EXHIBIT 4(g)(7)
CENTERPOINT ENERGY, INC.
To
JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION
Trustee
----------
SUPPLEMENTAL INDENTURE NO. 6
Dated as of August 23, 2005
----------
3.75% Convertible Senior Notes, Series B due 2023
CENTERPOINT ENERGY, INC.
SUPPLEMENTAL INDENTURE NO. 6
3.75% Convertible Senior Notes, Series B due 2023
SUPPLEMENTAL INDENTURE No. 6 dated as of August 23, 2005, between
CENTERPOINT ENERGY, INC., a Texas corporation (the "Company"), and JPMORGAN
CHASE BANK, NATIONAL ASSOCIATION (formerly named JPMorgan Chase Bank), as
Trustee (the "Trustee").
RECITALS
The Company has heretofore executed and delivered to the Trustee an
Indenture, dated as of May 19, 2003, as amended and supplemented by the
Supplemental Indenture No. 1 dated as of May 19, 2003, the Supplemental
Indenture No. 2 dated as of May 27, 2003, the Supplemental Indenture No. 3 dated
as of September 9, 2003, the Supplemental Indenture No. 4 dated as of December
17, 2003 and the Supplemental Indenture No. 5 dated as of December 13, 2004 (the
"Original Indenture" and, as hereby supplemented and amended, the "Indenture"),
providing for the issuance from time to time of one or more series of the
Company's Securities.
Pursuant to the terms of the Indenture, the Company desires to provide for
the establishment of one new series of Securities to be designated as the "3.75%
Convertible Senior Notes, Series B due 2023 (the "Notes"), the form and
substance of such Notes and the terms, provisions and conditions thereof to be
set forth as provided in the Original Indenture and this Supplemental Indenture
No. 6.
Section 301 of the Original Indenture provides that various matters with
respect to any series of Securities issued under the Indenture may be
established in an indenture supplemental to the Indenture.
Subparagraph (7) of Section 901 of the Original Indenture provides that the
Company and the Trustee may enter into an indenture supplemental to the
Indenture to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301 of the Original Indenture.
For and in consideration of the premises and the issuance of the series of
Securities provided for herein, it is mutually covenanted and agreed, for the
equal and proportionate benefit of the Holders of the Securities of such series,
as follows:
ARTICLE I
Relation to Indenture; Additional Definitions
Section 101 Relation to Indenture. This Supplemental Indenture No. 6
constitutes an integral part of the Indenture.
-1-
Section 102 Additional Definitions. For all purposes of this Supplemental
Indenture No. 6:
Capitalized terms used herein shall have the meaning specified herein
or in the Original Indenture, as the case may be;
"Affiliate" of, or a Person "affiliated" with, a specific Person means
a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this definition, "control" (including the terms
"controlled by" and "under common control with") means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting shares, by contract, or otherwise;
"Beneficial Owner" or "Beneficial Ownership" shall be determined in
accordance with Rule 13d-3 promulgated by the Commission under the Exchange
Act;
"Bid Solicitation Agent" has the meaning set forth in Section 212
hereof;
"Business Day" means, with respect to any Note, any day other than a
Saturday, a Sunday or a day on which banking institutions in The City of
New York are authorized or required by law, regulation or executive order
to close. If any Interest Payment Date, Maturity Date, Redemption Date,
Purchase Date or Fundamental Change Purchase Date of a Note falls on a day
that is not a Business Day, the required payment will be made on the next
succeeding Business Day with the same force and effect as if made on the
relevant date that the payment was due and no interest will accrue on such
payment for the period from and after the Interest Payment Date, Maturity
Date, Redemption Date, Purchase Date or Fundamental Change Purchase Date,
as the case may be, to the date of that payment on the next succeeding
Business Day. The definition of "Business Day" in this Supplemental
Indenture and the provisions described in the preceding sentence shall
supersede the definition of Business Day in the Original Indenture and
Section 113 of the Original Indenture;
"Capital Lease" means a lease that, in accordance with accounting
principles generally accepted in the United States of America, would be
recorded as a capital lease on the balance sheet of the lessee;
"Cash" or "cash" means U.S. legal tender;
"CenterPoint Houston" means CenterPoint Energy Houston Electric, LLC,
a Texas limited liability company;
"CERC" means CenterPoint Energy Resources Corp., a Delaware
corporation;
"Common Equity" of any Person means capital stock of such Person that
is generally entitled to (1) vote in the election of directors of such
Person or (2) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing
-2-
body, partners, managers or others that will control the management or
policies of such Person;
"Common Stock" means the common stock, par value $.01 per share, of
the Company;
"Company Notice" has the meaning provided in Section 701 hereof;
"Company Notice Date" has the meaning provided in Section 701 hereof;
"Contingent Interest" has the meaning provided in Section 204(a)
hereof;
"Continuing Director" means a director who either was a member of the
Board of Directors on May 13, 2003 or who becomes a member of the Board of
Directors subsequent to that date and whose appointment, election or
nomination for election by the Company's shareholders is duly approved by a
majority of the Continuing Directors on the Board of Directors at the time
of such approval, either by a specific vote or by approval of the proxy
statement issued by the Company on behalf of the Board of Directors in
which such individual is named as nominee for director;
"Conversion Agent" means the office or agency designated by the
Company where Notes may be presented for conversion;
"Conversion Date" has the meaning provided in Section 802 hereof;
"Conversion Price" means $1,000 divided by the Conversion Rate;
"Conversion Rate" has the meaning provided in Section 801(a) hereof;
"Conversion Value" has the meaning specified in Section 801(b) hereof;
"CPDI Regulations" has the meaning provided in Section 213 hereof;
"Determination Date" has the meaning provided in Section 801(e)
hereof;
"Distributed Assets or Securities" has the meaning provided in Section
806(c) hereof;
"Effective Date" has the meaning provided in Section 501(b);
"Equity Interests" means any capital stock, partnership, joint
venture, member or limited liability or unlimited liability company
interest, beneficial interest in a trust or similar entity or other equity
interest or investment of whatever nature;
"ex-date" has the meaning provided in the definition of Spin-off
Market Price;
"Exchange Property" has the meaning provided in Section 812 hereof;
-3-
"Exchange Property Average Price" has the meaning provided in Section
812 hereof;
"Exchange Property Value" has the meaning provided in Section 812
hereof;
"Fair Market Value" means the amount which a willing buyer would pay a
willing seller in an arm's length transaction;
A "Fundamental Change" shall be deemed to have occurred at such time
after the original issuance of the Notes as any of the following occurs:
(a) the Common Stock or other common stock into which the Notes are
convertible is neither listed for trading on a United States national
securities exchange nor approved for trading on the Nasdaq National Market
or another established automated over-the-counter trading market in the
United States; (b) a "person" or "group" within the meaning of Section
13(d) of the Exchange Act, other than the Company, any Subsidiary of the
Company or any employee benefit plan of the Company or any such Subsidiary,
files a Schedule TO (or any other schedule, form or report under the
Exchange Act) disclosing that such person or group has become the direct or
indirect ultimate Beneficial Owner of Common Equity of the Company
representing more than 50% of the voting power of the Company's Common
Equity; (c) consummation of any share exchange, consolidation or merger of
the Company pursuant to which the Common Stock will be converted into Cash,
securities or other property or any sale, lease or other transfer (in one
transaction or a series of transactions) of all or substantially all of the
consolidated assets of the Company and its Subsidiaries, taken as a whole,
to any Person (other than the Company or one or more of the Company's
Subsidiaries); provided, however, that a transaction where the holders of
the Company's Common Equity immediately prior to such transaction own,
directly or indirectly, more than 50% of the aggregate voting power of all
classes of Common Equity of the continuing or surviving corporation or
transferee immediately after such event shall not be a Fundamental Change;
or (d) Continuing Directors cease to constitute at least a majority of the
Board of Directors; provided, however, that a Fundamental Change shall not
be deemed to have occurred in respect of any of the foregoing if either (i)
the Last Reported Sale Price of Common Stock for any five Trading Days
within the period of ten consecutive Trading Days ending immediately before
the later of the Fundamental Change or the public announcement thereof
shall equal or exceed 105% of the Conversion Price of the Notes in effect
immediately before the Fundamental Change or the public announcement
thereof (the "105% Trading Exception"); or (ii) at least 90% of the
consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Fundamental Change consists of
shares of Capital Stock traded on a national securities exchange or quoted
on the Nasdaq National Market (or which shall be so traded or quoted when
issued or exchanged in connection with such Fundamental Change) (such
securities being referred to as "Publicly Traded Securities") and as a
result of such transaction or transactions the Notes become convertible
into such Publicly Traded Securities (excluding cash payments for
fractional shares). For purposes of the foregoing the term "Capital Stock"
of any Person means any and all shares (including ordinary shares or
American Depositary Shares), interests, participations or other equivalents
however designated of corporate stock or other equity participations,
including partnership interests, whether general or limited, of such Person
and any rights
-4-
(other than debt securities convertible or exchangeable into an equity
interest), warrants or options to acquire an equity interest in such
Person;
"Fundamental Change Purchase Date" has the meaning provided in Section
501 hereof;
"Fundamental Change Purchase Notice" has the meaning provided in
Section 503 hereof;
"Fundamental Change Purchase Price" has the meaning provided in
Section 501 hereof;
"Global Notes" has the meaning set forth in Section 208(a) hereof;
The term "Indebtedness" as applied to any Person, means bonds,
debentures, notes and other instruments or arrangements representing
obligations created or assumed by any such Person, in respect of: (i)
obligations for money borrowed (other than unamortized debt discount or
premium); (ii) obligations evidenced by a note or similar instrument given
in connection with the acquisition of any business, properties or assets of
any kind; (iii) obligations as lessee under a Capital Lease; and (iv) any
amendments, renewals, extensions, modifications and refundings of any such
indebtedness or obligations listed in clause (i), (ii) or (iii) above. All
indebtedness of such type secured by a lien upon property owned by such
Person, although such Person has not assumed or become liable for the
payment of such indebtedness, shall also for all purposes hereof be deemed
to be indebtedness of such Person. All indebtedness for borrowed money
incurred by any other Persons which is directly guaranteed as to payment of
principal by such Person shall for all purposes hereof be deemed to be
indebtedness of any such Person, but no other contingent obligation of such
Person in respect of indebtedness incurred by any other Persons shall for
any purpose be deemed to be indebtedness of such Person;
"Interest Payment Date" has the meaning set forth in Section 204(a)
hereof;
"Last Reported Sale Price" means, with respect to Common Stock or any
other Equity Interest, on any date, the closing sale price per share or
other applicable unit (or, if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and the average ask prices) on that date as
reported in composite transactions for the principal U.S. securities
exchange on which the Common Stock or such Equity Interest is traded or, if
the Common Stock or such Equity Interest is not listed on a U.S. national
or regional securities exchange, as reported by the Nasdaq National Market.
If the Common Stock or such Equity Interest is not listed for trading on a
U.S. national or regional securities exchange and not reported by the
Nasdaq National Market on the relevant date, the "Last Reported Sale Price"
with respect thereto shall be the last quoted bid price for Common Stock or
such Equity Interest in the over-the-counter market on the relevant date as
reported by the National Quotation Bureau or similar organization. If the
Common Stock or such Equity Interest is not so quoted, the "Last Reported
Sale Price" with respect thereto will be the average of the mid-point of
-5-
the last bid and ask prices for the Common Stock or such Equity Interest on
the relevant date from each of at least three nationally recognized
independent investment banking firms selected by the Company for this
purpose;
"Make-Whole Premium" has the meaning provided in Section 501(b);
"Market Price per share of Common Stock" means the average of the Last
Reported Sale Prices of Common Stock for the 20 Trading Day period ending
on the applicable date of determination (if the applicable date of
determination is a Trading Day or, if not, then on the last Trading Day
prior to such applicable date of determination), appropriately adjusted to
take into account the occurrence, during the period commencing on the first
of the Trading Days during such 20 Trading Day period and ending on the
applicable date of determination, of any event that would result in an
adjustment of the Conversion Rate under this Supplemental Indenture;
"Maturity Date" has the meaning set forth in Section 203 hereof;
"Maximum Conversion Rate" has the meaning set forth in Section 806(h)
hereof;
"Net Exchange Property Amount" has the meaning provided in Section
812(d)(ii) hereof;
"Net Share Amount" has the meaning provided in Section 801(c) hereof;
"Net Shares" has the meaning provided in Section 801(c) hereof;
"Non-Electing Share" has the meaning provided in Section 812(b)
hereof;
"Notes" has the meaning set forth in the second paragraph of the
Recitals hereof;
"105% Trading Exception" has the meaning provided in the definition of
a Fundamental Change;
"Original Indenture" has the meaning set forth in the first paragraph
of the Recitals hereof;
"Original Issue Date" means the first date on which any Notes are
issued under this Supplemental Indenture;
"Principal Return" has the meaning provided in Section 801(c) hereof;
"Prior Notes" means the 3.75% Convertible Senior Subordinated Notes
due 2023 issued by the Company pursuant to the Original Indenture;
"Public Acquirer Change of Control" has the meaning provided in
Section 501(c);
"Public Acquirer Common Stock" has the meaning provided in Section
501(c);
"Purchase Date" has the meaning provided in Section 601(a) hereof;
-6-
"Purchase Notice" has the meaning provided in Section 601(a)(i)
hereof;
"Purchase Price" has the meaning provided in paragraph 8 of the Notes;
"Redemption Price" has the meaning set forth in paragraph 6 of the
Notes;
"Regular Record Date" has the meaning set forth in Section 204(a)
hereof;
"Rights Plan" means that certain Rights Agreement dated January 1,
2002, between the Company and JPMorgan Chase Bank, National Association
(formerly JPMorgan Chase Bank) as rights agent, as amended from time to
time;
"Significant Subsidiary" means CERC and CenterPoint Houston, and any
other Subsidiary which, at the time of the creation of a pledge, mortgage,
security interest or other lien upon any Equity Interests of such
Subsidiary, has consolidated gross assets (having regard to the Company's
beneficial interest in the shares, or the like, of that Subsidiary) that
represents at least 25% of the Company's consolidated gross assets
appearing in the Company's most recent audited consolidated financial
statements;
"Spin-off Market Price" per share of Common Stock or per share or
other applicable unit of Equity Interests in a subsidiary or other business
unit of the Company on any day means the average of the Last Reported Sale
Price with respect thereto for each of the ten consecutive Trading Days
commencing on and including the fifth Trading Day after the "ex date" with
respect to the issuance or distribution requiring such computations. As
used herein, the term "ex date," when used with respect to any issuance or
distribution, shall mean the first date on which the security trades
regular way on the New York Stock Exchange or such other national regional
exchange or market in which the security trades without the right to
receive such issuance or distribution;
"Stock Price" has the meaning provided in Section 501(b);
"Subsidiary" of any entity means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which)
more than 50% of (i) the issued and outstanding Equity Interests having
ordinary voting power to elect a majority of the Board of Directors or
comparable governing body of such corporation or entity (irrespective of
whether at the time capital stock of any other class or classes of such
corporation or other entity shall or might have voting power upon the
occurrence of any contingency), (ii) the interest in the capital or profits
of such limited liability company, partnership, joint venture or other
entity, or (iii) the beneficial interest in such trust or estate is at the
time directly or indirectly owned or controlled by such entity, by such
entity and one or more of its other Subsidiaries, or by one or more of such
entity's other Subsidiaries;
"Ten-Day Average Price" has the meaning provided in Section 801(b);
"Trading Day" means (a) if the applicable security is listed, admitted
for trading or quoted on the New York Stock Exchange, the Nasdaq National
Market or another national security exchange, a day on which the New York
Stock Exchange, the Nasdaq
-7-
National Market or another national security exchange is open for business
or (b) if the applicable security is not so listed, admitted for trading or
quoted, any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law,
regulation or executive order to close;
"Trading Price" of the Notes on any date of determination means the
average of the secondary market bid quotations per $1,000 principal amount
of Notes obtained by the Bid Solicitation Agent for $10 million principal
amount of Notes at approximately 4:00 p.m., New York City time, on such
determination date from three unaffiliated, nationally recognized
securities dealers the Company selects, provided that if: (i) at least
three such bids are not obtained by the Bid Solicitation Agent, or (ii) in
the Company's reasonable judgment, the bid quotations are not indicative of
the secondary market value of the Notes, then the Trading Price of the
Notes will equal (a) the then applicable Conversion Rate of the Notes
multiplied by (b) the average of the Last Reported Sale Price of Common
Stock for each of the five Trading Days ending on such determination date,
appropriately adjusted to take into account the occurrence, during the
period commencing on the first of such Trading Days during such five
Trading Day period and ending on such determination date, of any event
described in Section 806 of this Supplemental Indenture;
All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this
Supplemental Indenture; and
The terms "herein," "hereof," "hereunder" and other words of similar
import refer to this Supplemental Indenture.
