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EXHIBIT 4.2
AXYS PHARMACEUTICALS, INC.
TO
U.S. BANK TRUST NATIONAL ASSOCIATION,
AS TRUSTEE
-----------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of September 22, 2000
$26,000,000
8% Senior Secured Convertible Notes due 2004
-----------------------
Supplemental to Indenture Dated as of September 22, 2000
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AXYS PHARMACEUTICALS, INC.
TO
U.S. BANK TRUST NATIONAL ASSOCIATION,
AS TRUSTEE
FIRST SUPPLEMENTAL INDENTURE
8% Senior Secured Convertible Notes due 2004
TABLE OF CONTENTS
PAGE
ARTICLE ONE DEFINITIONS................................................................2
Section 1.01. Definitions.........................................................2
ARTICLE TWO FORM OF NOTES..............................................................25
Section 2.01. Form of Notes.......................................................25
Section 2.02. Form of Face of Notes...............................................25
Section 2.03. Form of Reverse of Notes............................................27
Section 2.04. Form of Conversion Notice...........................................30
ARTICLE THREE THE NOTES..................................................................31
Section 3.01. Establishment of Series; Amount.....................................31
Section 3.02. Issuance of Common Stock in Lieu of Cash Interest...................32
Section 3.03. Defeasance..........................................................34
ARTICLE FOUR REMEDIES...................................................................35
Section 4.01. Events of Default...................................................35
ARTICLE FIVE COVENANTS..................................................................37
Section 5.01. Limitations on Certain Indebtedness.................................37
Section 5.02. Investment Company Act..............................................37
Section 5.03. Limitations on Asset Sales, Liquidations, Etc.; Certain Matters.....37
Section 5.04. Limitations on Liens................................................38
Section 5.05. Limitation on Certain Issuances of Securities.......................38
Section 5.06. Certain Obligations.................................................39
Section 5.07. Transactions with Affiliates........................................39
Section 5.08. Notice of Defaults..................................................40
Section 5.09. Limitations on Dividends, Other Share Payments and Investments
in Unrestricted Subsidiaries.................................40
Section 5.10. Further Documentation; Pledge of Instruments and Chattel Paper......41
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Section 5.11. Indemnification.....................................................41
Section 5.12. Maintenance of Records..............................................42
Section 5.13. Limitation on Liens on Collateral and Akkadix Shares................42
Section 5.14. Limitations on Dispositions of Collateral and Akkadix Shares........43
Section 5.15. Performance of Contracts and Agreements Giving Rise to Accounts.....43
Section 5.16. Further Identification of Collateral................................43
Section 5.17. Notices.............................................................43
Section 5.18. Changes in Locations, Name, Etc.....................................43
Section 5.19. Subsidiaries........................................................43
Section 5.20. Waiver..............................................................44
Section 5.21. Additional Collateral in Respect of Pledged Securities..............44
ARTICLE SIX PLEDGE AND SECURITY INTEREST; COLLATERAL...................................45
Section 6.01. Grant of Security Interest and Pledge; Collateral Assignment........45
Section 6.02. Rights of Trustee; Limitations on Trustee's Obligations.............45
Section 6.03. Trustee's Powers Respecting the Collateral..........................46
Section 6.04. Performance by Trustee of Company's Obligations.....................48
Section 6.05. Remedies in General.................................................48
Section 6.06. Remedies With Respect to Pledged Securities.........................49
Section 6.07. Limitation on Duties Regarding Preservation of Collateral...........50
Section 6.08. Powers Coupled with an Interest.....................................50
Section 6.09. Termination of Security Interest Release of Collateral..............50
Section 6.10. Concerning the Trustee..............................................51
Section 6.11. Substitution of Collateral..........................................51
ARTICLE SEVEN REPURCHASE UPON A REPURCHASE EVENT.........................................52
Section 7.01. Repurchase Right....................................................52
Section 7.02. Notices; Method of Exercising Repurchase Rights, Etc................52
Section 7.03. Other...............................................................53
Section 7.04. Form of Company Notice..............................................54
Section 7.05. Form of Holder Notice...............................................55
ARTICLE EIGHT CONVERSION.................................................................56
Section 8.01. Right to Convert....................................................56
Section 8.02. Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion...................................................57
Section 8.03. Adjustment of Conversion Price......................................59
Section 8.04. Effect of Reclassification, Consolidation, Merger or Sale...........67
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Section 8.05. Reservation of Shares; Shares to Be Fully Paid; Listing of
Common Stock.................................................68
Section 8.06. Notice to Holders Prior to Certain Actions..........................69
Section 8.07. Original Indenture..................................................70
ARTICLE NINE SUNDRY PROVISIONS..........................................................70
Section 9.01. Representations, Warranties and Covenants of the Company............70
Section 9.02. Trustee Not Responsible for Recitals................................70
Section 9.03. Effect of Headings and Table of Contents............................70
Section 9.04. Successors and Assigns..............................................70
Section 9.05. Separability Clause.................................................70
Section 9.06. Benefits of Supplemental Indenture..................................70
Section 9.07. Governing Law.......................................................71
Section 9.08. Counterparts........................................................71
Section 9.09. Enforceable Obligation..............................................71
Section 9.10. Certain Performance.................................................71
Section 9.11. Amendments..........................................................71
Section 9.12. Reference to and Effect on Original Indenture.......................71
Section 9.13. Notices.............................................................71
Section 9.14. Payment of Notes on Repurchase; Deposit of Repurchase Price,
Etc..........................................................73
SCHEDULE I Certain Permitted Indebtedness
SCHEDULE II Certain Pledged Securities
SCHEDULE III Subordination of Indebtedness
SCHEDULE IV Form of Agreement Relating to the DPI Contracts
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AXYS PHARMACEUTICALS, INC.
TO
U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE
FIRST SUPPLEMENTAL INDENTURE
8% Senior Secured Convertible Notes due 2004
FIRST SUPPLEMENTAL INDENTURE, dated as of September 22, 2000,
between AXYS PHARMACEUTICALS, INC., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company"), having
its principal executive office at 180 Kimball Way, South San Francisco,
California 94080, and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking
association duly organized and existing under the laws of the United States of
America, as Trustee under the Original Indenture mentioned below (herein called
the "Trustee").
RECITALS OF THE COMPANY
The Company and the Trustee have heretofore entered into an
Indenture, dated as of September 22, 2000 (hereinafter called the "Original
Indenture"), to provide, among other things, for the issuance from time to time
of Securities, unlimited as to principal amount, all as provided in the Original
Indenture.
The Securities authorized hereby are the first series of
Securities to be authorized under the Original Indenture.
Section 901 of the Original Indenture provides that, without the
consent of any Holders, the Company, when authorized by a Board Resolution, and
the Trustee, at any time or from time to time, may enter into one or more
indentures supplemental to the Original Indenture, in form satisfactory to the
Trustee, for the purpose of, among other things, establishing the form or terms
of Securities of any series as permitted by Sections 201 and 301 of the Original
Indenture, to add to, change or eliminate any provisions of the Original
Indenture in respect of any one or more series of Securities, to secure the
Securities or to make provision with respect to the conversion rights of
Holders.
The Company desires to issue from time to time its 8% Senior
Secured Convertible Notes due 2004, and to add to the provisions of the Original
Indenture certain provisions with respect to such Notes.
The entry into this Supplemental Indenture by the parties hereto
is in all respects authorized by the provisions of the Original Indenture.
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All things necessary to make this Supplemental Indenture a valid
agreement of the Company in accordance with its terms have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Notes, without preference,
priority or distinction of any of the Notes over any of the others by reason of
priority in time of issuance or otherwise, except as otherwise provided in the
Original Indenture or this Supplemental Indenture, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. DEFINITIONS. (a) For all purposes of this
Supplemental Indenture, except as otherwise herein expressly provided or unless
the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the singular;
(2) terms used herein in capitalized form and defined in the
Original Indenture and not otherwise defined herein shall have the respective
meanings specified in the Original Indenture;
(3) the words "herein", "hereof" and "hereunder" and other words
of similar import used in this Supplemental Indenture refer to this Supplemental
Indenture as a whole and not to any particular Article, Section or other
subdivision of this Supplemental Indenture;
(4) the terms defined in the introductory paragraph hereof and in
the first paragraph of the Recitals of the Company herein shall have the
respective meanings specified therein;
(5) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted
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hereunder shall mean such accounting principles as are generally accepted in the
United States at the date of such computation; and
(6) The following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Accounts" means all rights to payment for goods sold or leased
or for services rendered, whether or not such rights have been earned by
performance.
"Affiliate" means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the subject Person. For purposes
of this definition, "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
"Akkadix" means Akkadix Corporation, a California corporation,
and its successors.
"Akkadix Shares" means the 3,000,000 shares of Series A Preferred
Stock, $.001 par value per share, of Akkadix registered in the name of the
Company, any other shares of capital stock of Akkadix owned by the Company from
time to time, and any shares of capital stock of Akkadix into or for which such
shares shall be converted, exchanged, changed or reclassified.
"AMEX" means the American Stock Exchange, Inc.
"Applicable Rate" means 8 percent per annum; provided, however,
that if an Event of Default shall have occurred, then the Applicable Rate shall
be increased to the Default Rate during the period from the date of such Event
of Default until the date no Event of Default is continuing (or in either such
case such lesser rate as shall be the highest rate permitted by applicable law).
"Board of Directors" means the Board of Directors of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors, or duly authorized committee thereof (to the extent
permitted by applicable law), and to be in full force and effect on the date of
such certification, and delivered to the Holder.
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"Business Day" means any day other than a Saturday, Sunday or a
day on which commercial banks in The City of New York or the State of California
are authorized or required by law or executive order to remain closed.
"California UCC" means the Uniform Commercial Code as in effect
from time to time in the State of California.
"Cash, Cash Equivalents and Eligible Investment Balances" of any
Person on any date shall be determined from such Person's books maintained in
accordance with Generally Accepted Accounting Principles, and means (without
duplication) the sum of (1) the cash accrued by such Person and its subsidiaries
on a consolidated basis on such date and available for use by such Person and
its subsidiaries on such date, (2) all assets which would, on a consolidated
balance sheet of such Person and its subsidiaries prepared as of such date in
accordance with Generally Accepted Accounting Principles, be classified as cash
equivalents and (3) all Eligible Marketable Securities, in the amount thereof
that would be shown on such balance sheet.
"Chattel Paper" shall have the meaning assigned to such term
under the Code.
"Code" means the California UCC or the New York UCC, as
applicable.
"Collateral" means each of the following, whether now existing or
hereafter arising:
(1) the Pledged Securities;
(2) all of the Company's right, title and interest in and to all
Contracts relating to any of the Pledged Securities, including, without
limitation, the DPI Contracts;
(3) all General Intangibles of the Company, whether now existing
or hereafter arising, in any way relating to or arising from items (1)
through (2) immediately above;
(4) all cash, securities, rights and other property at any time
or from time to time received, receivable or otherwise distributed in
respect of items (1) through (3) immediately above;
(5) all insurance policies to the extent they relate to items
(1) through (4) immediately above;
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(6) all books, ledgers, books of account, records, writings,
databases, information and other property relating to, used or useful in
connection with, evidencing, embodying, incorporating, or referring to
any of the foregoing in this definition;
(7) to the extent not otherwise included, all Proceeds, products,
rents, issues, profits and returns of and from any and all of the
foregoing in this definition, which Proceeds may be in the form of
Accounts, Chattel Paper, Inventory or otherwise; and
(8) any funds or Government Obligations deposited by the Company
with the Trustee pursuant to Article Thirteen of the Original Indenture
or Section 6.11.
"Collateral Substitution" means the substitution by the Company
of Collateral pursuant to Section 6.11(a), and which will occur on the date that
the Company is entitled, in accordance with Section 6.11(a), to the release of
all Collateral other than the Collateral so deposited by the Company with the
Trustee pursuant to Section 6.11(a).
"Collateral Value" as of any date means the sum of the following:
(1) all cash held by the Trustee on such date that constitutes
Collateral; and
(2) the Fair Market Value, as set forth in a certificate signed
by a Financial Advisor and delivered to the Trustee, of all Pledged
Securities held by the Trustee on such date that constitute Collateral,
taking into account any restrictions on sale of such Pledged Securities
other than the restrictions arising from the Security Interest;
provided, however, that only such items of Collateral listed in the preceding
clauses (1) and (2) as to which the Trustee has a first priority perfected
security interest for the benefit of the Holders shall be included in the
calculation of Collateral Value.
"Common Stock" includes the Company's Common Stock, $.001 par
value, and the related Preferred Share Purchase Rights (and any similar rights
issued with respect to the Common Stock) as authorized on the date hereof, and
any other securities into which or for which the Common Stock or the related
Preferred Share Purchase Rights (and any similar rights issued with respect to
the Common Stock) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise and any
stock (other than Common Stock) and other securities of the Company or any other
Person which the Holders at any time shall be
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entitled to receive, or shall have received, on the conversion of the Notes, in
lieu of or in addition to Common Stock.
