion Retraction Period, then Cash Settlement or Combined
Settlement will occur on the first Trading Day following the Cash Settlement
Averaging Period.
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