ARTICLE II
The Series of Securities
Section 201 Title of the Securities. The Notes shall be designated as the
"3.75% Convertible Senior Notes, Series B due 2023." The Notes shall be treated
for all purposes under the Indenture as a single class or series of Securities.
Section 202 Limitation on Aggregate Principal Amount. The Trustee shall
authenticate and deliver Notes for original issue on the Original Issue Date up
to the aggregate principal amount of $575,000,000 upon a Company Order for the
authentication and delivery thereof and satisfaction of Sections 301 and 303 of
the Original Indenture. Such order shall specify the amount of the Notes to be
authenticated, the date on which the original issue of Notes is to be
authenticated and the name or names of the initial Holder or Holders. Additional
notes may be issued by the Company within 13 days after the Original Issue Date
without the consent of the existing Holders of the Notes and shall be part of
the same series as the Notes, but the aggregate principal amount of Notes that
may be outstanding shall not exceed $575,000,000.
Section 203 Stated Maturity. The Stated Maturity of the Notes shall be May
15, 2023 (the "Maturity Date"). The principal amount of the Notes shall be
payable on the Maturity Date
-8-
unless the Notes are earlier redeemed, purchased or converted in accordance with
the terms of the Indenture.
Section 204 Interest and Interest Rates.
(a) The Notes shall bear interest at a rate of 3.75% per year, from May 15,
2005 or from the most recent Interest Payment Date (as defined below) to which
payment has been made or duly provided for, payable semiannually in arrears on
May 15 and November 15 of each year (each an "Interest Payment Date"), beginning
November 15, 2005, to the persons in whose names the Notes are registered at the
close of business on May 1 and November 1 (each a "Regular Record Date")
(whether or not a Business Day), as the case may be, immediately preceding such
Interest Payment Date. The Notes shall also provide for payment of contingent
interest ("Contingent Interest") in certain circumstances as specified in
paragraph 5 of the Notes.
(b) Holders of Notes at the close of business on a Regular Record Date will
receive payment of interest, including Contingent Interest, if any, payable on
the corresponding Interest Payment Date notwithstanding the conversion of such
Notes at any time after the close of business on such Regular Record Date. Notes
surrendered for conversion by a Holder during the period from the close of
business on any Regular Record Date to the opening of business on the
immediately following Interest Payment Date must be accompanied by payment of an
amount equal to the interest, including Contingent Interest, if any, that the
Holder is to receive on the Notes; provided, however, that no such payment need
be made if (1) the Company has specified a Redemption Date that is after a
Regular Record Date and on or prior to the immediately following Interest
Payment Date, (2) the Company has specified a Purchase Date following a
Fundamental Change that is during such period or (3) any overdue interest
(including overdue Contingent Interest, if any) exists at the time of conversion
with respect to such Notes to the extent of such overdue interest.
(c) Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
shall either (i) be paid to the Person in whose name such Note (or one or more
Predecessor Securities) is registered at the close of business on the Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of the Notes not less than ten
days prior to such Special Record Date, or (ii) be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Notes may be listed or traded, and
upon such notice as may be required by such exchange or automated quotation
system, all as more fully provided in the Indenture.
(d) The amount of interest, including Contingent Interest, if any, payable
for any period shall be computed on the basis of a 360-day year of twelve 30-day
months. The amount of interest, including Contingent Interest, if any, payable
for any partial period shall be computed on the basis of a 360-day year of
twelve 30-day months and the days elapsed in any partial month. In the event
that any date on which interest is payable on a Note is not a Business Day, then
a payment of the interest, including Contingent Interest, if any, payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay) with the
same force and effect as if made on the date the payment was originally payable.
-9-
(e) If any principal of the Notes or any portion of such principal is not
paid when due (whether upon acceleration, upon the date set for payment of the
Redemption Price pursuant to paragraph 6 of the Notes, upon the date set for
payment of a Purchase Price or Fundamental Change Purchase Price pursuant to
paragraph 8 of the Notes or upon the Stated Maturity) or if interest (including
Contingent Interest, if any) due hereon or any portion of such interest is not
paid when due in accordance with paragraph 1 or paragraph 5 or 11 of the Note,
then in each such case the overdue amount shall bear interest at the rate of
3.75% per annum, compounded semiannually (to the extent that the payment of such
interest shall be legally enforceable), which interest shall accrue from the
date such overdue amount was due to the date payment of such amount, including
interest thereon, has been made or duly provided for. All such interest shall be
payable on demand.
Section 205 Paying Agent and Conversion Agent; Place of Payment. The
Trustee shall initially serve as the Paying Agent and Conversion Agent for the
Notes. The Company may appoint and change any Paying Agent or Conversion Agent
or approve a change in the office through which any Paying Agent acts without
notice, other than notice to the Trustee. The Company or any of its Subsidiaries
or any of their Affiliates may act as Paying Agent or Conversion Agent. The
Place of Payment where the Notes may be presented or surrendered for payment
shall be the Corporate Trust Office of the Trustee.
Section 206 Place of Registration or Exchange; Notices and Demands With
Respect to the Notes. The place where the Holders of the Notes may present the
Notes for registration of transfer or exchange and may make notices and demands
to or upon the Company in respect of the Notes shall be the Corporate Trust
Office of the Trustee.
Section 207 Percentage of Principal Amount. The Notes shall be initially
issued at 100% of their principal amount plus an amount equal to the accrued and
unpaid interest, if any, from May 15, 2005.
Section 208 Global Notes.
(a) The Notes shall be issued initially in the form of one or more
permanent Global Securities in definitive, fully registered, book-entry form,
without interest coupons (collectively, the "Global Notes").
(b) Each of the Global Notes shall represent such of the Notes as shall be
specified therein and shall each provide that it shall represent the aggregate
principal amount of Notes from time to time endorsed thereon and that the
aggregate principal amount of Notes represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges, redemptions,
purchases or conversions. Any endorsement of a Global Note to reflect the
amount, or any increase or decrease in the aggregate principal amount, of Notes
represented thereby shall be reflected by the Trustee on Schedule A attached to
the Note and made by the Trustee in accordance with written instructions or such
other written form of instructions as is customary for the Depositary, from the
Depositary or its nominee on behalf of any Person having a beneficial interest
in the Global Note.
-10-
(c) The Depository Trust Company shall initially serve as Depositary with
respect to the Global Notes. Such Global Notes shall bear the legends set forth
in the form of Note attached as Exhibit A hereto.
Section 209 Form of Securities. The Global Notes shall be substantially in
the form attached as Exhibit A hereto.
Section 210 Securities Registrar. The Trustee shall initially serve as the
Security Registrar for the Notes.
Section 211 Sinking Fund Obligations. The Company shall have no obligation
to redeem or purchase any Notes pursuant to any sinking fund or analogous
requirement.
Section 212 Bid Solicitation Agent. The Trustee shall initially serve as
the bid solicitation agent (the "Bid Solicitation Agent") for purposes of
obtaining secondary market bid quotations for determining Trading Prices. The
Company may change the Bid Solicitation Agent at any time; provided, however,
the Bid Solicitation Agent shall not be an Affiliate of the Company. The Bid
Solicitation Agent shall solicit bids from nationally recognized securities
dealers that are believed by the Company to be willing to bid for the Notes.
Section 213 Tax Treatment of Notes The Company agrees, and by purchasing a
beneficial ownership interest in the Notes each Holder, and any person
(including an entity) that acquires a direct or indirect beneficial interest in
the Notes, will be deemed to have agreed, unless otherwise required by
applicable law, (i) for United States federal income tax purposes to treat the
Notes as Indebtedness of the Company that is subject to the Contingent Payment
Debt Instrument regulations under Treas. Reg. Sec. 1.1275-4 (the "CPDI
Regulations"), (ii) for all tax purposes to treat the Notes as Indebtedness of
the Company, (iii) for purposes of the CPDI Regulations, to treat the fair
market value of any stock beneficially received by a beneficial holder upon any
conversion of the Notes as a contingent payment, (iv) to be bound by the
Company's determination that the Notes are contingent payment debt instruments
subject to the "noncontingent bond method" of accruing original issue discount
within the meaning of the CPDI Regulations with respect to the Notes, (v) to
accrue original issue discount at the comparable yield as determined by the
Company, and (vi) to be bound by the Company's projected payment schedule with
respect to the Notes. In addition, unless otherwise required by applicable law,
the Company will treat the exchange of Prior Notes for Notes as not constituting
a significant modification for United States federal income tax purposes. The
provisions of this Supplemental Indenture shall be interpreted to further this
intention and agreement of the parties. The comparable yield and the schedule of
projected payments are not determined for any purpose other than for the
determination of interest accruals and adjustment thereof in respect of the
Notes for United States federal income tax purposes. Consistent with the
Company's treatment of the exchange of Prior Notes for Notes, as described
above, the comparable yield and schedule of projected payments governing the
Notes is identical to the comparable yield and schedule of projected payments
that governed the Prior Notes. The comparable yield and the schedule of
projected payments do not constitute a projection or representation regarding
the future stock price or the amounts payable on the Notes. For purposes of the
foregoing, the Company's determination of the "comparable yield" is 5.81% per
annum, compounded semiannually. A Holder of Notes may obtain the amount of
original issue discount, issue date,
-11-
comparable yield and projected payment schedule (which schedule is attached as
Exhibit F) by telephoning the Company's Treasury Department at (713) 207-7019 or
submitting a written request for such information to: CenterPoint Energy, Inc.,
1111 Louisiana, Houston, Texas 77002, Attention: Treasury Department.
Section 214 Defeasance and Discharge; Covenant Defeasance.
(a) Article Fourteen of the Original Indenture, including without
limitation, Sections 1402 and 1403 (as modified by Section 214(b) hereof)
thereof, shall apply to the Notes.
(b) Notwithstanding Section 214(a), (i) the Company shall not be released
from its obligations under Article VIII hereof, which obligations shall survive
any defeasance and discharge under Section 1402 of the Original Indenture or
covenant defeasance under Section 1403 of the Original Indenture, and (ii) the
occurrence of any event specified in Section 501(4) of the Original Indenture
with respect to Article VIII hereof shall be deemed to be or result in an Event
of Default in accordance with the terms of Article Five of the Original
Indenture.
(c) Notwithstanding Section 1403 of the Original Indenture, the occurrence
of any event specified in Section 1001(d)(i) hereof shall be deemed not to be or
result in an Event of Default with respect to the Notes on and after the date
the conditions set forth in Section 1404 of the Original Indenture with respect
to such Notes are satisfied and such covenant defeasance remains in full force
and effect pursuant to Article Fourteen of the Original Indenture.
ARTICLE III
Additional Covenant
Section 301 Limitations on Liens. The Company shall not pledge, mortgage,
hypothecate, or grant a security interest in, or permit any such mortgage,
pledge, security interest or other lien upon any Equity Interests now or
hereafter owned by the Company in any Significant Subsidiary to secure any
Indebtedness, without making effective provisions whereby the outstanding Notes
shall be equally and ratably secured with or prior to any and all such
Indebtedness and any other Indebtedness similarly entitled to be equally and
ratably secured; provided, however, that this provision shall not apply to or
prevent the creation or existence of:
(a) [Reserved];
(b) any mortgage, pledge, security interest, lien or encumbrance upon the
Equity Interests of CenterPoint Energy Transition Bond Company, LLC or any
other special purpose Subsidiary created on or after the date of this
Supplemental Indenture by the Company in connection with the issuance of
securitization bonds for the economic value of generation-related
regulatory assets and stranded costs;
(c) any mortgage, pledge, security interest, lien or encumbrance upon any
Equity Interests in a Person which was not affiliated with the Company
prior to one year before the grant of such mortgage, pledge, security
interest, lien or encumbrance (or the Equity Interests of a holding company
formed to acquire or hold such Equity Interests) created at the time of the
Company's acquisition of the Equity Interests or within one year after such
-12-
time to secure all or a portion of the purchase price for such Equity
Interests; provided that the principal amount of any Indebtedness secured
by such mortgage, pledge, security interest, lien or encumbrance does not
exceed 100% of such purchase price and the fees, expenses and costs
incurred in connection with such acquisition and acquisition financing;
(d) any mortgage, pledge, security interest, lien or encumbrance existing
upon Equity Interests in a Person which was not affiliated with the Company
prior to one year before the grant of such mortgage, pledge, security
interest, lien or encumbrance at the time of the Company's acquisition of
such Equity Interests (whether or not the obligations secured thereby are
assumed by the Company or such Subsidiary becomes a Significant
Subsidiary); provided that (i) such mortgage, pledge, security interest,
lien or encumbrance existed at the time such Person became a Significant
Subsidiary and was not created in anticipation of the acquisition, and (ii)
any such mortgage, pledge, security interest, lien or encumbrance does not
by its terms secure any Indebtedness other than Indebtedness existing or
committed immediately prior to the time such Person becomes a Significant
Subsidiary;
(e) liens for taxes, assessments or governmental charges or levies to the
extent not past due or which are being contested in good faith by
appropriate proceedings diligently conducted and for which the Company has
provided adequate reserves for the payment thereof in accordance with
generally accepted accounting principles;
(f) pledges or deposits in the ordinary course of business to secure
obligations under workers' compensation laws or similar legislation;
(g) materialmen's, mechanics', carriers', workers' and repairmen's liens
imposed by law and other similar liens arising in the ordinary course of
business for sums not yet due or currently being contested in good faith by
appropriate proceedings diligently conducted;
(h) attachment, judgment or other similar liens, which have not been
effectively stayed, arising in connection with court proceedings; provided
that such liens, in the aggregate, shall not secure judgments which exceed
$50,000,000 aggregate principal amount at any one time outstanding;
provided further that the execution or enforcement of each such lien is
effectively stayed within 30 days after entry of the corresponding judgment
(or the corresponding judgment has been discharged within such 30 day
period) and the claims secured thereby are being contested in good faith by
appropriate proceedings timely commenced and diligently prosecuted;
(i) other liens not otherwise referred to in paragraphs (a) through (h)
above, provided that the Indebtedness secured by such liens in the
aggregate, shall not exceed 1% of the Company's consolidated gross assets
appearing in the Company's most recent audited consolidated financial
statements at any one time outstanding;
(j) any mortgage, pledge, security interest, lien or encumbrance on the
Equity Interests of any Subsidiary that was otherwise permitted under this
Section 301 if such Subsidiary subsequently becomes a Significant
Subsidiary; or
-13-
(k) any extension, renewal or refunding of Indebtedness secured by any
mortgage, pledge, security interest, lien or encumbrance described in
paragraphs (a) through (j) above; provided that the principal amount of any
such Indebtedness is not increased by an amount greater than the fees,
expenses and costs incurred in connection with such extension, renewal or
refunding.
ARTICLE IV
Optional Redemption of the Notes
Section 401 Right to Redeem; Notice to Trustee, Paying Agent and Holders.
On or after May 15, 2008, the Company may, at its option, redeem the Notes in
whole, or in part, at any time in accordance with the provisions of paragraph 6
of the Notes. If the Company elects to redeem Notes pursuant to paragraph 6 of
the Notes, it shall notify in writing the Trustee, the Paying Agent and each
Holder of Notes to be redeemed, as provided in Section 1104 of the Indenture and
Section 404 hereof.