"Common Stock Equivalent" means any warrant, option, subscription
or purchase right with respect to shares of Common Stock, any security
convertible into, exchangeable for, or otherwise entitling the holder thereof to
acquire, shares of Common Stock or any warrant, option, subscription or purchase
right with respect to any such convertible, exchangeable or other security.
"Company" shall have the meaning provided in the first paragraph
of this Supplemental Indenture.
"Company DPI Agreements" means, collectively, all agreements
between or among the Company and DPI, other than the DPI Contracts, whether
existing at the date of this Supplemental Indenture or entered into thereafter.
"Company Certificate" means a certificate of the Company signed
by an Officer.
"Company Notice" means a Company Notice in the form set forth in
Section 7.04 of this Supplemental Indenture.
"Computation Date" shall have the meaning provided in Section
5.09.
"Consolidated Net Current Assets" means the Net Current Assets of
the Company and its Restricted Subsidiaries consolidated in accordance with
Generally Accepted Accounting Principles.
"Contracts" shall have the meaning assigned to such term under
the Code.
"Conversion Date" means the date on which a Conversion Notice is
given in accordance with Section 8.02(a).
"Conversion Notice" means a duly executed Notice of Conversion of
8% Senior Secured Convertible Note due 2004 substantially in the form set forth
in Section 2.04 of this Supplemental Indenture.
"Conversion Price" means $7.06, subject to adjustment as provided
in Section 8.03.
"Credit Agreement" means that certain Credit Agreement, dated as
of July 26, 1999, as amended, by and between the Company and Foothill Capital
Corporation, providing for up to $30 million of revolving credit borrowings,
including any related
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notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and as amended, modified, renewed, refunded, replaced or
refinanced from time to time without increasing the principal amount of
borrowings thereunder and in compliance with the requirements of this
Supplemental Indenture.
"Current Market Price" shall mean the arithmetic average of the
daily Market Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to the date in question; provided, however, that (1) if
the "ex" date (as hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 8.03(a), (b), (c), (d), (e), (f), or (g)
occurs during such ten consecutive Trading Days, the Market Price for each
Trading Day prior to the "ex" date for such other event shall be adjusted by
multiplying such Market Price by the same fraction by which the Conversion Price
is so required to be adjusted as a result of such other event, (2) if the "ex"
date for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 8.03(a), (b), (c), (d), (e), (f), or (g) occurs on or after the "ex"
date for the issuance or distribution requiring such computation and prior to
the day in question, the Market Price for each Trading Day on and after the "ex"
date for such other event shall be adjusted by multiplying such Market Price by
the reciprocal of the fraction by which the Conversion Price is so required to
be adjusted as a result of such other event, and (3) if the "ex" date for the
issuance or distribution requiring such computation is prior to the day in
question, after taking into account any adjustment required pursuant to clause
(1) or (2) of this proviso, the Market Price for each Trading Day on or after
such "ex" date shall be adjusted by adding thereto the amount of any cash and
the Fair Market Value (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes of Section 8.03(d)
or (f), whose determination shall be conclusive and described in a Board
Resolution) of the evidences of indebtedness, shares of capital stock or assets
being distributed applicable to one share of Common Stock as of the close of
business on the day before such "ex" date. For purposes of any computation under
Section 8.03(f), the Current Market Price of the Common Stock on any date shall
be deemed to be the arithmetic average of the daily Market Prices per share of
Common Stock for such day and the next two succeeding Trading Days; provided,
however, that if the "ex" date for any event (other than the Tender Offer
requiring such computation) that requires an adjustment to the Conversion Price
pursuant to Section 8.03(a), (b), (c), (d), (e), (f) or (g), occurs on or after
the Expiration Time for the Tender Offer requiring such computation and prior to
the day in question, the Market Price for each Trading Day on and after the "ex"
date for such other event shall be adjusted by multiplying such Market Price by
the reciprocal of the fraction by which the Conversion Price is so required to
be adjusted as a result of such other event. For purposes of this paragraph, the
term "ex" date, (1) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades, regular way, on the
relevant exchange or in the relevant market from
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which the Market Price was obtained without the right to receive such issuance
or distribution, (2) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the Common Stock trades,
regular way, on such exchange or in such market after the time at which such
subdivision or combination becomes effective, and (3) when used with respect to
any Tender Offer means the first date on which the Common Stock trades, regular
way, on such exchange or in such market after the Expiration Time of such Tender
Offer. Notwithstanding the foregoing, whenever successive adjustments to the
Conversion Price are called for pursuant to Section 8.03, such adjustments shall
be made to the Current Market Price as may be necessary or appropriate to
effectuate the intent of Section 8.03 and to avoid unjust or inequitable results
as determined in good faith by the Board of Directors.
"Default" means any event that is, or with the passage of time or
the giving of notice or both would become, an Event of Default.
"Default Interest" shall have the meaning provided in the first
paragraph of the Note.
"Default Rate" means 15 percent per annum (or such lesser rate
equal to the highest rate permitted by applicable law).
"Depositary" means The Depository Trust Company.
"Documents" shall have the meaning assigned to such term under
the Code.
"DPI" means Discovery Partners International, Inc., a Delaware
corporation, and its successors.
"DPI Contracts" means the Standstill Agreement made as of April
28, 2000 by and between DPI and the Company; and the DPI Investors' Rights
Agreement.
"DPI Merger Agreement" means the Agreement and Plan of Merger,
dated as of April 11, 2000, by and among DPI, DPII Newco, LLC, a Delaware
limited liability company and a wholly-owned subsidiary of DPI, Axys Advanced
Technologies, Inc., a Delaware corporation, and the Company, as in effect of the
date of this Supplemental Indenture.
"DPI Investors' Rights Agreement" means the Second Amended and
Restated Investors' Rights Agreement made as of April 28, 2000 by and between
DPI and the Investors listed on Schedule A thereto, including the Company, as
amended by Amendment No. 1 to Second Amended and Restated Investors' Rights
Agreement
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dated as of June 30, 2000 by and between DPI and the Investors parties thereto,
including the Company.
"Eligible Marketable Securities" of any Person on any date means
the amount of marketable securities which would be reflected as investments that
are current assets on a consolidated balance sheet of such Person and its
subsidiaries prepared as of such date in accordance with Generally Accepted
Accounting Principles on a basis consistent with the most recently published
audited consolidated balance sheet of such Person and its subsidiaries at the
time of such determination.
"Event of Default" shall have the meaning provided in Section
4.01.
"Excluded Transaction" means a consolidation or merger of the
Company or any Subsidiary with or into another entity where all of the following
requirements are met:
(a) the stockholders of the Company immediately prior to such
transaction collectively own at least 40% of the outstanding voting
securities of the surviving entity of such consolidation or merger (or
of the Company, in the case of a consolidation or merger of a Subsidiary
in which the Company is not a constituent corporation in such
consolidation or merger) immediately following such transaction;
(b) such other entity and its Affiliates are principally engaged
in businesses of the same general types as the Company and the
Subsidiaries;
(c) the ratio of pro forma combined Net Cash, Cash Equivalents
and Eligible Investment Balances immediately prior to consummation of
such consolidation or merger to the pro forma combined Quarterly Cash
Requirements immediately prior to consummation of such consolidation or
merger, in each such case of the surviving entity of such consolidation
or merger (or of the Company, in the case of a consolidation or merger
of a Subsidiary in which the Company is not a constituent corporation in
such consolidation or merger) shall not be less than the ratio of the
Company's Net Cash, Cash Equivalents and Eligible Investment Balances to
the Company's Quarterly Cash Requirements, in each such case immediately
prior to consummation of such consolidation or merger; and
(d) the Board of Directors shall have determined prior to
consummation of such consolidation or merger, as evidenced by a Board
Resolution, that consummation of such consolidation or merger will not
adversely affect the ability of the Company to pay and perform its
obligations to the Holders under the Transaction Documents.
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Any such consolidation or merger shall be an Excluded Transaction
only if the Company shall have delivered to the Trustee at least ten days prior
to consummation of such consolidation or merger an Officers' Certificate signed
by the Company's Chief Executive Officer or Chief Financial Officer setting
forth in reasonable detail the facts showing that such consolidation or merger
is an Excluded Transaction.
"Expiration Time" shall have the meaning provided in Section
8.03(f).
"Fundamental Change" means
(a) Any consolidation or merger of the Company or any Subsidiary
with or into another entity (other than a consolidation or merger of a
Subsidiary into the Company or a wholly-owned Subsidiary and other than
an Excluded Transaction) where the stockholders of the Company
immediately prior to such transaction do not collectively own at least
51% of the outstanding voting securities of the surviving entity of such
consolidation or merger (or of the Company, in the case of a
consolidation or merger of a Subsidiary in which the Company is not a
constituent corporation in such consolidation or merger) immediately
following such transaction; or the sale of all or substantially all of
the assets of the Company and the Subsidiaries in a single transaction
or a series of related transactions; or
(b) The occurrence of any transaction or event in connection with
which all or substantially all the Common Stock shall be exchanged for,
converted into, acquired for or constitute the right to receive
consideration (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all
common stock which is (or will, upon consummation of or immediately
following such transaction or event, will be) listed on the NYSE or the
AMEX or approved for quotation on Nasdaq or any similar United States
system of automated dissemination of transaction reporting of securities
prices; or
(c) The acquisition by a Person or entity or group of Persons or
entities acting in concert as a partnership, limited partnership,
syndicate or group, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise, of
beneficial ownership of securities of the Company representing 50% or
more of the combined voting power of the outstanding voting securities
of the Company ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of directors
other than pursuant to a Negotiated Transaction.
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"General Intangibles" shall have the meaning assigned to such
term under the Code.
"Generally Accepted Accounting Principles" for any Person means
the generally accepted accounting principles and practices applied by such
Person from time to time in the preparation of its audited financial statements.
"Government Obligations" means direct obligations of, or
obligations the timely payment of the principal of and the interest on which are
unconditionally guaranteed by, the United States of America and which are not,
by their terms, callable.
"Hedging Obligations" means, with respect to any specified
Person, the obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates.
"Holder Notice" means a Holder Notice in the form set forth in
Section 7.05 of this Supplemental Indenture.
"Indebtedness" as used in reference to any Person means all
indebtedness of such Person for borrowed money, the deferred purchase price of
property, goods and services and obligations under leases which are required to
be capitalized in accordance with Generally Accepted Accounting Principles and
shall include all such indebtedness guaranteed in any manner by such Person or
in effect guaranteed by such Person through a contingent agreement to purchase
and all indebtedness for the payment or purchase of which such Person has
contingently agreed to advance or supply funds and all indebtedness secured by
mortgage or other Lien upon property owned by such Person, although such Person
has not assumed or become liable for the payment of such indebtedness, and, for
all purposes hereof, such indebtedness shall be treated as though it has been
assumed by such Person; provided, however, that "Indebtedness" shall not include
trade debt incurred in the ordinary course of business to trade creditors that
is payable on customary trade terms.
"Initial Allocation" shall have the meaning provided in Section
5.13.
"Interest Payment Dates" shall mean each March 15, June 15,
September 15 and December 15 and the Maturity Date.
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"Interest Share Price" means, with respect to any Interest
Payment Date, an amount equal to 95 percent of the arithmetic average of the
Market Price of one share of Common Stock for each of the ten consecutive
Trading Days ending on and including the Trading Day immediately preceding such
Interest Payment Date.
"Interest Shares" means the shares of Common Stock and the
related Preferred Share Purchase Rights issuable in payment of interest on the
Notes in accordance with Section 3.02.
"Instrument" shall have the meaning assigned to such term under
the Code.
"Inventory" shall have the meaning assigned to such term under
the Code, and in any event, including all inventory, merchandise, goods and
other personal property that are held by or on behalf of a Person for sale or
lease or to be furnished under a contract of service or which give rise to any
Account, including returned goods.
"Issuance Date" means the date the Notes were first issued to the
original Holders of the Notes.
"Issuing Agent" means Computershare Investor Services, LLC, its
successor or such other person who shall be serving as transfer agent and
registrar for the Common Stock and who shall have been authorized by the Company
to act as conversion agent for the Notes in accordance with the Issuing Agent
Instruction and the name, address and telephone number of whom shall have been
given to the Trustee and the Holders by notice from the Company.
"Issuing Agent Instruction" means the Issuing Agent Instruction,
dated September 22, 2000, from the Company to the Issuing Agent for the benefit
of the Holders and the holders from time to time of the Warrants.
"Lien" shall mean any lien, mortgage, security interest, chattel
mortgage, pledge, equity or other encumbrance (statutory or otherwise) of any
kind, including, without limitation, any agreement to give any of the foregoing,
any conditional sales or other title retention agreement, any lease in the
nature thereof, and the filing of or the agreement to give any financing
statement under the Code of any jurisdiction or similar evidence of any
encumbrance, whether within or outside the United States.
"Majority Holders" means at any time Holders who hold Notes that
are Outstanding which, based on the Outstanding principal amount thereof,
represent a majority of the aggregate Outstanding principal amount of all the
Notes.