Section 402 Fewer Than All Outstanding Notes to Be Redeemed. If fewer than
all of the outstanding Notes are to be redeemed, the Trustee shall select the
Notes to be redeemed in principal amounts of $1,000 or integral multiples
thereof. In the case that the Trustee shall select the Notes to be redeemed, the
Trustee may effectuate such selection by lot, pro rata, or by any other method
that the Trustee considers fair and appropriate. The Trustee will make such
selection promptly following receipt of the notice of redemption from the
Company provided pursuant to Section 404 hereof.
Section 403 Selection of Notes to Be Redeemed. If any Notes selected for
partial redemption are thereafter surrendered for conversion in part before
termination of the conversion right with respect to the portion of the Notes so
selected, the converted portion of such Notes shall be deemed (so far as may
be), solely for purposes of determining the aggregate principal amount of Notes
to be redeemed by the Company, to be the portion selected for redemption. Notes
which have been converted during a selection of Notes to be redeemed may be
treated by the Trustee as outstanding for the purpose of such selection. Nothing
in this Section 403 shall affect the right of any Holder to convert any Notes
pursuant to Article VIII hereof before the termination of the conversion right
with respect thereto.
Section 404 Notice of Redemption. In addition to those matters set forth in
Section 1104 of the Indenture, a notice of redemption sent to Holders of Notes
shall state:
(a) the then current Conversion Rate;
(b) the name and address of the Paying Agent and the Conversion Agent;
(c) that the Notes called for redemption may be converted at any time
before the close of business on the Business Day immediately preceding the
Redemption Date; and
(d) that Holders who wish to convert Notes must comply with the procedures
in paragraph 10 of the Notes.
-14-
Section 405 Effect of Notice of Redemption. Once notice of redemption is
mailed, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price, except for Notes that are converted in
accordance with the provisions of Article VIII hereof and paragraph 10 of the
Notes. Upon presentation and surrender to the Paying Agent, Notes called for
redemption shall be paid at the Redemption Price as defined in paragraph 6 of
the Notes.
Section 406 Deposit of Redemption Price. On or before 10:00 a.m. (New York
City time) on the Redemption Date, the Company shall deposit with the Paying
Agent (or if the Company or an Affiliate of the Company is acting as the Paying
Agent, shall segregate and hold in trust) an amount of money sufficient to pay
the aggregate Redemption Price of all the Notes to be redeemed on that date
other than the Notes or portions thereof called for redemption which on or prior
thereto have been delivered by the Company to the Security Registrar for
cancellation or have been converted. The Trustee and Paying Agent shall, as
promptly as practicable, return to the Company any money not required for that
purpose because of conversion of the Notes in accordance with the provisions of
Article VIII hereof. If such money is then held by the Company or a Subsidiary
in trust and is not required for such purpose, it shall be discharged from such
trust.
ARTICLE V
Purchase and Adjustments to Conversion Rate Upon a Fundamental Change
Section 501 Purchase at the Option of the Holder Upon a Fundamental Change.
(a) If a Fundamental Change shall occur at any time prior to May 15, 2008,
each Holder shall have the right, at such Holder's option, to require the
Company to purchase any or all of such Holder's Notes for cash on the date
selected by the Company that is no later than 35 days after the date of the
Company Notice of the occurrence of such Fundamental Change (subject to
extension to comply with applicable law, as provided in Section 704) (the
"Fundamental Change Purchase Date"). The Notes shall be repurchased in integral
multiples of $1,000 of the principal amount. The Company shall purchase such
Notes at a price (the "Fundamental Change Purchase Price") equal to 100% of the
principal amount of the Notes to be purchased plus accrued and unpaid interest,
including Contingent Interest, if any, to the Fundamental Change Purchase Date.
No Notes may be purchased at the option of the Holders upon a Fundamental Change
if there has occurred and is continuing an Event of Default (other than an Event
of Default that is cured by the payment of the Fundamental Change Purchase Price
of the Notes).
(b) Subject to Section 501(c), if a Holder elects to convert such Holder's
Notes in connection with a Fundamental Change pursuant to clause (c) of the
definition thereof set forth in Section 102 (or in connection with a transaction
that would have been a Fundamental Change under such clause (c) but for the
existence of the 105% Trading Price Exception), that occurs on or prior to May
15, 2008 pursuant to which 10% or more of the consideration for the Common Stock
(other than cash payments for fractional shares) in such Fundamental Change
transaction consists of cash or securities (or other property) that are not
traded or scheduled to be traded
-15-
immediately following such transaction on a U.S. national securities exchange or
the Nasdaq National Market, the Company will increase the Conversion Rate by the
Make-Whole Premium.
The "Make-Whole Premium" will be determined by reference to the table below
and is based on the date on which the Fundamental Change becomes effective (the
"Effective Date") and the price (the "Stock Price") paid per share of Common
Stock in the transaction constituting the Fundamental Change. If the holders of
Common Stock receive only cash in the transaction, the Stock Price shall be the
cash amount paid per share of Common Stock. Otherwise, the Stock Price shall be
equal to the average of the Last Reported Sale Price of Common Stock for each of
the five Trading Days ending on the Trading Day immediately preceding the
Effective Date.
The following table shows what the Make-Whole Premium would be for each
hypothetical Stock Price and Effective Date set forth below, expressed as the
number of additional shares to be issuable per $1,000 of the principal amount of
the Notes.
STOCK PRICE
EFFECTIVE $ 7.72 $ 8.25 $ 9.00 $10.00 $12.50 $15.00 $17.50 $20.00 $22.50 $25.00 $27.50 $30.00 $32.50 $35.00 $37.50 $40.00
DATE
November 43.18 35.00 26.51 19.44 9.38 4.72 2.50 1.40 0.88 0.58 0.39 0.27 0.18 0.12 0.07 0.00
15, 2005
May
15, 2006 43.18 34.98 26.37 18.97 8.66 4.12 2.04 1.08 0.66 0.43 0.29 0.20 0.13 0.08 0.00 0.00
November 43.18 34.95 26.27 18.18 7.24 2.81 0.98 0.80 0.40 0.19 0.11 0.08 0.01 0.00 0.00 0.00
15, 2006
May
15, 2007 43.18 34.93 26.03 17.64 6.72 2.53 0.65 0.20 0.22 0.13 0.07 0.02 0.00 0.00 0.00 0.00
November 43.18 34.90 25.57 17.13 5.36 1.48 0.36 0.14 0.09 0.05 0.03 0.01 0.00 0.00 0.00 0.00
15, 2007
May
15, 2008 43.18 34.88 25.31 16.40 3.25 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
The Make-Whole Premiums set forth above are based upon a Stock Price of
$7.72 at the time of the initial offer of the Prior Notes on May 15, 2003 and an
initial Conversion Rate of 86.3558.
The actual Stock Price and Effective Date may not be set forth on the
table, in which case:
(i) If the actual Stock Price on the Effective Date is between two
Stock Prices on the table or the actual Effective Date is between two
Effective Dates on the table, the Make-Whole Premium will be determined by
a straight-line interpolation between the
-16-
Make-Whole Premiums set forth for the two Stock Prices and the two
Effective Dates on the table based on a 365-day year, as applicable;
(ii) If the Stock Price on the Effective Date exceeds $40.00 per share
(subject to adjustment described below), no Make-Whole Premium will be
paid; and
(iii) If the Stock Price on the Effective Date is less than or equal
to $7.72 per share (subject to adjustment described below), no Make-Whole
Premium will be paid.
Notwithstanding the foregoing, in no event will the Conversion Rate exceed
the Maximum Conversion Rate, subject to adjustments in the same manner as set
forth in Section 806.
The Stock Prices set forth in the first row of the table above will be
adjusted as of any date on which the Conversion Rate is adjusted. The adjusted
Stock Prices will equal the Stock Prices applicable immediately prior to such
adjustment multiplied by a fraction, the numerator of which is the Conversion
Rate immediately prior to the adjustment giving rise to the Stock Price
adjustment and the denominator of which is the Conversion Rate so adjusted. The
Make-Whole Premium will be correspondingly adjusted in the same manner as the
adjustments described in Section 806.
(c) Notwithstanding the foregoing, in the case of a Public Acquirer Change
of Control (as defined below), the Company may, in lieu of paying a Make-Whole
Premium as described in Section 501(b), elect to adjust the Conversion Rate and
the related conversion obligation such that from and after the effective date of
such Public Acquirer Change of Control, Holders of the Notes will be entitled to
convert the Notes into a number of shares of Public Acquirer Common Stock (as
defined below) by multiplying the Conversion Rate in effect immediately before
the Public Acquirer Change of Control by a fraction:
(i) the numerator of which will be (i) in the case of a share
exchange, consolidation or merger, pursuant to which the Common Stock is
converted into cash, securities or other property, the average value of all
cash and any other consideration (as determined by the Board of Directors)
paid or payable per share of Common Stock or (ii) in the case of any other
Public Acquirer Change of Control, the average of the Last Reported Sale
Price of the Common Stock for the five Trading Days prior to but excluding
the effective date of such Public Acquirer Change of Control, and
(ii) the denominator of which will be the average Last Reported Sale
Price of the Public Acquirer Common Stock for the five Trading Days
commencing on the Trading Day next succeeding the effective date of such
Public Acquirer Change of Control.
A "Public Acquirer Change of Control" means any event that would otherwise
obligate the Company to pay a Make-Whole Premium as described in Section 501(b)
and the acquirer (or any entity that directly or indirectly has Beneficial
Ownership of more than 50% of the voting power of all shares of the acquirer's
capital stock that are entitled to vote generally in the election of directors
or that is a direct or indirect wholly-owned subsidiary of the acquirer) has a
class of common stock traded on a national securities exchange or quoted on the
Nasdaq
-17-
National Market or which will be so traded or quoted when issued or exchanged in
connection with such event (the "Public Acquirer Common Stock").
After the adjustment of the Conversion Rate in connection with a Public
Acquirer Change of Control, the Conversion Rate will be subject to further
similar adjustments in the event that any of the events described in Section 806
occur thereafter.
Upon a Public Acquirer Change of Control, if the Company so elects, Holders
may convert the Notes at the adjusted Conversion Rate described in the third
preceding paragraph but will not be entitled to the Make-Whole Premium described
under Section 501(b). The Company is required to notify Holders of its election
in writing. In addition, the Holder can also, subject to this Section 501,
require the Company to repurchase all or a portion of the Notes as described
under Section 501(a).
Section 502 Notice of Fundamental Change. The Company, or at its request
(which must be received by the Paying Agent at least five Business Days (or such
lesser period as agreed to by the Paying Agent) prior to the date the Paying
Agent is requested to give such notice as described below), the Paying Agent in
the name of and at the expense of the Company, shall mail to all Holders and the
Trustee and the Paying Agent a Company Notice of the occurrence of a Fundamental
Change and of the purchase right arising as a result thereof, including the
information required by Section 701 hereof, on or before the 30th day after the
occurrence of such Fundamental Change.
Section 503 Exercise of Option. For a Note to be so purchased at the option
of the Holder, the Paying Agent must receive such Note duly endorsed for
transfer, together with a written notice of purchase (a "Fundamental Change
Purchase Notice") in the form entitled "Form of Fundamental Change Purchase
Notice" on the reverse thereof duly completed, on or before the 35th day after
the date of the Company Notice of the occurrence of such Fundamental Change,
subject to extension to comply with applicable law. The Fundamental Change
Purchase Notice shall state:
(a) if certificated, the certificate numbers of the Notes which the Holder
shall deliver to be purchased, or, if not certificated, the Fundamental
Change Purchase Notice must comply with appropriate Depositary procedures;
(b) the portion of the principal amount of the Notes which the Holder shall
deliver to be purchased, which portion must be $1,000 in principal amount
or an integral multiple thereof; and
(c) that such Notes shall be purchased as of the Fundamental Change
Purchase Date pursuant to the terms and conditions specified in paragraph 8
of the Notes and in this Supplemental Indenture.
Section 504 Procedures. The Company shall purchase from a Holder, pursuant
to Article V hereof, Notes if the principal amount of such Notes is $1,000 or an
integral multiple of $1,000 if so requested by such Holder.
-18-
Any purchase by the Company contemplated pursuant to the provisions of
Article V hereof shall be consummated by the delivery of the Fundamental Change
Purchase Price to be received by the Holder promptly following the later of the
Fundamental Change Purchase Date or the time of book-entry transfer or delivery
of the Notes.
Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Fundamental Change Purchase Notice contemplated by Section
503 shall have the right at any time prior to the close of business on the
Business Day prior to the Fundamental Change Purchase Date to withdraw such
Fundamental Change Purchase Notice (in whole or in part) by delivery of a
written notice of withdrawal to the Paying Agent in accordance with Section 702.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Fundamental Change Purchase Notice or written notice of withdrawal thereof.
On or before 10:00 a.m. (New York City time) on the Fundamental Change
Purchase Date, the Company shall deposit with the Paying Agent (or if the
Company or an Affiliate of the Company is acting as the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the aggregate Fundamental
Change Purchase Price of the Notes to be purchased pursuant to Article V hereof.
Payment by the Paying Agent of the Fundamental Change Purchase Price for such
Notes shall be made promptly following the later of the Fundamental Change
Purchase Date or the time of book-entry transfer or delivery of such Notes. If
the Paying Agent holds, in accordance with the terms of the Indenture, money
sufficient to pay the Fundamental Change Purchase Price of such Notes on the
Business Day following the Fundamental Change Purchase Date, then, on and after
such Fundamental Change Purchase Date, such Notes shall cease to be outstanding
and interest (including Contingent Interest, if any) on such Notes shall cease
to accrue, whether or not book-entry transfer of such Notes is made or such
Notes are delivered to the Paying Agent, and all other rights of the Holder
shall terminate (other than the right to receive the Fundamental Change Purchase
Price upon delivery or transfer of the Notes). Nothing herein shall preclude any
withholding tax required by law.
The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of the
Fundamental Change Purchase Price and shall notify the Trustee of any default by
the Company in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall segregate the money held by it as Paying
Agent and hold it as a separate trust fund. The Company at any time may require
a Paying Agent to deliver all money held by it to the Trustee and to account for
any funds disbursed by the Paying Agent. Upon doing so, the Paying Agent shall
have no further liability for the cash delivered to the Trustee.
All questions as to the validity, eligibility (including time of receipt)
and acceptance of any Notes for redemption shall be determined by the Company,
whose determination shall be final and binding.
-19-
ARTICLE VI
Optional Purchase
Section 601 Purchase of Notes by the Company at the Option of the Holder.
(a) On each of May 15, 2008, May 15, 2013 and May 15, 2018 (each, a
"Purchase Date"), Holders shall have the option to require the Company to
purchase any Notes at the Purchase Price specified in paragraph 8 of the Notes,
upon:
(i) delivery to the Paying Agent by the Holder of a written notice of
purchase (a "Purchase Notice") at any time from the opening of business on
the date that is 20 Business Days prior to a Purchase Date until the close
of business on the fifth Business Day prior to such Purchase Date, stating:
(1) if certificated, the certificate numbers of the Notes which
the Holder will deliver to be purchased, or, if not certificated, the
Purchase Notice must comply with appropriate Depositary procedures;
(2) the portion of the principal amount of the Notes which the
Holder will deliver to be purchased, which portion must be $1,000 in
principal amount or an integral multiple thereof; and
(3) that such Notes shall be purchased as of the Purchase Date
pursuant to the terms and conditions specified in paragraph 8 of the
Notes and in this Supplemental Indenture; and
(ii) delivery or book-entry transfer of such Notes to the Paying Agent
prior to, on or after the Purchase Date (together with all necessary
endorsements) at the offices of the Paying Agent, such delivery or transfer
being a condition to receipt by the Holder of the Purchase Price therefor;
provided, however, that such Purchase Price shall be so paid pursuant to
this Section 601 only if the Notes so delivered or transferred to the
Paying Agent shall conform in all respects to the description thereof in
the related Purchase Notice.