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"Market Price" with respect to any security on any day shall mean
the closing bid price of such security on such day on the Nasdaq or the NYSE or
the AMEX, as applicable, or, if such security is not listed or admitted to
trading on the Nasdaq, the NYSE or the AMEX, on the principal national
securities exchange or quotation system on which such security is quoted or
listed or admitted to trading, in any such case as reported by Bloomberg, L.P.
or, if not quoted or listed or admitted to trading on any national securities
exchange or quotation system, the average of the closing bid and asked prices of
such security on the over-the-counter market on the day in question, as reported
by the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished by any
New York Stock Exchange member firm selected from time to time by the Board of
Directors for that purpose, or a price determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution.
"Maturity Date" means October 1, 2004.
"Nasdaq" means the Nasdaq National Market.
"Negotiated Transaction" means an acquisition by a Person or
entity or group of Persons or entities acting in concert as a partnership,
limited partnership or group, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise, of beneficial
ownership of securities of the Company representing 50% or more of the combined
voting power of the outstanding voting securities of the Company ordinarily (and
apart from rights accruing in special circumstances) having the right to vote in
the election of directors which acquisition meets all of the following
requirements:
(1) such acquisition is made pursuant to a written agreement to
which the Company is a party and which has been approved by the Board of
Directors prior to such acquisition and which the Company and the other
parties have entered into prior to such transaction; and
(2) such agreement provides for the acquisition by such Person,
entity, group of Persons or group of entities making such acquisition of
such outstanding voting securities of the Company of all of the
outstanding voting securities of the Company at the same price and in
the same form of consideration per share for all voting securities of
the Company of the same class or series.
"Net Cash, Cash Equivalents and Eligible Investment Balances" of
any Person on any date means the consolidated Cash, Cash Equivalents and
Eligible Investment Balances of such Person and its subsidiaries on such date
less the sum
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(without duplication) of (1) the amount of any outstanding Indebtedness of such
Person or any of its subsidiaries which, directly or indirectly, is secured in
whole or in part by, or restricts the use of, the consolidated Cash, Cash
Equivalents and Eligible Investment Balances of such Person or any of its
subsidiaries plus (2) the amount of outstanding Indebtedness of such Person and
its subsidiaries which on such date is classified as short-term debt in
accordance with Generally Accepted Accounting Principles.
"Net Current Assets" of any Person at any date shall be
determined from books of such Person maintained in accordance with Generally
Accepted Accounting Principles, and means as of such date
(1) the value shown by such books of all assets, exclusive of
patents, patent applications, trademarks, copyrights, trade names, good
will, organizational expense, research and development, other
intangibles, treasury stock and unamortized debt, discount and expense,
classified as current assets as of such date;
less
(2) all current liabilities of such Person.
"New York UCC" means the Uniform Commercial Code as in effect
from time to time in the State of New York.
"Newly Issued Shares" shall have the meaning provided in Section
8.03(g).
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable as a guarantor or
otherwise, or (c) constitutes the lender;
(2) no default with respect to which (including any rights that
the holders of the Indebtedness may have to take enforcement action
against an Unrestricted Subsidiary) would permit upon notice, lapse of
time or both any holder of any other Indebtedness of the Company or any
of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the
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payment of such other Indebtedness to be accelerated or payable prior to
its stated maturity; and
(3) as to which the lenders have been notified in writing by the
Company that they will not have any recourse to the stock or assets of
the Company or any of its Restricted Subsidiaries.
"Note Purchase Agreements" means the Note Purchase Agreements,
dated as of September 22, 2000, by and between the Company and the several
original Holders of the Notes.
"Notes" means the Company's 8% Senior Secured Convertible Notes
due 2004 issued pursuant to the Original Indenture and this Supplemental
Indenture.
"NYSE" means the New York Stock Exchange, Inc.
"Obligations" means:
(1) the full and prompt payment when due of all obligations and
liabilities to the Holders, whether now existing or hereafter arising,
under the Notes, this Supplemental Indenture or the other Transaction
Documents and the due performance and compliance with the terms of the
Notes and the other Transaction Documents;
(2) any and all sums advanced in accordance with the terms of the
Notes, this Supplemental Indenture or applicable law by the Trustee or
any Holder in order to preserve the Collateral or to preserve the
Trustee's security interest in the Collateral;
(3) in the event of any proceeding for the collection or
enforcement of any obligations or liabilities of the Company referred to
in the immediately preceding clauses (1) and (2) in accordance with the
terms of the Notes and this Supplemental Indenture, the reasonable
expenses of re-taking, holding, preparing for sale, selling or otherwise
disposing of or realizing on the Collateral, or of any other exercise by
the Trustee of its rights hereunder, together with reasonable attorneys'
fees and court costs; and
(4) any amounts for which any Holder is entitled to
indemnification under Section 5.11.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the President or the Chief Financial Officer of the Company.
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"Permitted Collateral or Akkadix Disposition" means a sale,
transfer or other disposition of Collateral or the Akkadix Shares in accordance
with, and as permitted by, Section 5.03(b)(1); provided, however, that if during
the period of 20 consecutive Trading Days ending on and including the Trading
Day immediately preceding the closing of a Permitted Collateral or Akkadix
Disposition on each such Trading Day (a) the Common Stock shall be listed on
Nasdaq, the NYSE or the Amex, and the Market Price of the Common Stock shall be
at least 200% of the Conversion Price in effect on each such Trading Day (b) no
Event of Default shall have occurred or be continuing and no Repurchase Event
shall have occurred with respect to which any Holder has the right to require
repurchase of any Note pursuant to Article Seven or with respect to which any
Holder has exercised such right and the Company shall not have paid or deposited
in accordance with Section 9.14 of this Supplemental Indenture the applicable
Repurchase Price, (c) the Registration Statement shall be effective and
available for use by the Company for the sale of shares of Common Stock to
holders of the Warrants upon exercise of the Warrants and is reasonably expected
to remain effective and available after such period of 20 Trading Days, and (d)
the Company shall have furnished to the Holders and the Trustee a Company
Certificate certifying the matters set forth in the immediately preceding
clauses (a) through (c), then such Permitted Collateral or Akkadix Disposition
shall not constitute a Repurchase Event.
"Permitted Indebtedness" means
(1) with respect to the Company or any of its Restricted
Subsidiaries:
(a) Indebtedness outstanding on the Issuance Date and identified
on SCHEDULE I;
(b) Indebtedness incurred after the Issuance Date in an aggregate
amount not to exceed $5 million at any one time outstanding so long as
(x) such Indebtedness is incurred for the purpose of acquiring,
constructing or improving an interest in real estate owned or used or to
be owned or used by the Company or one of its Restricted Subsidiaries
(or for the purpose of acquiring the capital stock or similar equity
interests of a Restricted Subsidiary of the Company that is formed for
the limited purpose of owning same and does not own or hold any other
material assets) and does not exceed the purchase price of the interest
in real estate, capital stock or other equity interest so acquired plus
reasonable transaction expenses or the cost of such construction or
improvements plus reasonable transaction expenses, as the case may be,
(y) such Indebtedness, if secured, is secured solely by the interest of
the Company or one of its Restricted Subsidiaries in the real estate so
acquired, constructed or improved and rights related thereto and (z) the
holder of such Indebtedness shall not have recourse to the Company or
any Subsidiary for payment thereof or performance of any obligation
relating thereto;
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(c) Indebtedness incurred after the Issuance Date in an aggregate
amount not to exceed $15 million at any one time outstanding so long as
(x) such Indebtedness is incurred for the purpose of acquiring equipment
owned or used or to be owned or used by the Company or one of its
Restricted Subsidiaries (or for the purpose of acquiring the capital
stock or similar equity interests of a Restricted Subsidiary of the
Company that is formed for the limited purpose of owning same and does
not own or hold any other material assets) and does not exceed the
purchase price of the equipment, capital stock or other equity interest
so acquired plus reasonable transaction expenses and (y) such
Indebtedness, if secured, is secured solely by the interest of the
Company or one of its Restricted Subsidiaries in the equipment so
acquired and rights related thereto;
(d) endorsements for collection or deposit in the ordinary
course of business;
(e) Indebtedness of the Company incurred under and in accordance
with the Credit Agreement in an aggregate amount not to exceed $30
million at any time outstanding;
(f) Indebtedness represented by the Notes;
(g) Permitted Refinancing Indebtedness issued in exchange for, or
the net proceeds of which are used to refund, refinance or replace,
Indebtedness that is identified in subclauses (a) through (h) or (j) of
this clause (1) of this definition;
(h) Hedging Obligations that are incurred by the obligor on
Indebtedness that is identified in subclauses (a) and (e) of this clause
(1) of this definition (or Permitted Refinancing Indebtedness that is
identified in subclause (g) of clause (1) of this definition and that
refunds or replaces such Indebtedness) that does not have a fixed rate
of interest and which Hedging Obligations are incurred solely for the
bona fide purpose of fixing or hedging interest rate risk with respect
to such Indebtedness;
(i) Indebtedness constituting reimbursement obligations with
respect to letters of credit issued in the ordinary course of business
in respect of workers' compensation claims or self-insurance, or other
Indebtedness with respect to reimbursement type obligations regarding
workers' compensation claims or self-insurance, and obligations in
respect of performance and surety bonds and completion guarantees
incurred in the ordinary course of business; provided, however, that
upon the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following
such drawing or incurrence;
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(j) Indebtedness in an aggregate amount at any one time
outstanding not to exceed the greater of (A) $10 million and (B) an
amount equal to 20% of the Consolidated Net Current Assets of the
Company and its Restricted Subsidiaries, and in the case of both the
preceding clauses (A) and (B) (x) which is subordinated to the Notes on
the Subordination Terms and (y) for which no payment of principal of
such Indebtedness is scheduled to be due prior to the date that is one
year after the Maturity Date; and
(k) Guaranties by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or any of its Restricted
Subsidiaries which Indebtedness is Permitted Indebtedness that is of the
type or character specified in subclauses (a), (c), (d), (e), (h) or (i)
of clause (1) of this definition (including any such Permitted
Indebtedness so specified that may have been incurred pursuant to
subclause (g) of clause (1) of this definition) or subclause (c) of
clause (2) of this definition; and
(2) in the case of any Restricted Subsidiary of the Company:
(a) Indebtedness owed by such Restricted Subsidiary to the
Company; and
(b) Indebtedness of such Restricted Subsidiary to another
Restricted Subsidiary of the Company in an aggregate amount not to
exceed $5 million at any one time outstanding for all Restricted
Subsidiaries of the Company; and
(c) Indebtedness of a Restricted Subsidiary of the Company
existing at the time such Restricted Subsidiary is acquired by the
Company so long as immediately prior to such acquisition the amount by
which (x) the outstanding amount of such Indebtedness of such Restricted
Subsidiary exceeds (y) the Cash, Cash Equivalents and Eligible
Investment Balances of such Restricted Subsidiary does not exceed 20% of
the Fair Market Value of the assets of such Restricted Subsidiary, as
set forth in a certificate of the Chief Financial Officer of the Company
delivered by the Company to the Trustee prior to such acquisition;
so long as, in the case of any Indebtedness specified in subclauses (c), (e) and
(j) of clause (1) of this definition (including any Indebtedness that is of the
type or character specified in subclause (c), (e) or (j) of clause (1) of this
definition and that the Company may propose to incur as Permitted Refinancing
Indebtedness pursuant to subclause (g) of clause (1) of this definition) or
Indebtedness specified in clause (2) of this definition, at the time of
incurrence of such Indebtedness no Default or Event of Default (A) has occurred
and is continuing by reason of Section 4.01(a), 4.01(b), 4.01(c) (with respect
to Sections 5.03, 5.06, 5.13, 5.14, 5.17, 5.18 and 5.21 of this Supplemental
Indenture only),
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4.01(d) (with respect to Sections 5.10, 5.12, 5.15 and 5.16 and Article Six of
this Supplemental Indenture only), 4.01(h), 4.01(i) (with respect to Section
501(2) of the Original Indenture only) or 4.01(k) of this Supplemental Indenture
or (B) would result from such incurrence; provided, however, that,
notwithstanding the occurrence or continuation of any Default or Event of
Default, the Company and its Restricted Subsidiaries shall not be prohibited
from incurring Indebtedness specified in clauses (c), (e) and (j) of clause (1)
of this definition (including any Indebtedness that is of the type or character
specified in subclause (c), (e) or (j) of clause (1) of this definition and that
the Company may propose to incur as Permitted Refinancing Indebtedness pursuant
to subclause (g) of clause (1) of this definition) or Indebtedness specified in
clause (2) of this definition so long as at the time of such incurrence (x) the
Collateral Substitution shall have occurred or (y) the Collateral Value is at
least 300% of the amount of the Obligations and, in the case of either the
preceding clause (x) or (y), no Default or Event of Default would result from
such incurrence.