(b) The Company shall purchase from a Holder, pursuant to the terms of this
Section 601, Notes if the principal amount of such Notes is $1,000 or an
integral multiple of $1,000 if so requested by such Holder.
(c) Any purchase by the Company contemplated pursuant to the provisions of
this Section 601 shall be consummated by the delivery of the Purchase Price to
be received by the Holder promptly following the later of the Purchase Date or
the time of book-entry transfer or delivery of the Notes.
(d) Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Purchase Notice contemplated by this Section 601 shall
have the right at any time prior to the close of business on the Business Day
prior to the Purchase Date to withdraw
-20-
such Purchase Notice (in whole or in part) by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 702.
(e) The Paying Agent shall promptly notify the Company of the receipt by it
of any Purchase Notice or written notice of withdrawal thereof.
(f) On or before 10:00 a.m. (New York City time) on the Purchase Date, the
Company shall deposit with the Paying Agent (or if the Company or an Affiliate
of the Company is acting as the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the aggregate Purchase Price of the Notes to be
purchased pursuant to this Section 601. Payment by the Paying Agent of the
Purchase Price for such Notes shall be made promptly following the later of the
Purchase Date or the time of book-entry transfer or delivery of such Notes. If
the Paying Agent holds, in accordance with the terms of the Indenture, money
sufficient to pay the Purchase Price of such Notes on the Business Day following
the Purchase Date, then, on and after such Purchase Date, such Notes shall cease
to be outstanding and interest (including Contingent Interest, if any) on such
Notes shall cease to accrue, whether or not book-entry transfer of such Notes is
made or such Notes are delivered to the Paying Agent, and all other rights of
the Holder shall terminate (other than the right to receive the Purchase Price
upon delivery or transfer of the Notes).
(g) The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of the
Purchase Price and shall notify the Trustee of any default by the Company in
making any such payment. If the Company or an Affiliate of the Company acts as
Paying Agent, it shall segregate the money held by it as Paying Agent and hold
it as a separate trust fund. The Company at any time may require a Paying Agent
to deliver all money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon doing so, the Paying Agent shall have no
further liability for the cash delivered to the Trustee.
ARTICLE VII
Conditions and Procedures for Purchases at Option of Holders
Section 701 Notice of Purchase Date or Fundamental Change. The Company
shall send notices (each, a "Company Notice") to the Holders (and to beneficial
owners as required by applicable law) at their addresses shown in the Security
Register maintained by the Security Registrar, and delivered to the Trustee and
Paying Agent, not less than 20 Business Days prior to each Purchase Date, or on
or before the 30th day after the occurrence of the Fundamental Change, as the
case may be (each such date of delivery, a "Company Notice Date"). Each Company
Notice shall include a form of Purchase Notice or Fundamental Change Purchase
Notice to be completed by a Holder and shall state:
(a) the applicable Purchase Price or Fundamental Change Purchase Price,
excluding accrued and unpaid interest, Conversion Rate at the time of such
notice (and any adjustments to the Conversion Rate) and, to the extent
known at the time of such notice, the amount of interest (including
Contingent Interest, if any), if any, that will be payable
-21-
with respect to the Notes on the applicable Purchase Date or Fundamental
Change Purchase Date;
(b) if the notice relates to a Fundamental Change, the events causing the
Fundamental Change and the date of the Fundamental Change;
(c) the Purchase Date or Fundamental Change Purchase Date;
(d) the last date on which a Holder may exercise its purchase right;
(e) the name and address of the Paying Agent and the Conversion Agent;
(f) that Notes must be surrendered to the Paying Agent to collect payment
of the Purchase Price or Fundamental Change Purchase Price;
(g) that Notes as to which a Purchase Notice or Fundamental Change Purchase
Notice has been given may be converted only if the applicable Purchase
Notice or Fundamental Change Purchase Notice has been withdrawn in
accordance with the terms of this Supplemental Indenture;
(h) that the Purchase Price or Fundamental Change Purchase Price for any
Notes as to which a Purchase Notice or a Fundamental Change Purchase
Notice, as applicable, has been given and not withdrawn shall be paid by
the Paying Agent promptly following the later of the Purchase Date or
Fundamental Change Purchase Date, as applicable, or the time of book-entry
transfer or delivery of such Notes;
(i) the procedures the Holder must follow under Article V or VI hereof, as
applicable, and Article VII hereof;
(j) briefly, the conversion rights of the Notes;
(k) that, unless the Company defaults in making payment of such Purchase
Price or Fundamental Change Purchase Price on Notes covered by any Purchase
Notice or Fundamental Change Purchase Notice, as applicable, interest
(including Contingent Interest, if any) will cease to accrue on and after
the Purchase Date or Fundamental Change Purchase Date, as applicable;
(l) the CUSIP or ISIN number of the Notes; and
(m) the procedures for withdrawing a Purchase Notice or Fundamental Change
Purchase Notice.
In connection with providing such Company Notice, the Company will issue a
press release and publish a notice containing the information in such Company
Notice in a newspaper of general circulation in The City of New York or publish
such information on the Company's then existing Web site or through such other
public medium as the Company may use at the time.
-22-
At the Company's request, made at least five Business Days prior to the
date upon which such notice is to be mailed (or such lesser period as agreed to
by the Paying Agent), and at the Company's expense, the Paying Agent shall give
the Company Notice in the Company's name; provided, however, that, in all cases,
the text of the Company Notice shall be prepared by the Company.
Section 702 Effect of Purchase Notice or Fundamental Change Purchase
Notice; Effect of Event of Default. Upon receipt by the Company of the Purchase
Notice or Fundamental Change Purchase Notice specified in Section 601 or Section
503, as applicable, the Holder of the Notes in respect of which such Purchase
Notice or Fundamental Change Purchase Notice, as the case may be, was given
shall (unless such Purchase Notice or Fundamental Change Purchase Notice is
withdrawn as specified in the following two paragraphs) thereafter be entitled
to receive solely the Purchase Price or Fundamental Change Purchase Price with
respect to such Notes. Such Purchase Price or Fundamental Change Purchase Price
shall be paid by the Paying Agent to such Holder promptly following the later of
(x) the Purchase Date or the Fundamental Change Purchase Date, as the case may
be, with respect to such Notes (provided the conditions in Section 601 or
Section 503, as applicable, have been satisfied) and (y) the time of delivery or
book-entry transfer of such Notes to the Paying Agent by the Holder thereof in
the manner required by Section 601 or Section 503, as applicable. Notes in
respect of which a Purchase Notice or Fundamental Change Purchase Notice, as the
case may be, has been given by the Holder thereof may not be converted for
shares of Common Stock on or after the date of the delivery of such Purchase
Notice or Fundamental Change Purchase Notice, as the case may be, unless such
Purchase Notice or Fundamental Change Purchase Notice, as the case may be, has
first been validly withdrawn as specified in the following two paragraphs.
A Purchase Notice or Fundamental Change Purchase Notice, as the case may
be, may be withdrawn by means of a written notice of withdrawal delivered to the
office of the Paying Agent at any time prior to 5:00 p.m. New York City time on
the Business Day prior to the Purchase Date or the Fundamental Change Purchase
Date, as the case may be, to which it relates specifying:
(a) if certificated, the certificate number of the Notes in respect of
which such notice of withdrawal is being submitted, or, if not
certificated, the written notice of withdrawal must comply with appropriate
Depositary procedures;
(b) the principal amount of the Notes with respect to which such notice of
withdrawal is being submitted; and
(c) the principal amount, if any, of such Notes which remains subject to
the original Purchase Notice or Fundamental Change Purchase Notice, as the
case may be, and which has been or shall be delivered for purchase by the
Company.
There shall be no purchase of any Notes pursuant to Article V or Article VI
hereof if an Event of Default has occurred and is continuing (other than a
default that is cured by the payment of the Purchase Price or Fundamental Change
Purchase Price, as the case may be). The Paying Agent shall promptly return to
the respective Holders thereof any Notes (x) with respect to which a Purchase
Notice or Fundamental Change Purchase Notice, as the case may be, has
-23-
been withdrawn in compliance with this Supplemental Indenture, or (y) held by it
during the continuance of an Event of Default (other than a default that is
cured by the payment of the Purchase Price or Fundamental Change Purchase Price,
as the case may be) in which case, upon such return, the Purchase Notice or
Fundamental Change Purchase Notice with respect thereto shall be deemed to have
been withdrawn.
Section 703 Notes Purchased in Part. Any Notes that are to be purchased
only in part shall be surrendered at the office of the Paying Agent (with, if
the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing) and the Company shall execute and the Trustee or the Authenticating
Agent shall authenticate and deliver to the Holder of such Notes, without
service charge, a new Note or Notes, of any authorized denomination as requested
by such Holder in aggregate principal amount equal to, and in exchange for, the
portion of the principal amount of the Notes so surrendered which is not
purchased or redeemed.
Section 704 Covenant to Comply with Securities Laws Upon Purchase of Notes.
In connection with any offer to purchase Notes under Article V or Article VI
hereof, the Company shall, to the extent applicable, (a) comply with Rules 13e-4
and 14e-1 (and any successor provisions thereto) under the Exchange Act, if
applicable; (b) file the related Schedule TO (or any successor schedule, form or
report) under the Exchange Act, if applicable; and (c) otherwise comply with all
applicable federal and state securities laws so as to permit the rights and
obligations under Article V or Article VI hereof to be exercised in the time and
in the manner specified in Article V or Article VI hereof.
Section 705 Repayment to the Company. The Trustee and the Paying Agent
shall return to the Company any cash or property that remains unclaimed as
provided in paragraph 14 of the Notes, together with interest that the Trustee
or Paying Agent, as the case may be, has agreed to pay, if any, held by them for
the payment of a Purchase Price or Fundamental Change Purchase Price, as the
case may be; provided, however, that to the extent that the aggregate amount of
cash or property deposited by the Company pursuant to Section 601(f) or 504, as
applicable, exceeds the aggregate Purchase Price or Fundamental Change Purchase
Price, as the case may be, of the Notes or portions thereof which the Company is
obligated to purchase as of the Purchase Date or Fundamental Change Purchase
Date, as the case may be, then promptly on and after the Business Day following
the Purchase Date or Fundamental Change Purchase Date, as the case may be, the
Trustee and the Paying Agent shall return any such excess to the Company
together with interest that the Trustee or Paying Agent, as the case may be, has
agreed to pay, if any.
Section 706 Officers' Certificate. At least five Business Days before the
Company Notice Date, the Company shall deliver an Officers' Certificate to the
Trustee (provided, that at the Company's option, the matters to be addressed in
such Officers' Certificate may be divided among two such certificates)
specifying:
(a) the manner of payment selected by the Company; and
(b) whether the Company desires the Trustee to give the Company Notice
required by Section 701 herein.
-24-
ARTICLE VIII
Conversion of Notes
Section 801 Right to Convert; Conversion Value; Method of Payment.
(a) Subject to and in accordance with the provisions of the Indenture, a
Holder may convert its Notes at any time during which any condition stated in
paragraph 10 of the Notes is met into Cash and, if applicable, shares of Common
Stock at a rate per $1,000 principal amount of Notes equivalent to 86.3558
shares of Common Stock, subject to adjustment as herein set forth (the
"Conversion Rate"). A Holder may convert a portion of the principal amount of
Notes if the portion is $1,000 or an integral multiple of $1,000.
(b) Once Notes are tendered for conversion, subject to this Section 801 and
to Section 806, Holders tendering the Notes will be entitled to receive, per
$1,000 principal amount of Notes, Cash and, if applicable, shares of Common
Stock, the aggregate value of which per $1,000 principal amount of Notes (the
"Conversion Value") will be equal to the product of (i) the Conversion Rate in
effect on the Conversion Date, and (ii) the average of the Last Reported Sale
Price of Common Stock for each of the ten consecutive Trading Days
(appropriately adjusted to take into account the occurrence during such period
of stock splits and similar events) beginning on the second Trading Day
immediately following the day the Notes are tendered for conversion (the
"Ten-Day Average Price").
(c) The Company will deliver the Conversion Value of the Notes surrendered
for conversion to a converting Holder as follows:
(i) an amount in Cash (in the case of each such conversion, the
"Principal Return") equal to the lesser of (A) the aggregate Conversion
Value of those Notes and (B) the aggregate principal amount of those Notes;
(ii) if the aggregate Conversion Value of those Notes is greater than
the Principal Return, a number of shares of Common Stock (in the case of
each such conversion, the "Net Shares"), determined as set forth in clause
(d) below, having a value equal to such aggregate Conversion Value less the
Principal Return (in the case of each such conversion, the "Net Share
Amount"); provided, however, that the Company may, at its option, deliver
Cash or a combination of Cash and shares of Common Stock equal in value to
the Net Share Amount. If and to the extent the Company makes such an
election, references herein to "Net Shares" and "Net Share Amount" shall be
deemed to be references to such amount in Cash or a combination of Cash and
shares of Common Stock, as applicable.
(d) The Cash payment and the number of Net Shares to be issued, if any,
will be determined by dividing the Net Share Amount by the Ten-Day Average
Price.
(e) The Conversion Value, Principal Return, Net Share Amount and the number
of Net Shares with respect to any Notes tendered by a Holder for conversion will
be determined by the Company at the end of the ten consecutive Trading Day
period beginning on the second Trading Day immediately following the day such
Notes are tendered for conversion (in the case
-25-
of each such conversion, the "Determination Date"). The Company will pay the
Cash and deliver the Net Shares, if any, with respect to such Notes as
contemplated by Section 802.
Section 802 Conversion Procedures. To convert Notes, a Holder must satisfy
the requirements in this Section 802 and in paragraph 10 of the Notes. The later
of (a) the date on which the Holder satisfies all those requirements with
respect to any Notes held by such Holder and (b) the Determination Date with
respect to such conversion is herein referred to as the "Conversion Date". As
soon as practicable, but in no event later than the fifth Business Day following
the Conversion Date, the Company shall deliver to such Holder, through the
Conversion Agent, the Principal Return, a certificate for (or book-entry
transfer through the Depositary of) the number of Net Shares issuable upon the
conversion and cash in lieu of any fractional Net Shares determined pursuant to
Section 803. The Person in whose name any such shares of Common Stock are
registered shall be treated as a stockholder of record on and after the
Conversion Date; provided, however, that no surrender of Notes on any date when
the stock transfer books of the Company shall be closed shall be effective to
constitute the Person or Persons entitled to receive any 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; such conversion
shall be at the Conversion Rate in effect on the Conversion Date, as if the
stock transfer books of the Company had not been closed. Upon conversion of
Notes by a Holder, such Person shall no longer be a Holder of such Notes.
No payment or adjustment shall be made for dividends on, or other
distributions with respect to, any Common Stock, except as provided in Section
806 or as otherwise provided in this Indenture.
On conversion of Notes, that portion of accrued interest including accrued
Contingent Interest, if any, with respect to the converted Notes shall not be
canceled, extinguished or forfeited, but rather shall be deemed to be paid in
full to the Holder thereof through delivery of the Principal Return and the Net
Shares, if any (together with the cash payment, if any, in lieu of any
fractional Net Shares), with respect to such Notes in exchange for the Notes
being converted pursuant to the provisions hereof, and the Fair Market Value of
any Net Shares (together with any such cash payment in lieu of any fractional
Net Shares) shall be treated as issued, to the extent thereof, first in exchange
for interest accrued and unpaid through the Conversion Date and accrued and
unpaid Contingent Interest, and the balance, if any, of such Fair Market Value
of such Net Shares (and any such cash payment) shall be treated as issued in
exchange for the principal amount of the Notes being converted pursuant to the
provisions hereof.
If a Holder converts more than one Note at the same time, the Principal
Return and the number of Net Shares issuable upon the conversion shall be based
on the total principal amount of the Notes converted.
Upon surrender of a Note that is converted in part, the Company shall
execute, and the Trustee or the Authenticating Agent shall authenticate and
deliver to the Holder, a new Note in
-26-
an authorized denomination equal in principal amount to the unconverted portion
of the Note surrendered.
If the last day on which Notes may be converted is a legal holiday in a
place where a Conversion Agent is located, the Notes may be surrendered to that
Conversion Agent on the next succeeding day that it is not a legal holiday.
Section 803 Cash Payments in Lieu of Fractional Shares. The Company shall
not issue a fractional share of Common Stock upon conversion of Notes. Instead
the Company shall deliver Cash for the current market value of the fractional
share. The current market value of a fractional share shall be determined to the
nearest 1/10,000th of a share by multiplying the Ten-Day Average Price of a full
share of Common Stock by the fractional amount and rounding the product to the
nearest whole cent.
Section 804 Taxes on Conversion. If a Holder converts Notes, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on the
issue of shares of Common Stock upon the conversion. However, the Holder shall
pay any such tax which is due because the Holder requests the shares to be
issued in a name other than the Holder's name. The Conversion Agent may refuse
to deliver the certificates representing (or to effect a book-entry transfer of)
any Shares of Common Stock being issued in a name other than the Holder's name
until the Conversion Agent receives a sum sufficient to pay any tax which shall
be due because the shares are to be issued in a name other than the Holder's
name. Nothing herein shall preclude any withholding tax required by law.
Section 805 Covenants of the Company. The Company shall, prior to issuance
of any Notes hereunder, and 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 the Notes.
All shares of Common Stock delivered upon conversion of the Notes shall be
newly issued shares or treasury shares, shall be duly and validly issued and
fully paid and nonassessable and shall be free from preemptive rights and free
of any lien or adverse claim.
The Company shall endeavor promptly to comply with all federal and state
securities laws regulating the order and delivery of shares of Common Stock upon
the conversion of Notes, if any, and shall cause to have listed or quoted all
such shares of Common Stock on each United States national securities exchange
or over-the-counter or other domestic market on which the Common Stock is then
listed or quoted.
Section 806 Adjustments to Conversion Rate. The Conversion Rate shall be
adjusted from time to time, without duplication, as follows:
(a) In case the Company shall (i) pay a dividend, or make a distribution
exclusively in shares of its capital stock, on the Common Stock; (ii) subdivide
its outstanding Common Stock into a greater number of shares; (iii) combine its
outstanding Common Stock into a smaller number of shares; or (iv) reclassify its
Common Stock, the Conversion Rate in effect immediately prior to the record date
or effective date, as the case may be, for the adjustment pursuant to this
Section 806(a) as described below, shall be adjusted so that the Holder of any
-27-
Notes thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock of the Company which such Holder would have
owned or have been entitled to receive after the happening of any of the events
described above had such Notes been converted immediately prior to such record
date or effective time, as the case may be.
An adjustment made pursuant to this Section 806(a) shall become effective
immediately after the open of business on the day immediately following the
applicable record date, in the case of any such dividend or distribution, or
immediately after the applicable effective date of any such subdivision,
combination or reclassification of Common Stock. If any dividend or distribution
of the type described in clause (i) of the first sentence of this Section 806(a)
is not so paid or made, the Conversion Rate shall again be adjusted to the
Conversion Rate which would then be in effect if such dividend or distribution
had not been declared.
(b) In case the Company shall issue rights or warrants to all holders of
the Common Stock entitling them (for a period expiring within 60 days after the
date of issuance of such rights or warrants) to subscribe for or purchase Common
Stock at a price per share less than the Market Price per share of Common Stock
on the record date fixed for determination of shareholders entitled to receive
such rights or warrants, the Conversion Rate shall be adjusted so that the same
shall equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the open of business on the day immediately following such
record date by a fraction of which (i) the numerator shall be the number of
shares of Common Stock outstanding at the close of business on such record date
plus the number of additional shares of Common Stock offered for subscription or
purchase, and (ii) the denominator shall be the number 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 so offered would purchase at the
Market Price per share of Common Stock on the earlier of such record date or the
Trading Day immediately preceding the ex date for such issuance of rights or
warrants. Such adjustment shall be made successively whenever any such rights or
warrants are issued, and shall become effective immediately after the opening of
business on the day immediately following the record date for the determination
of shareholders entitled to receive such rights or warrants. To the extent that
shares of Common Stock are not delivered after the expiration of such rights or
warrants, the Conversion Rate shall be readjusted to the Conversion Rate which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of
shares of Common Stock actually delivered. If such rights or warrants are not so
issued, the Conversion Rate shall again be adjusted to be the Conversion Rate
which would then be in effect if such record date for the determination of
shareholders entitled to receive such rights or warrants had not been fixed. In
determining whether any rights or warrants entitle the holders to subscribe for
or purchase shares of Common Stock at less than such Market Price, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received by the Company for such
rights or warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors.
(c) In case the Company shall, by dividend or otherwise, distribute to all
holders of Common Stock any assets, debt securities or rights or warrants to
purchase any of its securities (excluding (i) any dividend, distribution or
issuance covered by those referred to in Section 806(a) or 806(b) hereof and
(ii) any dividend or distribution paid exclusively in cash) (any of the
foregoing hereinafter in this Section 806(c) called the "Distributed Assets or
Securities") in an
-28-
aggregate amount per share of Common Stock that, combined together with the
aggregate amount per share of Common Stock of any other such distributions to
all holders of its Common Stock made within the 12 months preceding the date of
payment of such distribution, and in respect of which no adjustment pursuant to
this Section 806(c) has been made, exceeds 15% of the Market Price per share of
Common Stock on the Trading Day immediately preceding the declaration of such
distribution, then, the Conversion Rate shall be adjusted so that the same shall
equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the open of business on the date immediately following the
record date mentioned below by a fraction of which (A) the numerator shall be
the Market Price per share of the Common Stock on the earlier of such record
date or the Trading Day immediately preceding the ex date for such dividend or
distribution, and (B) the denominator shall be (1) the Market Price per share of
Common Stock on the earlier of such record date or the Trading Day immediately
preceding the ex date for such dividend or distribution less (2) the Fair Market
Value on the earlier of such record date or the Trading Day immediately
preceding the ex date for such dividend or distribution (as determined by the
Board of Directors, whose determination shall be conclusive, and described in a
certificate filed with the Trustee and the Paying Agent) of the Distributed
Assets or Securities so distributed applicable to one share of Common Stock.
Such adjustment shall become effective immediately after the open of business on
the day immediately following the record date for the determination of
shareholders entitled to receive such dividend or distribution; provided,
however, that, if (i) the Fair Market Value of the portion of the Distributed
Assets or Securities so distributed applicable to one share of Common Stock is
equal to or greater than the Market Price per share of Common Stock on the
record date for the determination of shareholders entitled to receive such
distribution or (ii) the Market Price per share of Common Stock on the record
date for the determination of shareholders entitled to receive such distribution
is greater than the Fair Market Value per share of such Distributed Assets or
Securities by less than $1.00, then, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder shall have the right to
receive upon conversion, in addition to Cash, and, if applicable, shares of
Common Stock, the kind and amount of assets, debt securities, or rights or
warrants comprising the Distributed Assets or Securities the Holder would have
received had such Holder converted such Notes immediately prior to the record
date for the determination of stockholders entitled to receive such
distribution. In the event that such dividend or distribution is not so paid or
made, the Conversion Rate shall again be adjusted to the Conversion Rate which
would then be in effect if such dividend or distribution had not been declared.
(d) In case the Company shall make any distributions, by dividend or
otherwise, during any quarterly fiscal periods consisting exclusively of cash to
all holders of outstanding shares of Common Stock in an aggregate amount that,
together with (i) other all-cash distributions made to all holders of
outstanding shares of Common Stock during such quarterly fiscal period, and (ii)
any cash and the Fair Market Value, as of the expiration of any tender or
exchange offer (other than consideration payable in respect of any odd-lot
tender offer) of consideration payable in respect of any tender or exchange
offer by the Company or any of the Company's Subsidiaries for all or any portion
of shares of Common Stock concluded during such quarterly fiscal period, exceed
the product of $0.10 (appropriately adjusted from time to time for any stock
dividends on or subdivisions or combinations of the Common Stock) multiplied by
the number of shares of Common Stock outstanding on the record date for such
distribution, then, and in each such case, the Conversion Rate shall be adjusted
so that the same
-29-
shall equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the open of business on the day immediately following the
record date fixed for the determination of holders of Common Stock entitled to
receive such dividend or distribution by a fraction of which (A) the numerator
shall be the Market Price per share of Common Stock on the earlier of such
record date or the Trading Day immediately preceding the ex date for such
dividend or distribution and (B) the denominator shall be (1) the Market Price
per share of Common Stock on the earlier of such record date or the Trading Day
immediately preceding the ex date for such dividend or distribution plus (2)
$0.10 (appropriately adjusted from time to time for any stock dividends on or
subdivisions or combination of Common Stock) less (3) an amount equal to the
quotient of (x) the combined amount distributed or payable in the transactions
described in clauses (i), (ii) and (iii) above during such quarterly fiscal
period and (y) the number of shares of Common Stock outstanding on such record
date, such adjustment to become effective immediately after the open of business
on the day immediately following the record date for the determination of
shareholders entitled to receive such dividend or distribution.
(e) With respect to Section 806(c) above, in the event that the Company
makes any distribution to all holders of Common Stock consisting of Equity
Interests in a Subsidiary or other business unit of the Company, then,
notwithstanding the provisions of Section 806(c), the Conversion Rate shall be
adjusted so that the same shall equal the rate determined by multiplying the
Conversion Rate in effect immediately prior to the open of business on the day
immediately following the record date fixed for the determination of holders of
Common Stock entitled to receive such distribution by a fraction of which (i)
the numerator shall be (x) the Spin-off Market Price per share of Common Stock
on such record date plus (y) the Spin-off Market Price per share or other
applicable unit of Equity Interest of the Subsidiary or other business unit of
the Company on such record date and (ii) the denominator shall be the Spin-off
Market Price per share of the Common Stock on such record date, such adjustment
to become effective Ten Trading Days after the effective date of such
distribution of Equity Interests in a Subsidiary or other business unit of the
Company.
(f) Upon conversion of the Notes, the Holders shall receive, with respect
to any shares of Common Stock issuable upon such conversion, the associated
rights issued under the Rights Plan or under any future shareholder rights plan
the Company implements (notwithstanding the occurrence of an event causing such
rights to separate from the Common Stock at or prior to the time of conversion)
unless, prior to conversion, the rights have expired, terminated or been
redeemed or exchanged in accordance with the Rights Plan. If, and only if, the
Holders of Notes receive rights under such shareholder rights plans as described
in the preceding sentence upon conversion of their Notes, then no other
adjustment pursuant to this Section 806 shall be made in connection with such
shareholder rights plans.
(g) For purposes of this Section 806, the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company shall not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
(h) Notwithstanding the foregoing, in no event shall the Conversion Rate
exceed the maximum conversion rate specified under this Section 806(h) (the
"Maximum Conversion
-30-
Rate") as a result of an adjustment pursuant to Section 501(b), Section 806(c)
and Section 806(d) hereof. The Maximum Conversion Rate shall initially be
129.5337 and shall be appropriately adjusted from time to time for any stock
dividends on or subdivisions or combinations of the Common Stock. The Maximum
Conversion Rate shall not apply to any adjustments made pursuant to any of the
events in Section 806(a) or Section 806(b) hereof.
Section 807 Calculation Methodology. (a) No adjustment in the Conversion
Price need be made unless the adjustment would require an increase or decrease
of at least 1% in the Conversion Price then in effect, provided that any
adjustment that would otherwise be required to be made shall be carried forward
and taken into account in any subsequent adjustment. Except as stated in this
Article VIII, the Conversion Rate will not be adjusted for the issuance of
Common Stock or any securities convertible into or exchangeable for Common Stock
or carrying the right to purchase any of the foregoing. Any adjustments that are
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under Article VII, Section 806 and this Section 807
shall be made to the nearest cent or to the nearest 1/10,000th of a share, as
the case may be.
(b) Any adjustment to the Conversion Price shall take into account the
adjustment provided under Section 806(d) based on the payment of an aggregate
amount of $0.20 per share of Common Stock in dividends during the first fiscal
quarter of 2005. For purposes of calculating this adjustment, "the Conversion
Rate in effect immediately prior to the open of business on the day immediately
following the record date fixed for the determination of holders of Common Stock
entitled to receive such dividend or distribution" shall be 86.3558.
Section 808 When No Adjustment Required. No adjustment to the Conversion
Rate need be made:
(a) upon the issuance of any shares of Common Stock pursuant to any present
or future plan providing for the reinvestment of dividends or interest
payable on securities of the Company and the investment of additional
optional amounts in shares of Common Stock under any plan;
(b) upon the issuance of any shares of Common Stock or options or rights to
purchase those shares pursuant to any present or future employee, director
or consultant benefit plan or program of or assumed by the Company or any
of its Subsidiaries;
(c) upon the issuance of any shares of Common Stock pursuant to any option,
warrant, right, or exercisable, exchangeable or convertible security not
described in paragraph (b) above and outstanding as of the date of this
Supplemental Indenture;
(d) [Reserved];
(e) for a change in the par value or no par value of the Common Stock; or
(f) for accrued and unpaid interest (including Contingent Interest, if
any).
Section 809 Notice of Adjustment. Whenever the Conversion Rate is adjusted
(including any adjustment that the Company may elect pursuant to Section
501(c)), the Company shall
-31-
promptly mail to Holders a notice of the adjustment. The Company shall file with
the Trustee and the Conversion Agent such notice. The notice shall, absent
manifest error, be conclusive evidence that the adjustment is correct. Neither
the Trustee nor any Conversion Agent shall be under any duty or responsibility
with respect to any such notice except to exhibit the same to any Holder
desiring inspection thereof.
Section 810 Voluntary Increase. The Company may make such increases in the
Conversion Rate, in addition to those required by Section 806, as the Board of
Directors considers to be advisable to avoid or diminish any income tax to
holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. To the extent permitted by applicable
law, the Company may from time to time increase the Conversion Rate by any
amount for any period of time if the period is at least 20 days, the increase is
irrevocable during the period and the Board of Directors shall have made a
determination that such increase would be in the best interests of the Company,
which determination shall be conclusive. Whenever the Conversion Rate is so
increased, the Company shall mail to Holders and file with the Trustee and the
Conversion Agent a notice of such increase. Neither the Trustee nor any
Conversion Agent shall be under any duty or responsibility with respect to any
such notice except to exhibit the same to any Holder desiring inspection
thereof. The Company shall mail the notice at least 15 days before the date the
increased Conversion Rate takes effect. The notice shall state the increased
Conversion Rate and the period it shall be in effect.
Section 811 Notice to Holders Prior to Certain Actions. In case:
(a) the Company shall declare a dividend (or any other distribution) on its
Common Stock that would require an adjustment in the Conversion Rate pursuant to
Section 806;
(b) the Company shall authorize the granting to all or substantially all
the holders of its Common Stock of rights or warrants to subscribe for or
purchase any share of any class or any other rights or warrants;
(c) of any reclassification or reorganization of the Common Stock of the
Company (other than a subdivision or combination of its outstanding Common
Stock, or a change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding-up
of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
Holder at its address appearing on the Security Register, as promptly as
possible but in any event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution or rights or warrants, or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution, or rights or warrants
are to be determined or (y) the date
-32-
on which such reclassification, reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up is expected to become effective
or occur, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
reorganization, consolidation, merger, sale, transfer, dissolution, liquidation
or winding-up.
Section 812 Effect of Reclassification, Consolidation, Merger, Binding
Share Exchange or Sale.