"Permitted Liens" means any of the following Liens, so long as
(except in the case of clause (2) of this definition) such Lien does not relate
to any of the Collateral or the Akkadix Shares:
(1) Liens upon any property of any Restricted Subsidiary or
Restricted Subsidiaries of the Company as security for indebtedness
owing to the Company;
(2) Liens securing the Notes ratably;
(3) Liens for taxes or assessments or governmental charges or
levies on the property of the Company or any of its Restricted
Subsidiaries if such taxes or assessments or charges or levies shall not
at the time be due and payable or if the amount, applicability, or
validity of any such tax, assessment, charge or levy shall currently be
contested in good faith by appropriate proceedings or necessary
preliminary steps are being taken to contest, compromise or settle the
amount thereof or to determine the applicability or validity thereof and
if the Company or such Restricted Subsidiary, as the case may be, shall
have set aside on its books reserves (segregated to the extent required
by sound accounting practice) deemed by it adequate with respect
thereto; deposits or pledges to secure payment of worker's compensation,
unemployment insurance, old age pensions or other social security;
deposits or pledges to secure performance of bids, tenders, contracts
(other than contracts for the payment of money borrowed or credit
extended), leases, public or statutory obligations, surety or appeal
bonds, or other deposits or pledges for purposes of like general nature
in the ordinary course of business; mechanics', carriers', workers',
repairmen's or other like Liens arising in the ordinary course of
business securing obligations which are not overdue for a period of 60
days, or which are in good faith being
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contested or litigated, or deposits to obtain the release of such Liens;
Liens created by or resulting from any litigation or legal proceedings
or proceedings being contested in good faith by appropriate proceedings,
provided any execution levied thereon shall be stayed; leases made, or
existing on property acquired, in the ordinary course of business;
landlords' Liens under leases to which the Company or any of its
Restricted Subsidiaries is a party; and zoning restrictions, easements,
licenses or restrictions on the use of real property or minor
irregularities in title thereto; provided that all such Liens described
in this subsection (3) do not, in the aggregate, materially impair the
use of such property in the operations of the business of the Company or
any of its Restricted Subsidiaries or the value of such property for the
purpose of such business;
(4) Liens existing on the Issuance Date and listed in Schedule
4(r) to the Note Purchase Agreement and Liens created by the Company on
the property covered by the Liens so listed on such Schedule 4(r) which
Liens secure Permitted Refinancing Indebtedness issued in accordance
with subclause (g) of clause (1) of the definition of Permitted
Indebtedness that is issued to refinance Indebtedness specified in
subclause (a) or (e) of clause (1) of the definition of Permitted
Indebtedness.
(5) judgment Liens not giving rise to an Event of Default;
(6) any interest or title of a lessor under any lease permitted
by subclauses (b) and (c) of clause (1) of the definition of Permitted
Indebtedness (including any such lease entered into pursuant to
subclause (g) of clause (1) of the definition of Permitted
Indebtedness);
(7) purchase money Liens to finance the purchase price of
property or assets purchased by the Company or any of its Restricted
Subsidiaries acquired in the ordinary course of business; provided,
however, that the Lien securing such Indebtedness shall be created
within 180 days of such acquisition, the amount of such Indebtedness so
secured in connection with any such acquisition of property or assets
shall not exceed the purchase price of such property or assets and the
Lien securing such Indebtedness shall not extend to any property or
assets other than the property or assets so acquired;
(8) Liens upon specific items of inventory or other goods of any
Person and on proceeds thereof securing such Person's obligations in
respect of banker's acceptances issued or created for the account of
such Person to facilitate the purchase, shipment, or storage of such
inventory or other goods;
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(9) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(10) leases, subleases, licenses or sublicenses granted to others
that do not materially interfere with the ordinary course of business of
the Company and its Restricted Subsidiaries and which are entered into
in compliance with Section 5.03; and
(11) Liens arising from filing Uniform Commercial Code financing
statements regarding leases permitted by subclauses (b), (c) and (g) of
clause (1) of the definition of Permitted Indebtedness so long as the
collateral described in such financing statements is limited to the
property covered by such leases;
so long as, in the case of any Lien specified in clauses (6) and (7) of this
definition, at the time such Lien is created (A) no Default or Event of Default
has occurred and is continuing by reason of Section 4.01(a), 4.01(b), 4.01(c)
(with respect to Sections 5.03, 5.06, 5.13, 5.14, 5.17, 5.18 and 5.21 of this
Supplemental Indenture only), 4.01(d) (with respect to Sections 5.10, 5.12, 5.15
and 5.16 and Article Six of this Supplemental Indenture only), 4.01(h), 4.01(i)
(with respect to Section 501(2) of the Original Indenture only) or 4.01(k) of
this Supplemental Indenture or (B) would result from such creation of such Lien;
provided, however, that, notwithstanding the occurrence or continuation of any
Default or Event of Default, the Company and its Restricted Subsidiaries shall
not be prohibited from creating any Lien specified in clauses (6) and (7) of
this definition so long as at the time such Lien is created (x) the Collateral
Substitution shall have occurred or (y) the Collateral Value is at least 300% of
the amount of the Obligations and, in the case of either the preceding clause
(x) or (y), no Default or Event of Default would result from the creation of
such Lien.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that all of the following
requirements are met:
(1) the principal amount (or accreted value, if applicable,
determined in accordance with Generally Accepted Accounting Principles)
of such Permitted Refinancing Indebtedness does not exceed the principal
amount (or accreted value, if applicable, determined in accordance with
Generally Accepted Accounting Principles) of the Indebtedness extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded and the amount of all expenses and
premiums incurred in connection therewith);
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(2) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and is subordinated in right
of payment to, the Notes on terms at least as favorable to the Holders
of Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(4) such Indebtedness is incurred by such of the Company or its
Restricted Subsidiary that is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded;
(5) the Indebtedness that is being extended, refinanced, renewed,
replaced, defeased or refunded will not remain outstanding after the
incurrence of such Permitted Refinancing Indebtedness; provided,
however, that in the case of any extension, refinancing, renewal,
replacement, defeasance or refunding of Indebtedness referred to in
subclauses (a) through (h) or (j) of clause (1) of the definition of
Permitted Indebtedness, if prior notice to the holder or holders of the
Indebtedness to be extended, refinanced, renewed, replaced, defeased or
refunded is required in order to repay such Indebtedness, then such
Indebtedness may remain outstanding for up to 60 days after the
incurrence of such Permitted Refinancing Indebtedness so long as on or
before the date of incurrence of such Permitted Refinancing Indebtedness
the Company or the applicable Restricted Subsidiary shall have (a) given
such notice to the holder or holders of such Indebtedness and (b)
irrevocably deposited in trust with a trustee (other than the Company or
any Subsidiary), for the exclusive benefit of the holder or holders of
the Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded, an amount at least equal to the aggregate amount that the
Company or such Restricted Subsidiary will be obligated to pay in
respect of such Indebtedness from such date to the date of payment in
full of such Indebtedness; and
(6) such Indebtedness is of the type or character specified in
subclauses (a) through (f) or (h) through (k) of clause (1) of the
definition of Permitted Indebtedness or subclause (a) or (b) of clause
(2) of the definition of Permitted Indebtedness.
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"Person" means any natural person, corporation, partnership,
limited liability company, trust, incorporated organization, unincorporated
association or similar entity or any government, governmental agency or
political subdivision.
"Pledged Securities" means:
(1) the outstanding shares of capital stock of DPI described on
SCHEDULE II hereto as "Pledged Securities"; and
(2) any and all other shares of capital stock or other securities
of DPI and any and all rights to acquire capital stock or other
securities of DPI hereafter acquired by the Company and required to be
delivered to the Trustee in accordance with Section 5.21.
"Preferred Share Purchase Rights" means the Preferred Share
Purchase Rights issued or issuable pursuant to the Rights Agreement (or any
similar right hereafter issued by the Company with respect to the Common Stock).
"Proceeds" shall have the meaning assigned to such term under the
Code.
"Quarterly Cash Requirements" of any Person as of any date means
the cash used in operating activities and for payment of Indebtedness of such
Person and its subsidiaries, determined on a consolidated basis, for the fiscal
quarter of such Person most recently completed prior to the date of such
determination, as would be shown on a consolidated statement of cash flows of
such Person and its subsidiaries for such fiscal quarter prepared in accordance
with Generally Accepted Accounting Principles.
"Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or converted into
any combination of cash, securities or other property, the date fixed for
determination of stockholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).
"Registration Statement" means the Company's Registration
Statement on Form S-3 under the 1933 Act (Registration No. 333-35828), as
amended by any post effective amendment thereto, including all documents and
reports incorporated therein by reference.
"Repurchase Date" means with respect to any Repurchase Event
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(a) the date that is 60 days after the latest date that any
Holder may exercise the repurchase right pursuant to Article VII with
respect to such Repurchase Event so long as (1) on the date of such
Repurchase Event occurs the Collateral Substitution has occurred or (2)
on the date such Repurchase Event occurs and at all times thereafter to
such 60th day the Collateral Value is at least 200% of the amount of the
Obligations;
(b) if the immediately preceding clause (a) of this definition is
not applicable on the date such Repurchase Event occurs, the date that
is 30 days after the latest date that any Holder may exercise the
repurchase right pursuant to Article VII with respect to such Repurchase
Event;
(c) if the preceding clause (a) of this definition is applicable
on the date such Repurchase Event occurs, and thereafter the Company
fails to continue to meet the requirements of such clause (a), the later
of (1) the date that is 30 days after the latest date that any Holder
may exercise the repurchase right pursuant to Article VII with respect
to such Repurchase Event and (2) the date that is five Business Days
after the date the Company no longer continues to meet the requirements
of such clause (a).
"Repurchase Event" means the occurrence of any one or more of the
following events:
(a) For any period of five consecutive Trading Days following the
date hereof there shall be no reported sale price of the Common Stock on
any of Nasdaq, the NYSE or the AMEX;
(b) Any Fundamental Change;
(c) The inability of the Company for twenty Trading Days (whether
or not consecutive) on or after the Issuance Date in any period of 365
consecutive days to sell shares of Common Stock to the holders of
Warrants upon exercise of the Warrants pursuant to the Registration
Statement (1) by reason of the requirements of the 1933 Act, the 1934
Act or any of the rules or regulations under either thereof or (2) due
to the Registration Statement containing any untrue statement of
material fact or omitting to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or
other failure of the Registration Statement to comply with the rules and
regulations of the SEC; provided, however, that at any time prior to the
Maturity Date the Company shall be entitled to an aggregate of 20
additional Trading Days during which it is unable so to sell shares of
Common Stock to the holders of Warrants without such inability
constituting a Repurchase Event under this clause (c) of this
definition.
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(d) Any Permitted Collateral or Akkadix Disposition.
"Repurchase Percentage" means 100%.
"Repurchase Portion" means, with respect to a particular
Repurchase Event:
(a) in the case of a Repurchase Event specified in clause (a),
(b) or (c) of the definition of the term Repurchase Event, 100 percent;
(b) in the case of a Repurchase Event specified in clause (d) of
the definition of the term Repurchase Event, if, after giving effect to
the sale, conveyance or other disposition giving rise to such Repurchase
Event, the Collateral Value of the remaining Collateral as to which the
Trustee holds a perfected first priority security interest is at least
equal to 150% of the amount by which (x) the amount of the Obligations
exceeds (y) the principal amount of Notes that are Outstanding and of
which the Holders have the right to require repurchase pursuant to
Article Seven by reason of such sale, conveyance or other disposition
(whether or not such right has been exercised), plus accrued interest
thereon to the date of determination, then the quotient, expressed as a
percentage, obtained by dividing (x) an amount equal to 50 percent of
the amount of gross proceeds from such Permitted Collateral or Akkadix
Disposition by (y) the principal amount of Notes that are Outstanding at
the close of business on the Business Day immediately preceding such
Permitted Collateral or Akkadix Disposition; and
(c) in the case of a Repurchase Event specified in clause (d) of
the definition of the term Repurchase Event, if, after giving effect to
the sale, conveyance or other disposition giving rise to such Repurchase
Event, the Collateral Value of the Collateral as to which the Trustee
holds a perfected first priority security interest would be less than
150% of the amount by which (x) the amount of the Obligations exceeds
(y) the principal amount of the Notes that are Outstanding and of which
the Holders have the right to require repurchase pursuant to Article
Seven by reason of such sale, conveyance or other disposition (whether
or not such right has been exercised), plus accrued interest thereon to
the date of determination if 50% of the gross proceeds of such sale,
conveyance or other disposition (plus the amount of any cash in addition
to such proceeds which cash is deposited by the Company with the Trustee
as Collateral in connection with such Permitted Collateral or Akkadix
Disposition and which may be applied to pay the Repurchase Price of such
Notes) were applied to repurchase of Notes pursuant to Article Seven,
then the quotient, expressed as a percentage, obtained by dividing (x)
such amount of the gross proceeds from
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such Permitted Collateral or Akkadix Disposition as shall be necessary
so that, assuming such amount of such gross proceeds (plus the amount of
any cash in addition to such proceeds which cash is deposited by the
Company with the Trustee as Collateral in connection with such Permitted
Collateral or Akkadix Disposition and which may be applied to pay the
Repurchase Price of such Notes) is applied to repurchase Notes pursuant
to Article Seven, the Collateral Value of the Collateral as to which the
Trustee holds a perfected first priority security interest would be at
least 150% of the amount by which the amount of the Obligations exceeds
the principal amount of Notes Outstanding that would be so repurchased
by (y) the principal amount of Notes that are Outstanding at the close
of business on the Business Day immediately preceding such Permitted
Collateral or Akkadix Disposition.