(a) If any of the following events occur, namely (i) any reclassification
or change of outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a reclassification, subdivision or combination); (ii) any
consolidation, merger, combination or binding share exchange of the Company with
another corporation 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 such Common Stock; or (iii) any sale or
conveyance of the properties and assets of the Company as, or substantially as,
an entirety to any other corporation 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 such Common Stock, then the
Company or the successor or purchasing corporation, as the case may be, shall
execute with the Trustee a supplemental indenture, providing for the conversion
and settlement of the Notes as set forth in this Indenture. Such supplemental
indenture shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article VIII. If, in
the case of any such reclassification, change, consolidation, merger,
combination, binding share exchange, sale or conveyance, the Exchange Property
includes shares of stock, other securities, property or assets of a Person other
than the successor or purchasing Person, as the case may be, in such
reclassification, change, consolidation, merger, combination, binding share
exchange, 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 Notes as the Board of Directors
shall reasonably consider necessary by reason of the foregoing. The Company
shall cause notice of the execution of such supplemental indenture to be mailed
to each Holder, at its address appearing on the Security Register, within 20
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
(b) Subject to the provisions of Section 801(b), the Conversion Value with
respect to each $1,000 principal amount of Notes converted following the
effective date of any such transaction referred to in Section 812(a) shall be
calculated (as provided in clause (c) below) based on the kind and amount of
stock, securities, other property, assets or cash received upon such
reclassification, change, consolidation, merger, binding share exchange, sale or
conveyance by a holder of Common Stock holding, immediately prior to the
transaction, a number of shares of Common Stock equal to the Conversion Rate
immediately prior to such transaction (the "Exchange Property"), assuming such
holder of Common Stock did not exercise any rights of election, if any, as to
the kind or amount of stock, securities, other property, assets or cash
-33-
receivable upon such consolidation, merger, binding share exchange, sale or
conveyance (provided that, if the kind or amount of stock, securities, other
property, assets or cash receivable upon such consolidation, merger, binding
share exchange, sale or conveyance is not the same for each share of Common
Stock in respect of which such rights of election shall not have been exercised
("Non-Electing Share"), then for the purposes of this Section 812 the kind and
amount of stock, securities, other property, assets or cash receivable upon such
consolidation, merger, binding share exchange, sale or conveyance for 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).
(c) The Conversion Value in respect of any Notes converted following the
effective date of any such transaction shall be equal to the average of the
daily values of the Exchange Property pertaining to such Notes as determined in
the next sentence (the "Exchange Property Value") for each of the ten
consecutive Trading Days (appropriately adjusted to take into account the
occurrence during such period of stock splits and similar events) beginning on
the later of (i) the second Trading Day immediately following the day the Notes
are tendered for conversion and (ii) the effective date of such transaction (the
"Exchange Property Average Price"). For the purpose of determining the value of
any Exchange Property:
(i) any shares of common stock of the successor or purchasing Person
or any other Person that are included in the Exchange Property shall be
valued as set forth in Section 801(b) as if such shares were "Common Stock"
using the procedures set forth in the definition of "Last Reported Sale
Price" in Section 102; and
(ii) any other securities, property or assets (other than cash)
included in the Exchange Property shall be valued in good faith by the
Board of Directors or by a New York Stock Exchange member firm selected by
the Board of Directors.
(d) The Company shall deliver such Conversion Value to holders of Notes so
converted as follows:
(i) an amount in Cash equal to the Principal Return with respect to
those Notes, determined as set forth in Section 801(c)(i); and
(ii) if the Conversion Value of those Notes is greater than the
Principal Return, an amount of Exchange Property, determined as set forth
below, equal to such aggregate Conversion Value less the Principal Return
(the "Net Exchange Property Amount"); provided, however, that the Company
may, at its option, deliver cash or a combination of cash and Exchange
Property equal to the Net Exchange Property Amount.
The amount of Exchange Property to be delivered shall be determined by dividing
the Net Exchange Property Amount by the Exchange Property Average Price. If the
Exchange Property includes more than one kind of property, the amount of
Exchange Property of each kind to be delivered shall be in the proportion that
the Exchange Property Value of such kind of Exchange Property bears to the
Exchange Property Value of all the Exchange Property. If the foregoing
calculations would require the Company to deliver a fractional share or unit of
Exchange Property to a holder of Notes being converted, the Company shall
deliver cash in lieu of such fractional share or unit based on its Exchange
Property Average Price.
-34-
(e) Notwithstanding clauses (b), (c) and (d) above, if the Notes are
tendered for conversion prior to the effective date of any such transaction
pursuant to this Section 812 above, and the amount in cash and number of shares
of Common Stock, if any, that a Holder will receive upon conversion have been
determined as of the effective date of such transaction, then the Company shall
(i) pay the amount in cash as set forth in Section 801 and (ii) instead of
delivering shares of Common Stock as set forth in Section 801, if applicable,
deliver an amount of Exchange Property that a holder of Common Stock, holding,
immediately prior to the transaction, a number of shares of Common Stock equal
to the number of shares of Common Stock as set forth in Section 801, would
receive, assuming such holder of Common Stock did not exercise his rights of
election, if any, as to the kind or amount of stock, securities, other property,
assets or cash receivable upon such consolidation, merger, binding share
exchange, sale or conveyance (provided that, if the kind or amount of stock,
securities, other property, assets or cash receivable upon such consolidation,
merger, binding share exchange, sale or conveyance is not the same for each
Non-Electing Share, then for the purposes of this Section 812 the kind and
amount of stock, securities, other property, assets or cash receivable upon such
consolidation, merger, binding share exchange, sale or conveyance for 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). If the foregoing calculations
would require the Company to deliver a fractional share or unit of Exchange
Property to a holder of Notes being converted, the Company shall deliver cash in
lieu of such fractional share or unit based on the Exchange Property Value (as
so determined).
The above provisions of this Section 812 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
binding share exchanges, sales and conveyances.
If this Section 812 applies to any event or occurrence, Section 806 shall
not apply. Notwithstanding this Section 812, if a Public Acquirer Change of
Control occurs and the Company elects to adjust the Conversion Rate and its
conversion obligation pursuant to Section 501(c), the provisions of Section
501(c) shall apply to the conversion instead of this Section 812.
Section 813 Responsibility of Trustee. The Trustee and any other Conversion
Agent shall not at any time be under any duty or responsibility to any Holder to
either calculate the Conversion Rate or determine whether any facts exist which
may require any adjustment of the Conversion Rate, or with respect to the nature
or extent or calculation of any such adjustment when made, or with respect to
the method employed, or herein or in any supplemental indenture provided to be
employed, in making the same and shall be protected in relying upon an Officers'
Certificate with respect to the same. The Trustee and any other Conversion Agent
shall not be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any other securities or property,
which may at any time be issued or delivered upon the conversion of any Notes
and the Trustee and any other Conversion Agent make no representations with
respect thereto. Subject to the provisions of Article Five of the Original
Indenture, neither the Trustee nor any Conversion Agent shall be responsible for
any failure of the Company to issue, transfer or deliver any Cash or shares of
Common Stock or stock certificates or other securities or property upon the
surrender of any Notes for the purpose of conversion or to comply with any of
the duties, responsibilities or covenants of the Company contained in this
Section. Without limiting the generality of the foregoing, neither the Trustee
nor any Conversion Agent shall be under any responsibility to determine the
correctness of any
-35-
provisions contained in any Supplemental Indenture entered into pursuant to
Article VIII hereof relating either to the kind or amount of shares of stock or
securities or property (including cash) receivable by Holders upon the
conversion of their Notes after any event referred to in such Section 812 or to
any adjustment to be made with respect thereto, but, subject to the provisions
of Article Five of the Original Indenture, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
Section 814 Simultaneous Adjustments. In the event that Section 806
requires adjustments to the Conversion Rate under more than one of Sections
806(a), (b), (c) or (d), and the Record Dates for the distributions giving rise
to such adjustments shall occur on the same date, then such adjustments shall be
made by applying, first, the provisions of Section 806(c), second, the
provisions of Section 806(a) and third, the provisions of Section 806(b);
provided, however, that nothing in this Section 814 shall be done to evade the
principle set forth in Section 806(h) hereof that the Maximum Conversion Rate
shall not apply to any adjustments made with respect to any of the events in
Section 806(a) or Section 806(b) hereof.
Section 815 Successive Adjustments. After an adjustment to the Conversion
Rate under Section 806, any subsequent event requiring an adjustment under
Section 806 shall cause an adjustment to the Conversion Rate as so adjusted.
Section 816 General Considerations. Whenever successive adjustments to the
Conversion Rate are called for pursuant to this Article VIII, such adjustments
shall be made to the Market Price per share of Common Stock as may be necessary
or appropriate to effectuate the intent of this Article VIII and to avoid unjust
or inequitable results as determined in good faith by the Board of Directors.
ARTICLE IX
Transfer and Exchange
Section 901 Transfer and Exchange of the Notes.
The transfer and exchange of Global Notes or beneficial interests therein
shall be effected through the Depositary, in accordance with Section 305 of the
Original Indenture and this Article IX (including the restrictions on transfer
set forth therein and herein) and the rules and procedures of the Depositary
therefor, which shall include restrictions on transfer comparable to those set
forth therein and herein to the extent required by the Securities Act. The
transfer and exchange of Global Notes or beneficial interests therein for
certificated notes (or vice versa) shall be effected through the Trustee and the
Depositary, as the case may be, in accordance with Section 305 of the Original
Indenture and this Article IX.
Section 902 Legends.
(a) Each certificate evidencing the Global Notes or certificated notes in
definitive form (and all Notes issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
-36-
THE HOLDER OF THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY IS SUBJECT TO, AND ENTITLED TO THE BENEFITS OF, A RIGHTS
AGREEMENT, DATED AS OF JANUARY 1, 2002, BETWEEN THE COMPANY AND
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, AS RIGHTS AGENT.
Each certificate evidencing the Global Notes also shall bear the legend
specified for Global Notes in the form of Note attached hereto as Exhibit A.
ARTICLE X
Remedies; Modification and Waiver
Section 1001 Additional Events of Default; Acceleration of Maturity.
(a) Solely with respect to the Notes issued hereby, Section 501(1) of the
Original Indenture is hereby deleted in its entirety, and the following is
substituted in lieu thereof as an Event of Default in addition to the other
events set forth in Section 501 of the Original Indenture:
"(1) default in the payment of any interest upon any Security of that
series, including Contingent Interest, if any, when it becomes due and
payable, and continuance of such default for a period of 30 days;"
(b) Solely with respect of the Notes issued hereby, Section 501(5) of the
Original Indenture is hereby deleted in its entirety, and the following is
substituted in lieu thereof as an Event of Default in addition to the other
events set forth in Section 501 of the Original Indenture:
"(5) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company, CERC or
CenterPoint Houston in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or (B) a decree or order adjudging the Company, CERC
or CenterPoint Houston a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company, CERC or
CenterPoint Houston under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company, CERC or
CenterPoint Houston or of any substantial part of its respective
property, or ordering the winding up or liquidation of its respective
affairs, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of
90 consecutive days; provided that any specified event in (A) or (B)
involving CERC or CenterPoint Houston shall not constitute an Event of
Default if, at the time such event occurs, CERC or
-37-
CenterPoint Houston, as the case may be, shall no longer be an
Affiliate of the Company; or"
(c) Solely with respect to the Notes issued hereby, Section 501(6) of the
Original Indenture is hereby deleted in its entirety, and the following is
substituted in lieu thereof as an Event of Default in addition to the other
events set forth in Section 501 of the Original Indenture:
"(6) the commencement by the Company, CERC or CenterPoint Houston
of a voluntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law or
of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by any of them to the entry of a decree or
order for relief in respect of the Company, CERC or CenterPoint
Houston in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against any of them, or the filing by any of them
of a petition or answer or consent seeking reorganization or relief
under any applicable federal or state law, or the consent by any of
them to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company, CERC or
CenterPoint Houston or of any substantial part of their respective
property, or the making by any of them of an assignment of a
substantial part of their respective property for the benefit of
creditors, or the admission by any of them in writing of the inability
of any of the Company, CERC or CenterPoint Houston to pay their
respective debts generally as they become due, or the taking of
corporate action by the Company, CERC or CenterPoint Houston in
furtherance of any such action; provided that any such specified event
involving CERC or CenterPoint Houston shall not constitute an Event of
Default if, at the time such event occurs, CERC or CenterPoint
Houston, as the case may be shall no longer be an Affiliate of the
Company; or"
(d) Solely with respect to the Notes issued hereby, and pursuant to Section
501(7) of the Original Indenture, the following shall each constitute an "Event
of Default" in addition to the other events set forth in Section 501 of the
Original Indenture:
"(i) The default by the Company, CERC or CenterPoint Houston in a
scheduled payment at maturity, upon redemption or otherwise, in the
aggregate principal amount of $50 million or more, after the
expiration of any applicable grace period, of any Indebtedness or the
acceleration of any Indebtedness of the Company, CERC or CenterPoint
Houston in such aggregate principal amount, so that it becomes due and
payable prior to the
-38-
date on which it would otherwise have become due and payable and such
payment default is not cured or such acceleration is not rescinded
within 30 days after notice to the Company in accordance with the
terms of the Indebtedness; provided that such payment default or
acceleration of CERC or CenterPoint Houston shall not to be an Event
of Default if, at the time such event occurs, CERC or CenterPoint
Houston, as the case may be, shall not be an Affiliate of the Company;
(ii) The Company defaults in its obligation to redeem the Notes
after exercising its redemption option pursuant to Article IV hereof;
(iii) The Company defaults in its obligation to convert the Notes
upon exercise of a Holder's conversion right in accordance with the
terms of the Notes and Article VIII hereof; and
(iv) The Company defaults in its obligation to purchase Notes
upon the occurrence of a Fundamental Change or the exercise by a
Holder of its option to require the Company to repurchase such
Holder's Notes in accordance with the terms of Article V or Article VI
hereof, as applicable."
Section 1002 Modification and Waiver. In addition to those matters set
forth in Section 902 of the Original Indenture (including the terms and
conditions of the Notes set forth herein), with respect to the Notes, no
amendment or Supplemental Indenture shall without the consent of the Holder of
each Note affected thereby:
(a) Reduce the Redemption Price, Purchase Price or Fundamental Change
Purchase Price of the Notes;
(b) Change the terms applicable to redemption or purchase of the Notes in a
manner adverse to the Holder; or
(c) Alter the manner of calculation or rate of Contingent Interest payable
on any Note or extend the time for payment of any such amount.
In addition, with respect to the Notes, notwithstanding Sections 513 and 1006 of
the Original Indenture, approval of the Holders of each outstanding Note shall
be required to:
(a) Waive any default by the Company in any payment of the Redemption
Price, Purchase Price or Fundamental Change Purchase Price with respect to
any Notes; or
(b) Waive any default which constitutes a failure to convert any Note in
accordance with its terms and the terms of Article VIII hereof.
-39-
The reference to "interest" in Section 513(1) of the Original Indenture shall
include Contingent Interest, if any.
ARTICLE XI
Miscellaneous Provisions
Section 1101 The Indenture, as supplemented and amended by this
Supplemental Indenture No. 6, is in all respects hereby adopted, ratified and
confirmed.
Section 1102 This Supplemental Indenture No. 6 may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 1103 THIS SUPPLEMENTAL INDENTURE NO. 6 AND EACH NOTE SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 1104 If any provision in this Supplemental Indenture No. 6 limits,
qualifies or conflicts with another provision hereof which is required to be
included herein by any provisions of the Trust Indenture Act, such required
provision shall control.
Section 1105 In case any provision in this Supplemental Indenture No. 6 or
the Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
-40-
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 6 to be duly executed, as of the day and year first written above.
CENTERPOINT ENERGY, INC.
By: /s/ Gary L. Whitlock
------------------------------------
Name: Gary L. Whitlock
Title: Executive Vice President and
Chief Financial Officer
Attest:
/s/ Richard B. Dauphin
- -------------------------------------
Name: Richard B. Dauphin
Title: Assistant Corporate Secretary
(SEAL)
JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, AS TRUSTEE
By: /s/ Carol Logan
------------------------------------
Name: Carol Logan
Title: Vice President and Trust Officer
(SEAL)
-41-
Exhibit A
[FORM OF FACE OF NOTE]
[Global Note]
[Certificated Note]
[IF THIS SECURITY IS TO BE A GLOBAL NOTE -] THIS SECURITY IS A GLOBAL SECURITY
WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY.