"Repurchase Price" means with respect to any repurchase of a Note
pursuant to Sections 7.01 and 7.02 an amount in cash equal to the sum of (1) the
product of (x) the Repurchase Percentage times (y) the outstanding principal
amount of such Note to be repurchased in accordance with Article Seven plus (B)
accrued and unpaid interest on such principal amount to the date the Repurchase
Price is required to be paid plus (C) accrued and unpaid Default Interest, if
any, thereon at the Default Rate to the date of such repurchase.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rights Agreement" means the Rights Agreement, dated as of
October 8, 1998, between the Company and Computershare Investor Services, LLC,
as Rights Agent.
"SEC" means the Securities and Exchange Commission.
"Securities" shall have the meaning provided in Section 8.03(d).
"Security Interest" means the security interest granted in, and
collateral assignment of, the Collateral pursuant to this Supplemental
Indenture.
"Share Payments" shall have the meaning provided in Section 5.09.
"Specified Market Value" when used with respect to the Common
Stock as of a specified date means with respect to each share of Common Stock
the average of the closing prices of the Common Stock sold on all securities
exchanges (including the Nasdaq and the Nasdaq SmallCap Market) on which the
Common Stock may at the time be listed, or, if there have been no sales on any
such exchange on such day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of
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such day, or, if on such day the Common Stock is not so listed, the average of
the representative bid and asked prices quoted in the NASDAQ System as of 4:00
p.m., New York City time, or, if on such day the Common Stock is not quoted in
the NASDAQ System, the average of the highest bid and lowest asked price on such
day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization, in each
such case averaged over a period of five Trading Days consisting of the day as
of which the Specified Market Value of Common Stock is being determined (or if
such day is not a Trading Day, the Trading Day next preceding such day) and the
four consecutive Trading Days prior to such day. If on the date for which
Specified Market Value is to be determined the Common Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the Specified Market Value of Common Stock shall be the highest price
per share which the Company could then obtain from a willing buyer (not an
employee or director of the Company at the time of determination) for shares of
Common Stock sold by the Company, from authorized but unissued shares, as
determined in good faith by the Board of Directors.
"Stock Payment Option" shall have the meaning provided in Section
3.02(a).
"Subordination Terms" means the terms set forth in SCHEDULE III
to this Supplemental Indenture or such other terms of subordination as shall
have been approved in advance of the incurrence of the applicable Indebtedness
by the Majority Holders in their sole discretion, as evidenced by the written
approval of the Majority Holders given to the Company and the Trustee prior to
incurrence of such Indebtedness.
"Subsidiary" means any corporation or other entity of which a
majority of the capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by the
Company.
"Tender Offer" means a tender offer or exchange offer.
"Trading Day" means a day on which any of the national securities
exchange or Nasdaq which then constitutes the principal securities market for
the Common Stock is open for general trading of securities.
"Transaction Documents" means the Original Indenture, this
Supplemental Indenture, the Notes, the Note Purchase Agreements, the Warrants
and the other agreements, instruments and documents contemplated hereby and
thereby.
"Trigger Event" shall have the meaning provided in Section
8.03(d).
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"Unrestricted Subsidiary" means PPGx, Inc. and its Subsidiaries
and any Subsidiary of the Company that is designated by the Board of Directors
as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the
extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the
Company unless the terms of any such agreement, contract, arrangement or
understanding comply with Section 5.07 (such compliance to be determined
without regard to the proviso to Section 5.07);
(3) is a Person with respect to which neither the Company nor any
of its Restricted Subsidiaries has any direct or indirect obligation (a)
to subscribe for additional equity interests or (b) to maintain or
preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary will be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions. If, at any time, any Unrestricted Subsidiary would fail to
meet the preceding requirements as an Unrestricted Subsidiary, it will
thereafter cease to be an Unrestricted Subsidiary for purposes of this
Supplemental Indenture and will become a Restricted Subsidiary of the Company
for purposes of this Supplemental Indenture, and any Indebtedness, Liens and
activities of such Subsidiary will be deemed to be incurred or engaged in by a
Restricted Subsidiary of the Company as of such date and shall be required to
comply as of such date with the requirements of this Supplemental Indenture
applicable to the Company and its Restricted Subsidiaries. The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary of the Company; provided, however, that such
designation will be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation will only be permitted if (1) such Indebtedness
is permitted under this Supplemental Indenture; and (2) no Default or Event of
Default would be in existence following such designation.
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"Warrants" means the Common Stock Purchase Warrants of the
Company issued to the original Holders of the Notes pursuant to the Note
Purchase Agreements.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the
amount of each then remaining installment, sinking fund, serial maturity
or other required payments of principal, including payment at final
maturity, in respect of such Indebtedness, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such
date and the making of such payment; by
(2) the outstanding principal amount of such Indebtedness at such
date.
(b) All the agreements or instruments herein defined shall mean
such agreements or instruments as the same may from time to time be supplemented
or amended or the terms thereof waived or modified to the extent permitted by,
and in accordance with, the terms thereof and of the Original Indenture, this
Supplemental Indenture and the Notes.
ARTICLE TWO
FORM OF NOTES
SECTION 2.01. FORM OF NOTES. The Notes shall be in substantially
the form set forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by the Original
Indenture and this Supplemental Indenture, and may have such other letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange
or Depositary therefor or as may, consistently herewith, be determined by the
officers executing the Notes, as evidenced by their execution thereof.
SECTION 2.02. FORM OF FACE OF NOTES.
AXYS PHARMACEUTICALS, INC.
No. $
------------------ -----------------
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Axys Pharmaceuticals, Inc., a corporation duly organized and existing under the
laws of Delaware (herein called the "Company," which term includes any successor
Person under the Original Indenture hereinafter referred to), for value
received, hereby promises to pay to __________________, or registered assigns,
the principal sum of _________ Dollars (or such lesser principal amount of this
Note as is outstanding on the date of payment) on September ______, 2004, and to
pay interest thereon from the Issuance Date or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, on each
Interest Payment Date in each year, commencing December 15, 2000, and at the
Maturity of this Note, at the Applicable Rate, until the principal hereof is
paid or made available for payment, provided that any principal or amount of
interest which is overdue shall bear interest at a rate per annum equal to the
Default Rate (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or made
available for payment, and such interest ("Default Interest") shall be payable
on demand. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Supplemental Indenture, be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the fifth Business Day preceding such Interest
Payment Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than ten days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Original Indenture and the Supplemental Indenture.
Payment of the principal of and any such interest on this
Security and any other amounts payable in respect of this Security will be made
at the office or agency of the Company maintained for that purpose in the city
in which the Corporate Trust Office is located, 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 or, at the option of the Company and subject to the
provisions of this Note, interest payable on the Interest Payment Dates may be
paid in whole or in part in fully paid and nonassessable shares of Common Stock;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register; provided further, however, that
cash payments shall be made by wire transfer of immediately available funds to
such account within the United States of America as the Holder may from time to
time designate by notice to the Company in accordance with the Original
Indenture and the
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'
Supplemental Indenture. Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Original Indenture or
the Supplemental Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated: AXYS PHARMACEUTICALS, INC.
--------------------
By:
-------------------------------------
Title:
Attest:
---------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
U.S. Bank Trust National Association, as Trustee, certifies that this
is one of the Securities referred to in the within-mentioned Original
Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION, AS
TRUSTEE
By:
---------------------------------------
Authorized Officer
Date of Authentication:
SECTION 2.03. FORM OF REVERSE OF NOTES. This Security is one of a
duly authorized issue of securities of the Company (herein called the
"Securities"), issued and to be issued in one or more series under an Original
Indenture, dated as of September 1, 2000 (herein called the "Original
Indenture," which term shall have the meaning
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assigned to it in such instrument), between the Company and U.S. Bank Trust
National Association, as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Original Indenture), and the
Supplemental Indenture, dated as of September ______, 2000, between the Company
and the Trustee (herein called the "Supplemental Indenture," which term shall
have the meaning assigned to it in such instrument), and reference is hereby
made to the Original Indenture, the Supplemental Indenture and all indentures
supplemental thereto for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, limited in aggregate principal amount to
$26,000,000 (except as otherwise provided in the Original Indenture and the
Supplemental Indenture).
The Original Indenture and the Supplemental Indenture contain
provisions for defeasance at any time of certain restrictive covenants, Events
of Default or other circumstances with respect to this Security upon compliance
with certain conditions set forth in the Original Indenture and the Supplemental
Indenture. Certain of the Company's obligations with respect to this Security
are defeasible in accordance with Sections 1302 and 1303 of the Original
Indenture and related provisions of the Supplemental Indenture.
Subject to the provisions of the Supplemental Indenture, the
Holder of this Security is entitled, at its option, at any time prior to the
close of business on September _____, 2004 (except that, if the Holder shall
have exercised repurchase rights under Article Seven of the Supplemental
Indenture, such conversion right shall terminate with respect to the portion of
this Security to be repurchased on the last Trading Day prior to the later of
(x) the date of such repurchase and (y) the date the Company pays or deposits in
accordance with the Supplemental Indenture the applicable Repurchase Price,
unless in any such case the Company shall default in payment due upon repurchase
hereof) to convert the principal amount of this Security, or any portion of such
principal amount which is at least $10,000 (or such lesser principal amount
hereof as shall be outstanding at such time), plus accrued and unpaid interest,
into that number of fully paid and non-assessable shares of Common Stock (as
such shares shall then be constituted) obtained by dividing (1) the sum of (x)
the principal amount of this Security or portion hereof being converted plus (y)
accrued and unpaid interest on the portion of the principal amount of this
Security being converted to the applicable Conversion Date plus (z) accrued and
unpaid Default Interest, if any, on the amount referred to in the immediately
preceding clause (y) to the applicable Conversion Date by (2) the Conversion
Price in effect on the applicable Conversion Date, by giving a Conversion Notice
in the manner provided in the Supplemental Indenture; provided, however, that,
if at any time this Security is converted in whole or in part, the Company does
not have available for issuance upon such conversion as authorized and unissued
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shares or in its treasury at least the number of shares of Common Stock required
to be issued pursuant hereto, then, at the election of the Holder made by notice
from the Holder to the Company, this Security (or portion hereof as to which
conversion has been requested), to the extent that sufficient shares of Common
Stock are not then available for issuance upon conversion, shall be converted
into the right to receive from the Company, in lieu of the shares of Common
Stock into which this Security or such portion hereof would otherwise be
converted and which the Company is unable to issue, payment in an amount equal
to the product obtained by multiplying (x) the number of shares of Common Stock
which the Company is unable to issue times (y) the arithmetic average of the
Market Price for the Common Stock during the five consecutive Trading Days
immediately prior to the applicable Conversion Date. Any such payment shall, for
all purposes of this Security, be deemed to be a payment of principal plus a
premium equal to the total amount payable less the principal portion of this
Security converted as to which such payment is required to be made because
shares of Common Stock are not then available for issuance upon such conversion.
The Holder is not entitled to any rights of a holder of Common Stock until the
Holder has converted this Security to Common Stock, and only to the extent this
Security is deemed to have been converted to Common Stock under the Supplemental
Indenture. The Conversion Rate is subject to adjustment as provided in the
Supplemental Indenture.
If an Event of Default with respect to Securities of this series
shall occur and be continuing, the principal of the Securities of this series
may be declared due and payable in the manner and with the effect provided in
the Original Indenture and the Supplemental Indenture.
The Original Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Original Indenture at any time by the
Company and the Trustee with the consent of the Holders of more than 50% in
principal amount of the Securities at the time Outstanding of each series to be
affected. The Original Indenture also contains provisions permitting the Holders
of specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such series,
to waive compliance by the Company with certain provisions of the Original
Indenture and the Supplemental Indenture and certain past defaults under the
Original Indenture and the Supplemental Indenture and their consequences. Any
such consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of any
Security 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 Security.
As provided in and subject to the provisions of the Original
Indenture, the Holder of this Security shall not have the right to institute any
proceeding with respect
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to the Original Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Original Indenture or the Supplemental
Indenture and no provision of this Security or of the Original Indenture or the
Supplemental Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Original Indenture and the Supplemental
Indenture and subject to certain limitations therein set forth, the transfer of
this Security is registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of the Company in
any place where the principal of and any premium and interest on this Security
are payable, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or its attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered
form without coupons. As provided in the Original Indenture and the Supplemental
Indenture and subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal amount of Securities
of this series and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made to a Holder for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the
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Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the
Supplemental Indenture shall have the meanings assigned to them in the
Supplemental Indenture.
SECTION 2.04. FORM OF CONVERSION NOTICE. The Conversion Notice
shall be in substantially the following form or, in the case of any particular
conversion of a Note, in such other form as agreed by the Company and the
converting Holder:
NOTICE OF CONVERSION OF
8% SENIOR SECURED CONVERTIBLE NOTE DUE 2004
OF AXYS PHARMACEUTICALS, INC.
To: Axys Pharmaceuticals, Inc.
180 Kimball Way
South San Francisco, California 94080
Attention: Chief Financial Officer
Facsimile No.: (650) 829-1067
[Name and Address of Issuing Agent]
Attention:
-----------------------------
Special Issuances
Facsimile No.:
1. Pursuant to the terms of the 8% Senior Secured Convertible Note due
2004 (the "Note"), the undersigned hereby elects to convert $_______________ of
the Note into shares of Common Stock of Axys Pharmaceuticals, Inc., a Delaware
corporation, at a Conversion Price per share equal to $_______________.
Capitalized terms used herein and not otherwise defined herein have the
respective meanings provided in the Note.
2. The number of shares of Common Stock issuable upon the conversion of
the Note to which this Notice relates is _________________.
3. Please issue a certificate or certificates for _______________ shares
of Common Stock in the name(s) specified immediately below or, if additional
space is necessary, on an attachment hereto:
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- ---------------------------------
Name
- ---------------------------------
Address
- ---------------------------------
SS or Tax ID Number
Delivery Instructions for Common Stock:
- ---------------------------------
- ---------------------------------
- ---------------------------------
Date:
----------------------- Name
Signature of Registered Holder
(Must be signed exactly as name appears in
the Note.)
ARTICLE THREE
THE NOTES
SECTION 3.01. ESTABLISHMENT OF SERIES; AMOUNT. There is hereby
established a series of Securities entitled "8% Senior Secured Convertible Notes
due 2004," which shall be limited in aggregate principal amount to $26,000,000
(except as otherwise provided in the Original Indenture or this Supplemental
Indenture). The Notes shall bear interest at the rate provided in the form of
Notes and interest on the Notes shall be payable quarterly on the Interest
Payment Dates specified in the form of Notes to the Persons who are Holders of
the Notes at the close of business on the fifth Business Day preceding each
Interest Payment Date. The Notes shall not be Original Issue Discount
Securities.
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SECTION 3.02. ISSUANCE OF COMMON STOCK IN LIEU OF CASH INTEREST.
(a) If the Company exercises its option to make a payment of interest on the
Notes wholly or partly in shares of Common Stock (herein sometimes called the
"Stock Payment Option"), the issuance of Interest Shares upon such exercise of
the Stock Payment Option shall have been authorized by the Board of Directors.
(b) The Company shall not be permitted to exercise the Stock
Payment Option with respect to any payment of interest on the Notes if:
(i) the number of shares of Common Stock authorized, unissued and
unreserved for all purposes other than payment of interest on the Notes,
or held in the Company's treasury, after taking into account shares of
Common Stock required to be reserved for conversion of the Notes and
exercise of the Warrants, is insufficient to pay the portion of such
interest to be paid in Common Stock;
(ii) the issuance or delivery of Interest Shares or the public
resale of such Interest Shares by the Holders who are not Affiliates of
the Company for purposes of the 1933 Act would require registration or
filing with or approval of any governmental authority under any law or
regulation, and such registration, filing or approval has not been
effected or obtained or is not in effect;
(iii) the Interest Shares shall not at the time of issuance have
been authorized for listing, upon official notice of issuance, on the
principal securities exchange on which the Common Stock is then listed
and traded;
(iv) the Interest Share Price for the Interest Shares is less
than the par value of the Common Stock;
(v) an Event of Default has occurred and is continuing on the
applicable Interest Payment Date or at any time thereafter to and
including the date on which the Company delivers such Interest Shares to
the Holders; or
(vi) the Common Stock is neither (i) listed or admitted for
trading on a national securities exchange nor (ii) quoted on Nasdaq.
(c) (1) The Company shall have the right to elect the Stock
Payment Option for the Notes with respect to a particular Interest Payment Date
only if the Company gives notice of such election to the Trustee and the Holders
on or before the date that is 25 Trading Days prior to such Interest Payment
Date. Any election of the Stock Payment Option for a particular Interest Payment
Date shall be applicable pro rata (based on the amount of interest payable on
such Interest Payment Date) to all Notes that are outstanding on such Interest
Payment Date. If the Company elects the Stock Payment Option with respect to a
particular Interest Payment Date, the Company
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shall issue to each Holder in respect of such Interest Payment Date the
aggregate number of whole shares of Common Stock determined by dividing the per
share Interest Share Price of the Common Stock on the applicable Interest
Payment Date into an amount equal to the total amount of lawful money of the
United States of America which such Holder would receive if the aggregate amount
of interest on the Notes held by such Holder which is being paid in Interest
Shares were being paid in such lawful money.
(2) If the Company elects the Stock Payment Option with respect
to an Interest Payment Date, the Interest Shares for such Interest Payment Date
shall become issuable on such Interest Payment Date and the Company shall
deliver, or cause to be delivered, the appropriate number of Interest Shares to
the Holders within three Trading Days after the applicable Interest Payment
Date. If in any case the Company shall fail to deliver or cause to be delivered
such number of Interest Shares to the Holders within five Trading Days after
such Interest Payment Date, then in addition to any other liabilities the
Company may have hereunder and under applicable law (A) the Company shall pay or
reimburse the Holders on demand for all out-of-pocket expenses, including,
without limitation, reasonable fees and expenses of legal counsel, incurred by
the Holders as a result of such failure, (B) if as a result of such failure the
Holders shall suffer any direct damages or liabilities from such failure
(including, without limitation, margin interest and the cost of purchasing
securities to cover a sale (whether by any Holder or any Holder's securities
broker) or borrowing of shares of Common Stock by such Holder for purposes of
settling any trade involving a sale of shares of Common Stock made by such
Holder during the period beginning on the applicable Interest Payment Date and
ending on the date the Company delivers or causes to be delivered to such Holder
the Interest Shares issuable in respect thereof), then the Company shall upon
demand of such Holder pay to such Holder an amount equal to the actual direct,
out-of-pocket damages and liabilities suffered by such Holder by reason thereof
which such Holder documents to the reasonable satisfaction of the Company, and
(C) such Holder may by written notice (which may be given by mail, courier,
personal service or telephone line facsimile transmission) or oral notice
(promptly confirmed in writing), given at any time prior to delivery to such
Holder of the shares of Common Stock issuable in connection with such exercise
of the Stock Payment Option, require payment in cash of the interest in respect
of which the Company exercised the Stock Payment Option, in which case the
amount of such interest shall be immediately due and payable, with Default
Interest thereon from the applicable Interest Payment Date until paid in full
and upon such cash payment in full the Company shall not be obligated to issue
such Interest Shares to such Holder. Notwithstanding the foregoing the Company
shall not be liable to a Holder under clause (B) of the immediately preceding
sentence to the extent the failure of the Company to deliver or to cause to be
delivered such Interest Shares results from fire, flood, storm, earthquake,
shipwreck, strike, war, acts of terrorism, crash involving facilities of a
common carrier, acts of God, or any similar event outside the control of the
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Company (it being understood that the action or failure to act of the Issuing
Agent shall not be deemed an event outside the control of the Company except to
the extent resulting from fire, flood, storm, earthquake, shipwreck, strike,
war, acts of terrorism, crash involving facilities of a common carrier, acts of
God, the bankruptcy, liquidation or reorganization of the Issuing Agent under
any bankruptcy, insolvency or other similar law or any similar event outside the
control of the Issuing Agent). A Holder shall notify the Company in writing (or
by telephone conversation, confirmed in writing) as promptly as practicable
following the second Trading Day after such Interest Payment Date if such Holder
becomes aware that Interest Shares so issuable have not been received as
provided herein, but any failure so to give such notice shall not affect the
rights of any Holder under the Notes or otherwise.
(3) No fractional shares of Common Stock shall be issued in
payment of interest on the Notes. In lieu thereof, the Company may, at its
option, issue a number of shares of Common Stock which reflects a rounding up to
the next whole number of shares or may pay lawful money of the United States of
America in payment of the amount of such interest in lieu of issuance of such
fractional share.
(d) If the Company elects the Stock Payment Option with respect
to a payment of interest on the Notes with respect to a particular Interest
Payment Date, the Company shall deliver to the Trustee and each Holder, on or
prior to the date on which Interest Shares for such payment of interest on the
Notes are required to be received by the Holders, a Company Certificate setting
forth (i) the total amount of the cash interest payment to which such respective
Holder is entitled, (ii) the portion of such interest payment being made in
Interest Shares, (iii) the Interest Share Price and the Market Price on each
Trading Day used in computing the Interest Share Price, (iv) the number of
Interest Shares allocable to such payment, as calculated pursuant to this
Section 3.02, (v) any rounding adjustment to such number or any payment
necessary to be made pursuant to Section 3.02(c), (vi) a brief statement of the
facts requiring such adjustment, and (vii) a brief statement that none of the
conditions set forth in Section 3.02(b) has occurred and is existing and that
all of the requirements of this Section 3.02 have been met. Such Company
Certificate shall be conclusive evidence of the correctness of the calculation
of the number of Interest Shares allocable to the payments to which such Company
Certificate relates and of any adjustments to such number made pursuant to this
Section 3.02 in the absence of manifest error. On or before the pertinent
Interest Payment Date, the Company shall issue, or cause the Issuing Agent to
prepare and issue, the Interest Shares in the names of the Holders or their
respective nominees before being so delivered by the Company on such Interest
Payment Date.
(e) The Interest Shares, when issued pursuant to and in
compliance with this Section 3.02, shall be, and for all purposes shall be
deemed to be, validly issued, fully paid and nonassessable shares of Common
Stock; the issuance and delivery thereof has been in all respects authorized by
the Company; and the issuance
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thereof, together with lawful money of the United States of America, if any,
paid in lieu of fractional shares of such Common Stock and any amount required
to be paid by the Company pursuant to Section 3.02(c)(3) with respect to such
interest payment, will be, and for all purposes shall be deemed to be, in full
discharge and satisfaction of the Company's obligation to pay the interest on
the Note to which such Interest Shares relate.
SECTION 3.03. DEFEASANCE. Certain of the Company's obligations
with respect to the Notes shall be defeasible in accordance with Sections 1302
and 1303 of the Original Indenture. For purposes of any Defeasance of the Notes
pursuant to Section 1302 of the Original Indenture, in addition to any
obligations of the Company which shall survive as provided in Section 1302 of
the Original Indenture until otherwise terminated or discharged, the Company's
obligations under Article Eight of this Supplemental Indenture shall survive
until otherwise terminated or discharged as provided in this Supplemental
Indenture. Any cash or property deposited by the Company with the Trustee
pursuant to Section 1302 or 1303 of the Original Indenture in respect of the
Notes shall constitute Collateral for purposes of this Supplemental Indenture.
ARTICLE FOUR
REMEDIES
SECTION 4.01. EVENTS OF DEFAULT. "Event of Default," whenever
used in the Original Indenture or this Supplemental Indenture with respect to
the Notes, means any of the following events:
(a) FAILURE TO PAY INTEREST. The Company fails to pay any
installment of interest on any Note when due and such failure continues for a
period of five Business Days after the due date thereof; or
(b) CONVERSION AND THE SHARES. The Company fails to issue or
cause to be issued shares of Common Stock (1) to any Holder upon exercise by
such Holder of such Holder's conversion rights in accordance with this
Supplemental Indenture and the Notes or (2) to the holder of any Warrant upon
exercise by such holder of such holder's purchase rights in accordance with the
terms of such Warrant, in either such case in the preceding clauses (1) and (2)
within two Trading Days after the due date therefor in accordance with the terms
of any Note, the Original Indenture, this Supplemental Indenture, or any
Warrant, as the case may be; provided, however, that if such failure occurs
solely by reason of any action that the Issuing Agent has taken or failed to
take, then no Event of Default shall occur under this Section 4.01(b) unless the
Company fails so to issue or to cause to be issued such shares of Common Stock
within
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four Trading Days after the due date therefor in accordance with the terms of
any Note, the Original Indenture, this Supplemental Indenture or any Warrant; or
(c) BREACH OF CERTAIN COVENANTS OR WARRANTIES. Default in the
performance, or breach, of any covenant or warranty of the Company in Section
1005 or 1006 of the Original Indenture or Sections 5.01, 5.03, 5.05, 5.06, 5.07,
5.08, 5.09, 5.13, 5.14, 5.17, 5.18, or 5.21 of this Supplemental Indenture; or
(d) BREACH OF OTHER COVENANTS OR WARRANTIES. Default in the
performance, or breach, of any covenant or warranty of the Company in the
Original Indenture or this Supplemental Indenture (other than a covenant or
warranty a default in the performance or breach of which is elsewhere in this
Section specifically dealt with or which has expressly been included in the
Original Indenture solely for the benefit of a series of Securities other than
the Notes), and continuance of such default or breach for a period of 15
Business Days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in principal amount of the Outstanding Securities of this series a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder or within 30
Business Days after such notice is given if, and only if, such default is
reasonably capable of cure within 30 Business Days after such notice is given
and at all times during such 30 Business Days period the Company has been
diligently taking action to cure such default and such cure cannot reasonably be
completed in such 15-Business Day period; or
(e) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty of the Company made herein or in any agreement, statement or
certificate given in writing pursuant hereto or in connection herewith
(including, without limitation, the Transaction Documents) shall be false or
misleading in any material respect when made and, to the extent susceptible to
cure, such breach shall not have been cured within ten Business Days after there
has been given, by facsimile transmission or registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in principal amount of the Outstanding Securities of this series a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(f) JUDGMENTS. Any court of competent jurisdiction shall enter
one or more final judgments against the Company or any of its Restricted
Subsidiaries or any of their respective properties or other assets in an
aggregate amount in excess of $1,000,000, which is not vacated, bonded, stayed,
discharged, satisfied or waived for a period of 45 consecutive days; or
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(g) DEFAULT UNDER OTHER AGREEMENTS AND INSTRUMENTS. (1) The
Company or any of its Restricted Subsidiaries shall default in any payment with
respect to any Indebtedness for borrowed money (other than the Notes) which
Indebtedness has an outstanding principal amount in excess of $1,000,000
individually, or $2,000,000 in the aggregate, for the Company and its
Subsidiaries, beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness was created or (2) any Indebtedness of
the Company or any of its Restricted Subsidiaries which has an outstanding
principal amount in excess of $1,000,000 individually, or $2,000,000 in the
aggregate, shall, in accordance with its terms, be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled or
required payment prior to the stated maturity thereof; or
(h) DELISTING OF THE COMMON STOCK. The Common Stock shall cease
to be listed on any of Nasdaq, the NYSE or the AMEX; or
(i) ORIGINAL INDENTURE EVENTS OF DEFAULT. Any Event of Default
specified in Section 501(2), 501(5) or 501(6) of the Original Indenture; or
(j) SECURITY INTEREST; PLEDGED SECURITIES. The Trustee shall
cease to have a first priority perfected Security Interest for the benefit of
the Holders in any of the Collateral, other than Collateral that has been
released from the Lien of this Supplemental Indenture in accordance with the
terms of the Original Indenture and this Supplemental Indenture; or any of the
Pledged Securities shall not be duly and validly authorized, fully paid and
non-assessable shares of capital stock of the issuer thereof.