[For as long as this Global Security is deposited with or on behalf of The
Depository Trust Company it shall bear the following legend.] Unless this
certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to CenterPoint Energy, Inc. or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
CENTERPOINT ENERGY, INC.
3.75% Convertible Senior Notes, Series B due 2023
No. __________ $__________ *
CUSIP No. ________
CENTERPOINT ENERGY, INC., a corporation duly organized and existing under
the laws of the State of Texas (herein called the "Company", which term includes
any successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _______________, or registered assigns, the
principal sum of ____________________ Dollars on May 15, 2023. This Note shall
bear interest as specified on the other side of this Note. This
- ----------
* REFERENCE IS MADE TO SCHEDULE A ATTACHED HERETO WITH RESPECT TO DECREASES
AND INCREASES IN THE AGGREGATE PRINCIPAL AMOUNT OF NOTES EVIDENCED BY THIS
CERTIFICATE.
A-1
Note is convertible and is subject to redemption at the option of the Company
and to purchase by the Company at the option of the Holder as specified on the
other side of this Note.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
THE HOLDER OF THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY IS SUBJECT TO, AND ENTITLED TO THE BENEFITS OF, A RIGHTS
AGREEMENT, DATED AS OF JANUARY 1, 2002, BETWEEN THE COMPANY AND
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, AS RIGHTS AGENT.
FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE,
THIS SECURITY IS A CONTINGENT PAYMENT DEBT INSTRUMENT AND WILL ACCRUE
ORIGINAL ISSUE DISCOUNT AT THE ISSUER'S "COMPARABLE YIELD" FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES. PURSUANT TO SECTION 213 OF THE
SUPPLEMENTAL INDENTURE, THE COMPANY AGREES, AND BY ACCEPTANCE OF A
BENEFICIAL OWNERSHIP INTEREST IN THE SECURITY, EACH BENEFICIAL HOLDER
OF THE SECURITIES WILL BE DEEMED TO HAVE AGREED, FOR UNITED STATES
FEDERAL INCOME TAX PURPOSES, (i) TO TREAT THE SECURITIES AS
INDEBTEDNESS THAT IS SUBJECT TO THE CONTINGENT PAYMENT DEBT INSTRUMENT
REGULATIONS UNDER SECTION 1.1275-4 OF THE UNITED STATES TREASURY
REGULATIONS (THE "CPDI REGULATIONS"), AND, FOR PURPOSES OF THE CPDI
REGULATIONS, TO TREAT THE FAIR MARKET VALUE OF COMMON STOCK RECEIVED
BY A BENEFICIAL HOLDER UPON ANY CONVERSION OF THE NOTES AS A
CONTINGENT PAYMENT AND (ii) TO BE BOUND BY THE COMPANY'S DETERMINATION
OF THE "COMPARABLE YIELD" AND "PROJECTED PAYMENT SCHEDULE," WITHIN THE
MEANING OF THE CPDI REGULATIONS, WITH RESPECT TO THE NOTES AND TO
ACCRUE ORIGINAL ISSUE DISCOUNT AT THE COMPARABLE YIELD AS DETERMINED
BY THE COMPANY. THE COMPANY'S DETERMINATION OF THE "COMPARABLE YIELD"
IS 5.81% PER ANNUM, COMPOUNDED SEMIANNUALLY. THE PROJECTED PAYMENT
SCHEDULE, DETERMINED BY THE COMPANY, IS ATTACHED TO THE SUPPLEMENTAL
INDENTURE AS EXHIBIT F. YOU MAY OBTAIN THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE, COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE
FOR THE SECURITY BY TELEPHONING THE COMPANY'S TREASURY
A-2
DEPARTMENT AT (713) 207-7019 OR SUBMITTING A WRITTEN REQUEST FOR SUCH
INFORMATION TO: CENTERPOINT ENERGY, INC., 1111 LOUISIANA, HOUSTON,
TEXAS 77002, ATTENTION: TREASURER.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
A-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: CENTERPOINT ENERGY, INC.
------------------------------
By:
------------------------------------
Name:
----------------------------------
(SEAL) Title:
---------------------------------
Attest:
- -------------------------------------
Name:
-------------------------------
Title:
------------------------------
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION
As Trustee
Date of Authentication:
-------------
By:
------------------------------------
Authorized Signatory
A-4
[FORM OF REVERSE SIDE OF NOTE]
CENTERPOINT ENERGY, INC.
3.75% CONVERTIBLE SENIOR NOTES, SERIES B DUE 2023
1. INTEREST
This Note shall bear interest at a rate of 3.75% per year on the principal
hereof, from May 15, 2005 or from the most recent Interest Payment Date (as
defined below) to which payment has been made or duly provided for, payable
semiannually in arrears on May 15 and November 15 of each year (each an
"Interest Payment Date"), beginning November 15, 2005 to the persons in whose
names the Notes are registered at the close of business on May 1 and November 1
(each a "Regular Record Date") (whether or not a Business Day), as the case may
be, immediately preceding such Interest Payment Date. This Note shall also bear
Contingent Interest in certain circumstances as specified in paragraph 5 below.
The amount of interest payable for any period shall be computed on the basis of
a 360-day year of twelve 30-day months. The amount of interest payable for any
partial period shall be computed on the basis of a 360-day year of twelve 30-day
months and the days elapsed in any partial month.
Holders of Notes at the close of business on a Regular Record Date will
receive payment of interest, including Contingent Interest, if any, payable on
the corresponding Interest Payment Date notwithstanding the conversion of such
Notes at any time after the close of business on such Regular Record Date. Notes
surrendered for conversion by a Holder during the period from the close of
business on any Regular Record Date to the opening of business on the
immediately following Interest Payment Date must be accompanied by payment of an
amount equal to the interest, including Contingent Interest, if any, that the
Holder is to receive on the Notes; provided, however, that no such payment need
be made if (1) the Company has specified a Redemption Date that is after a
Regular Record Date and on or prior to the immediately following Interest
Payment Date, (2) the Company has specified a Purchase Date following a
Fundamental Change that is during such period or (3) any overdue interest
(including overdue Contingent Interest, if any) exists at the time of conversion
with respect to such Notes to the extent of such overdue interest.
If the principal hereof or any portion of such principal is not paid when
due (whether upon acceleration, upon the date set for payment of the Redemption
Price pursuant to paragraph 6 hereof, upon the date set for payment of a
Purchase Price or Fundamental Change Purchase Price pursuant to paragraph 8
hereof or upon the Stated Maturity of this Note) or if interest (including
Contingent Interest, if any) due hereon or any portion of such interest is not
paid when due in accordance with this paragraph or paragraph 5 or 11 hereof,
then in each such case the overdue amount shall bear interest at the rate of
3.75% per annum, compounded semiannually (to the extent that the payment of such
interest shall be legally enforceable), which interest shall accrue from the
date such overdue amount was due to the date payment of such amount, including
interest thereon, has been made or duly provided for. All such interest shall be
payable on demand.
A-5
2. METHOD OF PAYMENT
Payment of the principal of (and premium, if any) and any such interest on
this Note will be made at the Corporate Trust Office of the Trustee, 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 of interest may be made (i) by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register or (ii) by wire transfer in immediately available funds at
such place and to such account as may be designated in writing by the Person
entitled thereto as specified in the Security Register.
3. PAYING AGENT, CONVERSION AGENT AND SECURITY REGISTRAR
Initially, the Trustee, shall act as Paying Agent, Conversion Agent and
Security Registrar. The Company may appoint and change any Paying Agent,
Conversion Agent, Security Registrar or co-registrar or approve a change in the
office through which any Paying Agent acts without notice, other than notice to
the Trustee. The Company or any of its Subsidiaries or any of their Affiliates
may act as Paying Agent, Conversion Agent, Security Registrar or co-registrar.
4. INDENTURE
This Note is one of a duly authorized issue of securities of the Company,
issued and to be issued in one or more series under an Indenture, dated as of
May 19, 2003 (the "Original Indenture"), as amended and supplemented by the
Supplemental Indenture No. 1 thereto, dated as of May 19, 2003, the Supplemental
Indenture No. 2 thereto, dated as of May 27, 2003, the Supplemental Indenture
No. 3 thereto, dated as of September 9, 2003, the Supplemental Indenture No. 4
thereto, dated as of December 17, 2003, the Supplemental Indenture No. 5
thereto, dated as of December 13, 2004, and the Supplemental Indenture No. 6
thereto, dated as of August 23, 2005 (the Original Indenture as so amended and
supplemented, the "Indenture"), between the Company and the Trustee. Capitalized
terms used herein and not defined herein have the meanings ascribed thereto in
the Indenture. Reference is hereby made to the Indenture for a statement of the
respective rights thereunder of the Company, the Trustee and the Holders and the
terms upon which the Notes are to be authenticated and delivered. The terms,
conditions and provisions of the Notes are those stated in the Indenture, those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended, and those set forth in the Notes.
The Notes are general unsecured obligations of the Company limited to
$575,000,000 aggregate principal amount.
5. CONTINGENT INTEREST
The Company will pay Contingent Interest to the Holders of the Notes in
respect of any six-month interest period from May 15 to November 14 or November
15 to May 14 commencing on or after May 15, 2008 for which the average Trading
Price of a Note for the applicable five Trading Day reference period equals or
exceeds 120% of $1,000 per $1,000 principal amount of Notes as of the day
immediately preceding the first day of the applicable six-month interest period.
The "five Trading Day reference period" means the five Trading Days ending on
the second Trading Day immediately preceding the relevant six-month interest
period. For any six-
A-6
month interest period in respect of which Contingent Interest is payable, the
Contingent Interest payable on each $1,000 principal amount of Notes shall equal
0.25% of the average Trading Price per $1,000 principal amount of Notes during
the applicable five Trading Day reference period.
The record dates and payment dates for Contingent Interest, if any, will be
the same as the Regular Record Date and Interest Payment Dates for the
semi-annual interest payments on the Notes.
Upon determination that Holders will be entitled to receive Contingent
Interest which may become payable, the Company shall notify the Holders. In
connection with providing such notice, the Company will issue a press release
and publish a notice containing information regarding the Contingent Interest
determination in a newspaper of general circulation in The City of New York or
publish such information on the Company's then existing Web site or through such
other public medium as the Company shall determine.
6. REDEMPTION AT THE OPTION OF THE COMPANY
No sinking fund is provided for the Notes. The Notes are redeemable for
cash in whole, or in part, at any time on or after May 15, 2008 at the option of
the Company at a redemption price ("Redemption Price") equal to 100% of the
principal amount of the Notes to be redeemed plus any accrued and unpaid
interest (including Contingent Interest, if any) to the Redemption Date.
7. NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY
Notice of redemption at the option of the Company shall be mailed at least
30 days but not more than 60 days before a Redemption Date to the Trustee, the
Paying Agent and each Holder of Notes to be redeemed at the Holder's registered
address. If money sufficient to pay the Redemption Price of all Notes (or
portions thereof) to be redeemed on the Redemption Date is deposited with the
Paying Agent prior to or on the Redemption Date, on and after the Redemption
Date interest (including Contingent Interest, if any), if any, shall cease to
accrue on such Notes or portions thereof. Notes in denominations larger than
$1,000 principal amount may be redeemed in part but only in integral multiples
of $1,000 principal amount.
8. PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER; PURCHASE AT THE OPTION
OF THE HOLDER UPON A FUNDAMENTAL CHANGE
(a) Subject to the terms and conditions of the Indenture, a Holder shall
have the option to require the Company to purchase the Notes held by such Holder
on May 15, 2008, May 15, 2013 and May 15, 2018 (each, a "Purchase Date") at a
purchase price (the "Purchase Price") equal to 100% of the principal amount of
the Notes to be purchased plus any accrued and unpaid interest (including
Contingent Interest, if any) to such Purchase Date, upon delivery of a Purchase
Notice containing the information set forth in the Indenture, from the opening
of business on the date that is 20 Business Days prior to such Purchase Date
until the close of business on the fifth Business Day prior to such Purchase
Date and upon delivery of the Notes to the Paying Agent by the Holder as set
forth in the Indenture. The Company will pay the Purchase Price in cash.
A-7
Notes in denominations larger than $1,000 principal amount may be purchased
in part, but only in integral multiples of $1,000 principal amount.
(b) If a Fundamental Change shall occur at any time prior to May 15, 2008,
each Holder shall have the right, at such Holder's option and subject to the
terms and conditions of the Indenture, to require the Company to purchase any or
all of such Holder's Notes or any portion of the principal amount thereof that
is equal to $1,000 or an integral multiple of $1,000 on the date selected by the
Company that is no later than 35 days after the date of the Company Notice of
the occurrence of the Fundamental Change (subject to extension to comply with
applicable law) for a Fundamental Change Purchase Price equal to 100% of the
principal amount of Notes purchased plus accrued and unpaid interest (including
Contingent Interest, if any) to the Fundamental Change Purchase Date, which
Fundamental Change Purchase Price shall be paid by the Company in cash, as set
forth in the Indenture.
(c) Holders have the right to withdraw any Purchase Notice or Fundamental
Change Purchase Notice, as the case may be, by delivery to the Paying Agent of a
written notice of withdrawal in accordance with the provisions of the Indenture.
(d) If cash sufficient to pay a Fundamental Change Purchase Price or
Purchase Price, as the case may be, of all Notes or portions thereof to be
purchased as of the Purchase Date or the Fundamental Change Purchase Date, as
the case may be, is deposited with the Paying Agent on the Business Day
following the Purchase Date or the Fundamental Change Purchase Date, as the case
may be, interest (including Contingent Interest, if any) shall cease to accrue
on such Notes (or portions thereof) on and after such Purchase Date or
Fundamental Change Purchase Date, and the Holder thereof shall have no other
rights as such (other than the right to receive the Purchase Price or
Fundamental Change Purchase Price, as the case may be, upon surrender of such
Note).
9. RANKING
The Notes shall be unsecured and shall rank equally in right of payment
with all of the Company's other existing and future unsecured and unsubordinated
Indebtedness.
10. CONVERSION
Subject to the procedures set forth in the Indenture, a Holder may convert
Notes into Cash and, if applicable, shares of Common Stock (in accordance with
the provisions of the Indenture) on or before the close of business on May 15,
2023 during the periods and upon satisfaction of at least one of the conditions
set forth below:
(a) in any calendar quarter (and only during such calendar quarter) if the
Last Reported Sale Price for Common Stock for at least 20 Trading Days during
the period of 30 consecutive Trading Days ending on the last Trading Day of the
previous calendar quarter is greater than or equal to 120% or, following May 15,
2008, 110% of the Conversion Price per share of Common Stock on such last
Trading Day;
A-8
(b) during any period in which both (A) the credit rating assigned to the
Notes by Moody's Investors Service, Inc. is lower than Ba2 and (B) the credit
rating assigned to the Notes by Standard & Poor's Rating Services is lower than
BB;
(c) during any period in which the Notes no longer are assigned credit
ratings by at least one of Moody's Investors Services, Inc. and Standard &
Poor's Ratings Services or their successors;
(d) in the event that the Company calls the Notes for redemption, at any
time prior to the close of business on the second Business Day immediately
preceding the Redemption Date; or
(e) the Company becomes a party to a consolidation, merger or binding share
exchange pursuant to which the Common Stock would be converted into cash or
property (other than securities), or if a transaction described in clause (c) of
the definition of Fundamental Change set forth in Section 102 of the Indenture
(or in connection with a transaction that would have been a Fundamental Change
under such clause (c) but for the existence of the 105% Trading Price Exception)
that occurs on or prior to May 15, 2008 and results in an increase in the
Conversion Rate, in which case a Holder may surrender Notes for conversion at
any time from and after the date which is 15 days prior to the anticipated
effective date for the transaction until and including the date which is 15 days
after the actual effective date of such transaction (or if such transaction also
results in Holders having the right to require the Company to repurchase their
Notes, until the Fundamental Change Purchase Date); or
(f) the Company elects to (i) distribute to all holders of Common Stock
assets, debt securities or rights to purchase securities of the Company, which
distribution has a per share value as determined by the Board of Directors
exceeding 15% of the Last Reported Sale Price of a share of Common Stock on the
Trading Day immediately preceding the declaration date for such distribution, or
(ii) distribute to all holders of Common Stock rights entitling them to
purchase, for a period expiring within 60 days after the date of such
distribution, shares of Common Stock at less than the Last Reported Sale Price
of Common Stock on the Trading Day immediately preceding the declaration date of
the distribution. In the case of the foregoing clauses (i) and (ii), the Company
must notify the Holders at least 20 Business Days immediately prior to the ex
date for such distribution. Once the Company has given such notice, Holders may
surrender their Notes for conversion at any time thereafter until the earlier of
the close of business on the Business Day immediately prior to the ex date or
the Company's announcement that such distribution will not take place; provided,
however, that a Holder may not exercise this right to convert if the Holder may
participate in the distribution without conversion. As used herein, 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.