The Events of Default provided in Sections 501(1) and 501(4) of the Original
Indenture shall be superseded with respect to the Notes by the Events of Default
provided in Sections 4.01(a), 4.01(d) and 4.01(e) of this Supplemental
Indenture.
ARTICLE FIVE
COVENANTS
So long as the Company shall have any obligation for any amount
outstanding under any Note, unless otherwise consented to in advance by the
Majority Holders:
SECTION 5.01. LIMITATIONS ON CERTAIN INDEBTEDNESS. The Company
will not itself, and will not permit any of its Restricted Subsidiaries to,
create, assume, incur or in any manner become liable in respect of, including,
without limitation, by reason of any business combination transaction (all of
which are referred to herein as "incurring"), any Indebtedness other than
Permitted Indebtedness; provided, however, that if at any
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time during any period of 20 consecutive Trading Days commencing after the
Closing Date on each such Trading Day (a) the Common Stock shall be listed on
Nasdaq, the NYSE or the AMEX, and the Market Price of the Common Stock shall be
at least 300% of the Conversion Price in effect on each such Trading Day, (b) no
Event of Default shall have occurred or be continuing and no Repurchase Event
shall have occurred with respect to which any Holder has the right to require
repurchase of any Note pursuant to Article Seven or with respect to which any
Holder has exercised such right and the Company shall not have paid or deposited
in accordance with Section 9.14 of this Supplemental Indenture the applicable
Repurchase Price, (c) the Registration Statement shall be effective and
available for use by the Company for the sale of shares of Common Stock to
holders of the Warrants upon exercise of the Warrants and is reasonably expected
to remain effective and available after such period of 20 Trading Days, and (d)
the Company shall have furnished to the Holders and the Trustee a Company
Certificate certifying the matters set forth in the immediately preceding
clauses (a) through (c), then thereafter the Company shall no longer be
obligated to comply with this Section 5.01.
SECTION 5.02. INVESTMENT COMPANY ACT. The Company will not be or
become an open-end investment trust, unit investment trust or face-amount
certificate company that is or is required to be registered under Section 8 of
the Investment Company Act of 1940, as amended.
SECTION 5.03. LIMITATIONS ON ASSET SALES, LIQUIDATIONS, ETC.;
CERTAIN MATTERS. (a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to,
(1) sell, convey or otherwise dispose of (including, without
limitation, by way of lease or license) any assets which are material to the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company and its Restricted Subsidiaries, taken as
a whole, in a single transaction or a series of related transactions (including,
without limitation, in a transaction between the Company and any Subsidiary or
other Affiliate); or
(2) sell, convey, pledge, transfer or otherwise dispose of (A)
any of the Pledged Securities or (B) any capital stock or other interest in
Akkadix, except in each such case referred to in the preceding clauses (A) and
(B) as permitted by Section 5.03(b); or
(3) liquidate, dissolve or otherwise wind up its affairs.
(b) Notwithstanding the foregoing restrictions in Sections
5.03(a)(1), and 5.03(a)(2), the Company shall be permitted to sell, convey or
otherwise dispose of all or a portion of the Pledged Securities or the Akkadix
Shares so long as:
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(1) the net cash proceeds of such sale, conveyance or other
disposition (plus the amount of any cash in addition to such proceeds
which cash is deposited by the Company with the Trustee as Collateral in
connection with such Permitted Collateral or Akkadix Disposition and
which may be applied to pay the Repurchase Price of the Notes) are
sufficient to pay in full all amounts payable by the Company pursuant to
Article Seven by reason of the repurchase rights arising from such
transaction (assuming all Holders exercise their repurchase rights
pursuant to Article Seven to the full extent permitted thereby),
(2) the terms of such sale, conveyance or other disposition
provide for payment to the Company by deposit with the Trustee on or
before the date of such sale, conveyance or other disposition of an
amount in cash (or instrument payable in next day funds) which, together
with the amount of any cash in addition to such proceeds which cash is
deposited by the Company with the Trustee on or before such date as
Collateral in connection with such Permitted Collateral or Akkadix
Disposition and which may be applied to pay the Repurchase Price of
Notes, is at least equal to the amount specified in the immediately
preceding clause (l),
(3) after giving effect to such sale, conveyance or other
disposition, the Collateral Value of the Collateral as to which the
Trustee holds a perfected first priority security interest is at least
equal to 150% of the amount by which (A) the amount of the Obligations
exceeds (B) the principal amount of Notes that are Outstanding and of
which the Holders have the right to require repurchase pursuant to
Article Seven by reason of such sale, conveyance or other disposition
(whether or not such right has been exercised), plus accrued interest
thereon to the date of determination, and
(4) no Default or Event of Default has occurred and is
continuing.
SECTION 5.04. LIMITATIONS ON LIENS. The Company will not itself,
and will not permit any of its Restricted Subsidiaries to, create, assume or
suffer to exist any Lien upon all or any part of its property of any character,
whether owned at the date hereof or thereafter acquired, except Permitted Liens.
SECTION 5.05. LIMITATION ON CERTAIN ISSUANCES OF SECURITIES. The
Company shall not, and shall not permit any of its Restricted Subsidiaries to
(a) issue any Common Stock Equivalent that directly or indirectly is convertible
into, exchangeable for, or otherwise entitles the holder to acquire, shares of
Common Stock at a price that varies based on changes in the market price of the
Common Stock, (b) directly or indirectly issue any Common Stock or Common Stock
Equivalent under any agreement or arrangement that provides for re-pricing or
adjusting the price at which
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Common Stock is issued in connection therewith or which adjusts the number of
shares of Common Stock issued in connection therewith or (c) enter into any
agreement for the issuance of shares of Common Stock under an arrangement for
the Company to draw down from a commitment by any Person to issue shares of
Common Stock or which allows the Company or such Subsidiary to exercise any put
right with respect to shares of Common Stock or any similar transaction.
SECTION 5.06. CERTAIN OBLIGATIONS. (a) The Company shall not
amend, modify or waive any provision of DPI's charter or by-laws or any DPI
Contract, or enter into any agreement, arrangement or understanding with respect
to (1) the Pledged Securities or (2) which would impair the rights and remedies
of the Trustee with respect to the Collateral; provided, however, that nothing
in this Section 5.06(a) shall prohibit the Company from (x) entering into an
agreement for a transaction permitted by Section 5.03(b) or (y) amending,
modifying or waiving, or agreeing to amend, modify or waive, any provision of
DPI's charter or by-laws or any DPI Contract so long as (i) the terms of any
such amendment, modification or waiver treat the Company no less favorably than
other stockholders of DPI, (ii) such terms do not (A) adversely affect the
validity or enforceability of any Transaction Document, (B) materially impair
the ability of the Company to perform its obligations under the Transaction
Documents, (C) impair the existence, validity or priority of the Trustee's Lien
on and Security Interest in the Collateral for the benefit of the Holders or (D)
impair the rights of the Holders or the Trustee to enforce any of their
respective rights or remedies pursuant to the Transaction Documents, and (iii)
the Company gives the Holders and the Trustee at least ten Business Days prior
written notice of any such action which notice shall set forth in reasonable
detail the action proposed to be taken.
(b) The Company shall perform and comply in all material respects
with DPI's charter and by-laws and the DPI Contracts.
(c) The Company shall perform and comply with its obligations
under the Company DPI Agreements the failure to comply with which would give
rise to any claim by DPI against or in respect of any of the Pledged Securities;
provided, however, that the Company may surrender shares of DPI Common Stock
that constitute Pledged Securities only in accordance with Section 6.11(b).
SECTION 5.07. TRANSACTIONS WITH AFFILIATES. The Company will not,
and will not permit any of its Restricted Subsidiaries, directly or indirectly,
to pay any funds to or for the account of, make any investment (whether by
acquisition of stock or Indebtedness, by loan, advance, transfer of property,
guarantee or other agreement to pay, purchase or service, directly or
indirectly, any Indebtedness, or otherwise) in, lease, sell, transfer or
otherwise dispose of any assets, tangible or intangible, to, or participate in,
or effect any transaction in connection with, any joint enterprise or other
joint arrangement with, any Affiliate of the Company, except as in existence on
the date
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the Note Purchase Agreements are executed and delivered by the parties thereto
and except on terms to the Company or, in the case of any such payment,
investment or transaction between any of its Restricted Subsidiaries and any
Affiliate, such Restricted Subsidiary no less favorable than terms that could be
obtained by the Company or such Restricted Subsidiary from a Person that is not
an Affiliate of the Company, as determined in good faith by the Board of
Directors; provided, however, that nothing in this Section 5.07 shall prohibit a
transaction between the Company, on the one hand, and a Restricted Subsidiary,
on the other hand, if the terms of the transaction do not (i) adversely affect
the validity or enforceability of any Transaction Document, (ii) materially
impair the ability of the Company to perform its obligations under the
Transaction Documents, (iii) impair the value of the Collateral or the
existence, validity or priority of the Trustee's Lien on and Security Interest
in the Collateral, or (iv) impair the rights of the Holders, or the Trustee to
enforce any of their respective rights or remedies pursuant to the Transaction
Documents.
SECTION 5.08. NOTICE OF DEFAULTS. The Company shall notify the
Trustee and the Holders promptly, but in any event not later than five Business
Days after the Company becomes aware of the fact, of any failure by the Company
to comply with this Article Five. If the Company fails to give a notice required
by this Section 5.08 but nonetheless cures the failure to comply with this
Article Five that gave rise to the Company's obligation to give such notice
within the cure period, if any, applicable to such failure to comply with this
Article Five, from and after the time of such cure such failure to give such
notice shall cease to be a default under this Section 5.08.
SECTION 5.09. LIMITATIONS ON DIVIDENDS, OTHER SHARE PAYMENTS AND
INVESTMENTS IN UNRESTRICTED SUBSIDIARIES. The Company covenants and agrees that
(i) it will not declare or pay any dividends (other than dividends payable
solely in shares of the Company, including, without limitation, Preferred Share
Purchase Rights) on any shares of any class of its capital stock or make any
payment on account of the purchase, redemption or other retirement or
acquisition of any shares of such stock or make or declare any distribution in
respect thereof, either directly or indirectly (such dividend payments,
purchases, redemptions, retirements, acquisitions or distributions being herein
called "Share Payments"), and (ii) it will not itself, and will not permit any
of its Restricted Subsidiaries to, make any investment in Unrestricted
Subsidiaries, unless, in the case of any such investment referred to in this
clause (ii), at the date of such investment (hereinafter called the "Computation
Date"), after giving effect, as if made, to the proposed investment, the sum of
the amount of aggregate unliquidated investment (computed as herein below
provided) of the Company and all of its Restricted Subsidiaries in Unrestricted
Subsidiaries, made on or after the date of this Supplemental Indenture, shall
not exceed the greater of (x) $5 million and (y) an amount equal to 10% of the
Company's Consolidated Net Assets determined as of the Computation Date.
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For the purpose of this Section 5.09, the amount of any
investment in an Unrestricted Subsidiary or capital contribution made through
the transfer of property, shall be deemed to be the net book value of such
property at the date of such investment or contribution.
The Company shall not enter into any agreement or become bound by
any obligation to make any Share Payment that would be prohibited by this
Section 5.09.