If a Holder elects to convert such Holder's Notes in connection with a
Fundamental Change pursuant to clause (c) of the definition thereof set forth in
Section 102 of the Indenture (or in connection with a transaction that would
have been a Fundamental Change under such clause (c) but for the existence of
the 105% Trading Price Exception) that occurs on or prior to May 15, 2008
pursuant to which 10% or more of the consideration for the Common Stock (other
A-9
than cash payments for fractional shares) in such Fundamental Change transaction
consists of cash or securities (or other property) that are not traded or
scheduled to be traded immediately following such transaction on a U.S. national
securities exchange or the Nasdaq National Market, the Company will increase the
Conversion Rate by the Make-Whole Premium as described under Section 501(b) of
Supplemental Indenture No. 6 or, in lieu thereof, the Company may in certain
circumstances elect to adjust the Conversion Rate and the related conversion
obligation so that the Notes are convertible into shares of the acquiring or
surviving entity as described under Section 501(c) of Supplemental Indenture No.
6.
Notes in respect of which a Holder has delivered a notice of exercise of
the option to require the Company to purchase such Notes pursuant to Articles V
or VI of the Indenture may be converted only if the notice of exercise is
withdrawn in accordance with the terms of the Indenture.
The initial Conversion Rate is 86.3558. The Conversion Rate is subject to
adjustment in certain events described in the Indenture.
Holders of Notes at the close of business on a Regular Record Date will
receive payment of interest, including Contingent Interest, if any, payable on
the corresponding Interest Payment Date notwithstanding the conversion of such
Notes at any time after the close of business on such Regular Record Date. Notes
surrendered for conversion by a Holder during the period from the close of
business on any Regular Record Date to the opening of business on the
immediately following Interest Payment Date must be accompanied by payment of an
amount equal to the interest, including Contingent Interest, if any, that the
Holder is to receive on the Notes; provided, however, that no such payment need
be made if (1) the Company has specified a Redemption Date that is after a
Regular Record Date and on or prior to the immediately following Interest
Payment Date, (2) the Company has specified a Purchase Date following a
Fundamental Change that is during such period, or (3) any overdue interest
(including overdue Contingent Interest, if any) exists at the time of conversion
with respect to such Notes to the extent of such overdue interest.
To convert the Notes a Holder must (1) complete and manually sign the
irrevocable conversion notice on the back of the Notes (or complete and manually
sign a facsimile of such notice) and deliver such notice to the Conversion Agent
at the office maintained by the Conversion Agent for such purpose, (2) surrender
the Notes to the Conversion Agent, (3) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (4) pay any transfer or similar tax, if required.
A Holder may convert a portion of the Notes only if the principal amount of
such portion is $1,000 or a multiple of $1,000. No payment or adjustment shall
be made for dividends on the Common Stock except as provided in the Indenture.
On conversion of the Notes, that portion of accrued and unpaid interest
attributable to any period prior to and including the Conversion Date and
accrued and unpaid Contingent Interest with respect to the converted portion of
the Notes shall not be canceled, extinguished or forfeited, but rather shall be
deemed to be paid in full to the Holder thereof through the delivery of the Cash
and, if applicable, shares of Common Stock deliverable upon conversion in
exchange for the portion of the Notes being converted pursuant to the terms
hereof; and the Fair Market Value of any such shares of Common Stock (together
with
A-10
any such cash payment in lieu of fractional shares) shall be treated as issued,
to the extent thereof, first in exchange for interest accrued and unpaid through
the Conversion Date and accrued and unpaid Contingent Interest, and the balance,
if any, of such Fair Market Value of such Common Stock (and any such cash
payment) shall be treated as issued in exchange for the principal amount of the
Notes being converted pursuant to the provisions hereof.
If the Company engages in certain reclassifications of the Common Stock or
if the Company is a party to a consolidation, merger, binding share exchange or
a transfer of all or substantially all if its assets, in each case pursuant to
which shares of Common Stock are converted into cash, securities or other
property, then at the effective time of the transaction the Conversion Value and
the Net Share Amount will be based on the applicable Conversion Rate and the
kind and amount of cash, securities or other property which a Holder of one
share of Common Stock would have received in such transaction. In addition, if
the Holder converts its Notes following the effective time of the transaction,
the Net Share Amount will be paid, at the Company's option, in cash, in such
Exchange Property rather than Shares of Common Stock or in a combination of cash
and Exchange Property. Notwithstanding the first sentence of this paragraph, if
the Company elects to adjust the Conversion Rate and the Company's conversion
obligation as described in Section 501(c) of Supplemental Indenture No. 6, the
provisions described in that section will apply instead of the provisions
described in the first sentence of this paragraph.
11. DEFAULTED INTEREST
Except as otherwise specified with respect to the Notes, any Defaulted
Interest on any Note shall forthwith cease to be payable to the registered
Holder thereof on the relevant Regular Record Date or accrual date, as the case
may be, by virtue of having been such Holder, and such Defaulted Interest may be
paid by the Company as provided for in Section 204 of the Supplemental
Indenture.
12. DENOMINATIONS; TRANSFER; EXCHANGE
The Notes are in registered form, without coupons, in denominations of
$1,000 principal amount and integral multiples of $1,000. A Holder may transfer
or convert Notes in accordance with the Indenture. The Security Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. In the event of any redemption or purchase in part, the Security
Registrar need not register the transfer of or exchange any Notes selected for
redemption (except, in the case of a Note to be redeemed in part, the portion of
the Note not to be redeemed) or any Notes in respect of which a Purchase Notice
or Fundamental Change Purchase Notice has been given and not withdrawn (except,
in the case of a Note to be purchased in part, the portion of the Note not to be
purchased) for a period of 15 days before the mailing of a Redemption Notice,
Purchase Notice or Fundamental Change Purchase Notice.
13. PERSONS DEEMED OWNERS
The registered Holder of this Note may be treated as the owner of this Note
for all purposes.
A-11
14. UNCLAIMED MONEY OR PROPERTY
The Trustee and the Paying Agent shall return to the Company upon written
request any money or property held by them for the payment of any amount with
respect to the Notes that remains unclaimed for two years, provided, however,
that the Trustee or such Paying Agent, before being required to make any such
return, shall at the expense of the Company cause to be published once in a
newspaper of general circulation in The City of New York or mail to each such
Holder notice that such money or property remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, any unclaimed money or property then remaining
shall be returned to the Company. After return to the Company, Holders entitled
to the money or property must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another Person.
15. AMENDMENT; WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Notes may be amended with the written consent of the Holders of at least
a majority in aggregate principal amount of the Notes at the time Outstanding
and (ii) certain defaults or noncompliance with certain provisions may be waived
with the written consent of the Holders of a majority in aggregate principal
amount of the Notes at the time Outstanding. The Indenture or the Notes may be
amended without the consent of any Holders under circumstances set forth in
Section 901 of the Original Indenture. Any such consent or waiver by the Holder
of this Note shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
16. DEFAULTS AND REMEDIES
If an Event of Default occurs and is continuing, the Trustee, or the
Holders of at least 25% in aggregate principal amount of the Notes at the time
outstanding, may declare the principal amount and any accrued and unpaid
interest (including Contingent Interest, if any), of all the Notes to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which shall result in the Notes being declared due and payable
immediately upon the occurrence of such Events of Default.
Events of Default in respect of the Notes are set forth in Section 1001 of
the Supplemental Indenture and Section 501 of the Original Indenture. Holders
may not enforce the Indenture or the Notes except as provided in the Indenture.
The Trustee may refuse to enforce the Indenture or the Notes unless it receives
reasonable indemnity or security. Subject to certain limitations, conditions and
exceptions, Holders of a majority in aggregate principal amount of the Notes at
the time Outstanding may direct the Trustee in its exercise of any trust or
power, including the annulment of a declaration of acceleration. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment on any Notes) if it determines that withholding notice is in their
interests.
17. CONSOLIDATION, MERGER, AND SALE OF ASSETS
A-12
In the event of a consolidation, merger, or a conveyance, transfer or lease
of all or substantially all of Company's property or assets as described in
Article VIII of the Original Indenture, the successor corporation to the Company
shall succeed to and be substituted for the Company, and may exercise the
Company's rights and powers under this Indenture, and thereafter, except in the
case of a lease, the Company shall be relieved of all obligations and covenants
under the Indenture and the Notes.
18. TRUSTEE AND AGENT DEALINGS WITH THE COMPANY
The Trustee, Paying Agent, Conversion Agent and Security Registrar under
the Indenture, each in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with and collect obligations
owed to it by the Company or its Affiliates and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee, Paying Agent, Conversion Agent or Security Registrar.
19. CALCULATIONS IN RESPECT OF THE NOTES
The Company will be responsible for making all calculations called for
under the Notes. These calculations include, but are not limited to,
determination of the market prices for the Common Stock, accrued interest
payable on the Notes and Conversion Price of the Notes. The Company will make
these calculations in good faith and, absent manifest error, these calculations
will be final and binding on the Holders. The Company will provide to each of
the Trustee and the Conversion Agent a schedule of its calculations and each of
the Trustee and the Conversion Agent is entitled to rely upon the accuracy of
such calculations without independent verification. The Trustee will forward the
Company's calculations to any Holder upon the request of such Holder.
20. NO RECOURSE AGAINST OTHERS
A director, officer or employee, as such, of the Company or any Subsidiary
of the Company or any stockholder as such, of the Company shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Note, each Holder waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Notes.
21. AUTHENTICATION
This Note shall not be valid until an authorized officer of the Trustee or
Authenticating Agent manually signs the Trustee's Certificate of Authentication
on the other side of this Note.
22. ABBREVIATIONS
Customary abbreviations may be used in the name of a Holder or an assignee,
such as TEN COM (=tenants in common), TENANT (=tenants by the entireties), JT
TEN (=joint tenants with right of survivorship and not as tenants in common),
CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
A-13
23. GOVERNING LAW
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of law rules of said state.
A-14
SCHEDULE A
SCHEDULE OF ADJUSTMENTS
The initial aggregate principal amount of Securities evidenced by the
Certificate to which this Schedule is attached is _______________. The notations
on the following table evidence decreases and increases in the aggregate
principal amount of Securities evidenced by such Certificate.
Aggregate Principal
Decrease in Aggregate Increase in Aggregate Amount of Securities Notation by
Date of Principal Amount of Principal Amount of Remaining After Such Security
Adjustment Securities Securities Decrease or Increase Registrar
- ---------- --------------------- --------------------- -------------------- -----------
S-1
Exhibit B
FORM OF CONVERSION NOTICE
To: CenterPoint Energy, Inc.
The undersigned registered holder of this Note hereby exercises the option
to convert this Note, or portion hereof (which is $1,000 principal amount or an
integral multiple thereof) designated below, for cash and shares, if any, of
Common Stock of CenterPoint Energy, Inc. in accordance with the terms of the
Indenture referred to in this Note, and directs that the shares, if any,
issuable and deliverable upon such conversion, together with any check for cash
deliverable upon such conversion, and any Notes representing any unconverted
principal amount hereof, be issued and delivered to the registered holder hereof
unless a different name has been indicated below. If shares or any portion of
this Note not converted are to be issued in the name of a Person other than the
undersigned, the undersigned shall pay all transfer taxes payable with respect
thereto.
This notice shall be deemed to be an irrevocable exercise of the option to
convert this Note.
Dated:
------------------
----------------------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange if
shares of Common Stock are to be issued,
or Notes to be delivered, other than to
or in the name of the registered holder.
----------------------------------------
Signature Guarantee
B-1
Fill in for registration of shares if
to be delivered, and Notes if to be
issued other than to and in the name
of registered holder:
- ------------------------------------- Principal Amount to be purchased
(Name) (if less than all):
- ------------------------------------- $___________,000
(Street Address)
- ------------------------------------- Social Security or Other Taxpayer Number
(City, state and zip code)
Please print name and address
B-2
Exhibit C
FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE
To: CenterPoint Energy, Inc.
The undersigned registered holder of this Note hereby acknowledges receipt
of a notice from CenterPoint Energy, Inc. (the "Company") as to the occurrence
of a Fundamental Change with respect to the Company and requests and instructs
the Company to repurchase this Note, or the portion hereof (which is $1,000
principal amount or an integral multiple thereof) designated below, in
accordance with the terms of the Supplemental Indenture referred to in this Note
and directs that the check of the Company, in payment for this Note or the
portion thereof and any Notes representing any unrepurchased principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If any portion of this Note not
repurchased is to be issued in the name of a Person other than the undersigned,
the undersigned shall pay all transfer taxes payable with respect thereto.
Dated:
----------------------
----------------------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange if
Notes are to be delivered, other than to
or in the name of the registered holder.
----------------------------------------
Signature Guarantee
Fill in for registration of Notes if to be issued other than to and in the name
of registered holder:
- -------------------------------------
(Name)
- -------------------------------------
(Street Address)
- -------------------------------------
(City, state and zip code)
Please print name and address
Principal Amount to be purchased (if
less than all): $__________,000
Social Security or Other Taxpayer Number
C-1
Exhibit D
FORM OF PURCHASE NOTICE
To: CenterPoint Energy, Inc.
The undersigned registered holder of this Note hereby acknowledges receipt
of a notice from CenterPoint Energy, Inc. (the "Company") as to the holder's
option to require the Company to repurchase this Note and requests and instructs
the Company to repurchase this Note, or the portion hereof (which is $1,000
principal amount or an integral multiple thereof) designated below, in
accordance with the terms of the Supplemental Indenture referred to in this Note
and directs that the check of the Company in payment for this Note or the
portion thereof and any Notes representing any unrepurchased principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If any portion of this Note not
repurchased is to be issued in the name of a Person other than the undersigned,
the undersigned shall pay all transfer taxes payable with respect thereto.
Dated:
----------------------
----------------------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange if
Notes are to be delivered, other than to
or in the name of the registered holder.
----------------------------------------
Signature Guarantee
Fill in for registration of Notes if to be issued other than to and in the name
of registered holder:
- -------------------------------------
(Name)
- -------------------------------------
(Street Address)
- -------------------------------------
(City, state and zip code)
Please print name and address
Principal Amount to be purchased (if
less than all): $__________,000
Social Security or Other Taxpayer Number
D-1
Exhibit E
ASSIGNMENT FORM
For value received ___________________________ hereby sell(s), assign(s)
and transfer(s) unto _____________________ (Please insert social security or
other Taxpayer Identification Number of assignee) the within Note, and hereby
irrevocably constitutes and appoints __________ attorney to transfer the said
Note on the books of the Company, with full power of substitution in the
premises.
Dated:
-----------------------
----------------------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange if
shares of Common Stock are to be issued,
or Notes to be delivered, other than to
or in the name of the registered holder.
----------------------------------------
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of the Note in every particular without alteration
or enlargement or any change whatever.
E-1