For the purpose of any computation under this Section 5.09, the
aggregate unliquidated investment of the Company and its Restricted Subsidiaries
in any Unrestricted Subsidiary shall be computed in accordance with Generally
Accepted Accounting Principles (subject to the above stated requirement to value
transferred property at the net book value) and shall include all investments by
means of share purchase, loan, advance, guarantee, capital contribution or
otherwise; provided, however, that
(i) amounts invested by the Company through the exchange of its
shares for shares of an Unrestricted Subsidiary shall be disregarded;
(ii) except as otherwise specifically provided in clause (iii) of
this proviso below, there shall not be deducted from the amounts
invested in any Unrestricted Subsidiary any amounts received by the
Company or any of its Restricted Subsidiaries (as dividends, interest or
otherwise) as earnings on its investment in such Unrestricted
Subsidiary;
(iii) there shall be deducted from the amounts invested in any
Unrestricted Subsidiary 50% of (x) any amounts received by the Company
or any of its Restricted Subsidiaries as proceeds of the sale or other
disposition of its interest in such Unrestricted Subsidiary on or after
the date of this Supplemental Indenture, to the extent such interest
arose from an investment in such Unrestricted Subsidiary that was made
by the Company or any of its Restricted Subsidiaries on or after the
date of this Supplemental Indenture, after payment or provision for all
costs incurred by the Company or its Restricted Subsidiary in making
such sale or other disposition and taxes arising from such sale or other
disposition and (y) the cash dividends received by the Company or any of
its Restricted Subsidiaries from its Unrestricted Subsidiaries on or
after the date of this Supplemental Indenture;
(iv) write-ups, write-downs or write-offs after December 31,
1999, of investments in Unrestricted Subsidiaries shall be disregarded;
and
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(v) current accounts receivable from an Unrestricted Subsidiary
arising in the ordinary course of business from the sale of goods or
services shall not be included.
The Company will not permit any of its Restricted Subsidiaries to
purchase any shares of any class of the Company other than a purchase of newly
issued shares from the Company for cash at a price per share equal to the
Current Market Price on the date of purchase.
SECTION 5.10. FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND
CHATTEL PAPER. At any time and from time to time, upon the written request of
the Trustee or Holders of at least 25% in principal amount of Notes that are at
the time Outstanding, and at the sole expense of the Company, the Company will
promptly and duly execute and deliver such further instruments and documents and
take such further action as the Trustee or such Holders may reasonably request
for the purpose of obtaining or preserving the full benefits of this
Supplemental Indenture and of the rights and powers herein granted, including,
without limitation, (i) the filing of any financing or continuation statements
under the Code or similar laws in effect in any such jurisdiction with respect
to the Liens created hereby and (ii) providing to the Trustee such documents or
instruments as shall be necessary or desirable for the exercise by the Trustee
on behalf of the Company of any and all rights relating to the Collateral. The
Company also hereby authorizes the Trustee to file any such financing or
continuation statement without the signature of the Company to the extent
permitted by applicable law. The Company agrees that a carbon, photographic or
other reproduction of this Supplemental Indenture may be filed as a financing
statement or attached to a financing statement in any jurisdiction where
permitted by applicable law. If any amount payable under or in connection with
any of the Collateral shall be or become evidenced by any Instrument or Chattel
Paper, such Instrument or Chattel Paper shall be immediately delivered to the
Trustee, duly endorsed in a manner satisfactory to the Trustee, to be held as
Collateral pursuant to this Supplemental Indenture.
SECTION 5.11. INDEMNIFICATION. The Company agrees to indemnify
and hold harmless the Trustee and each Holder from and against any and all
claims, demands, losses, judgments and liabilities (including liabilities for
penalties) of whatsoever kind or nature, and to reimburse the Trustee and each
Holder for all costs and expenses, including reasonable attorneys' fees and
expenses, arising out of or resulting from this Supplemental Indenture,
including any breach hereof or Event of Default hereunder, or the exercise by
the Trustee or any Holder, as the case may be, of any right or remedy granted to
it hereunder or under the other Transaction Documents under applicable law;
provided, however, that the Company shall not be required to indemnify the
Trustee or any Holder to the extent any claim, demand, loss, judgment,
liability, cost or expense is determined by final judgment (not subject to
further appeal) of a court of competent jurisdiction to have arisen primarily
from the gross negligence
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or willful misconduct of the Trustee or such Holder, as the case may be. In no
event shall the Trustee or any Holder be liable, in the absence of a
determination of gross negligence or willful misconduct on its part by final
judgment (not subject to further appeal) of a court of competent jurisdiction,
for any matter or thing in connection with this Supplemental Indenture other
than to account for moneys actually received by it in accordance with the terms
hereof. If and to the extent that the obligations of the Company under this
Section 5.11 are unenforceable for any reason, the Company hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law. In any suit, proceeding or action
brought by the Trustee or any Holder under any Account or Contract that
constitutes part of the Collateral for any sum owing thereunder, or to enforce
any provisions of any such Account or Contract, the Company will save, indemnify
and keep the Trustee and each Holder harmless from and against all expense, loss
or damage suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by the Company of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of such account debtor or obligor or its successors from the Company.
SECTION 5.12. MAINTENANCE OF RECORDS. The Company will keep and
maintain at its own cost and expense satisfactory and complete records of the
Collateral, including, without limitation, a record of all payments received and
all credits granted with respect to the Accounts that constitute part of the
Collateral. For the further security of the Trustee for the ratable benefit of
the Holders, the Company hereby grants to the Trustee, for the ratable benefit
of the Holders, a security interest in all of the Company's books and records
pertaining to the Collateral, and the Company shall turn over any such books and
records for inspection at the office of the Company to the Trustee or any Holder
or to their respective representatives during normal business hours at the
request of the Trustee upon reasonable prior notice from the Trustee or such
Holder to the Company.
SECTION 5.13. LIMITATION ON LIENS ON COLLATERAL AND AKKADIX
SHARES. (a) The Company (x) will not create, incur or permit to exist, will
defend the Collateral against, and will take such other action as is necessary
to remove, any Lien or claim on or to the Collateral, other than the Liens
created hereby and Permitted Liens identified in clause (3) of the definition of
Permitted Liens that are inchoate Liens, and (y) will defend the right, title
and interest of the Trustee in and to any of the Collateral against the claims
and demands of all persons whomsoever other than Permitted Liens identified in
clause (3) of the definition of Permitted Liens that are inchoate Liens.
(b) The Company will not create, incur or permit to exist, will
defend the Akkadix Shares against, and will take such other action as is
necessary to remove, any Lien or claim on or to the Akkadix Shares other than
(1) Permitted Liens identified
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in clause (3) of the definition of Permitted Liens that are inchoate
Liens and (2) Liens created in accordance with this Section 5.13(b).
Notwithstanding the foregoing limitation in this Section 5.13(b), the Company
shall be permitted to create Liens on the Akkadix Shares so long as:
(A) any such Lien secures only Indebtedness for borrowed money
that is Permitted Indebtedness and obligations of the Company relating thereto;
(B) no Default or Event of Default will result from such
incurrence;
(C) the Company shall have received a bona fide offer from one or
more persons to provide such Indebtedness to the Company with such Lien on the
Akkadix Shares;
(D) the Company shall have given the holders at least 10 days'
notice, with a copy to the Trustee, which notice shall include statements of the
amount of such Indebtedness, the material terms of such Indebtedness and the
time or period within which the closing of the funding of such Indebtedness is
to occur (but in no event sooner than 30 days or later than 90 days after the
Company gives such notice to the Holders) and copies of any proposed documents
relating to such Indebtedness, and during such 10-day period each Holder shall
have the right to notify the Company, with a copy to the Trustee, that such
Holder wishes to provide such Holder's pro rata portion of such Indebtedness to
the Company, such pro rata portion to be determined from the ratio of the
principal amount of such Holder's Note or Notes that are Outstanding to the
aggregate principal amount of all Notes that are Outstanding, in each case at
the close of business on the date such notice is given by the Company (the
"Initial Allocation"), and whether such Holder wishes to provide more than such
Holder's Initial Allocation (and if so, the amount such Holder wishes to provide
in excess of such Holder's Initial Allocation, which amount may be all of such
Indebtedness or any portion thereof as so specified by such Holder);
(E) if within such 10-day period (x) no Holder so notifies the
Company that it wishes to provide such Indebtedness or (y) one or more Holders
so notify the Company that such Holder or Holders wish to provide such
Indebtedness but the aggregate amount of such Indebtedness which such Holder or
Holders wish to provide (including all amounts in excess of their Initial
Allocations), as stated in such notices or notices from such Holder or Holders
to the Company, is less than the amount of such Indebtedness as stated in the
Company's notice to the Holders given pursuant to clause (D) of this Section
5.13(b), then in the case of either the preceding clause (x) or (y) no Holder
shall have any right to provide such Indebtedness and the Company shall be
entitled to complete the financing of such Indebtedness on the terms, and on or
before the date, or within the period, as the case may be, specified in such
notice from the Company to the Holders;
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(F) if within such 10-day period one or more Holders so notify
the Company that they wish to provide such Indebtedness and the aggregate amount
of such Indebtedness which such Holder or Holders wish to provide (including all
amounts in excess of their Initial Allocations), as stated in such notices or
notices from such Holder or Holders to the Company, is at least equal to the
amount of such Indebtedness as stated in the Company's notice to the Holders
given pursuant to clause (D) of this Section 5.13(b), then each Holder who so
notifies the Company shall be entitled to provide such pro rata portion of such
Indebtedness on the terms set forth in the Company's notice to the Holders given
in accordance with clause (D) of this Section 5.13(b); and, if all Holders do
not notify the Company that they wish to provide their Initial Allocations of
such Indebtedness, each Holder who shall have notified the Company that such
Holder wishes to provide more than its Initial Allocation shall be entitled to
provide a portion of the amount of such Indebtedness in excess of the aggregate
amount thereof which the Holders have offered to provide based on their Initial
Allocations, with the portion of such excess allocated to each such Holder to be
based on the ratio of the amount of such excess which such Holder offered to
provide to the aggregate amount of such excess that all such Holders offered to
provide (which procedure shall be followed successively until such excess is
fully allocated to such Holders);
(G) the closing of the transaction for such Indebtedness with the
Holder or Holders entitled to provide such Indebtedness and the creation of such
Lien shall occur at such time or within such period specified in the notice
given by the Company to the Holders pursuant to clause (D) of this Section
5.13(b); and
(H) if one or more Holders shall be entitled in accordance with
clause (F) of this Section 5.13(b) to provide such Indebtedness and such Holder
or Holders default in their obligations to provide such Indebtedness, then the
Company shall promptly give notice to the Holders of such default, with a copy
to the Trustee, and, notwithstanding any other provision of this Section
5.13(b), the Company shall have 60 days after such default to complete such
Indebtedness financing on terms no more favorable to the lenders providing such
Indebtedness than those contained in the notice provided by the Company to the
Holders in accordance with clause (D) of this Section 5.13(b).
If for any reason such closing and creation of such Lien do not occur within the
applicable period provided in this Section 5.13(b), thereafter any proposed
creation of a Lien on any of the Akkadix Shares shall again be subject to the
requirements of this Section 5.13(b).
SECTION 5.14. LIMITATIONS ON DISPOSITIONS OF COLLATERAL AND
AKKADIX SHARES. (a) The Company will not sell, transfer, lease, assign or
otherwise dispose of
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any of the Collateral to any Person, including, without limitation, any
Subsidiary, or attempt, offer or contract to do so except as expressly permitted
by Section 5.03(b)(1) of this Supplemental Indenture.
SECTION 5.15. PERFORMANCE OF CONTRACTS AND AGREEMENTS GIVING RISE
TO ACCOUNTS. The Company will (i) exercise promptly and diligently each and
every material right and perform each material obligation which it may have
under each Contract that constitutes part of the Collateral and each agreement
giving rise to an Account that constitutes part of the Collateral (other than
any right of termination) except where the Company determines in its reasonable
business judgment that the failure to exercise such right or perform such
obligation is in the best interest of the Company and consistent with the
protection and preservation of the rights and interests of the Trustee in the
Collateral or (ii) deliver to the Holder, upon request, a copy of each material
demand, notice or document received by it relating in any way to any Contract
that constitutes part of the Collateral or any agreement giving rise to an
Account that constitutes part of the Collateral. The Company will not amend or
modify the terms of, or waive any rights under, any Contract that constitutes
part of the Collateral in a manner which would adversely effect the Security
Interest or the value of the Collateral.
SECTION 5.16. FURTHER IDENTIFICATION OF COLLATERAL. The Company
will furnish to the Trustee or any Holder from time to time, upon the request of
the Trustee or such Holder, statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Trustee or such Holder may reasonably request, all in
reasonable detail.
SECTION 5.17. NOTICES. The Company will advise the Trustee
promptly, in reasonable detail, at its address in accordance with Section 9.13
(i) of any Lien (other than Liens permitted hereunder) on, or claim asserted
against, any of the Collateral of which the Company has actual notice, (ii) of
any Event of Default or any event which, with notice or the lapse of time, or
both, would become an Event of Default and (iii) of the occurrence of any other
event of which the Company is aware which could reasonably be expected to have a
material adverse effect on the Liens created hereunder.
SECTION 5.18. CHANGES IN LOCATIONS, NAME, ETC. The Company will
not (i) change the location of its chief executive office/chief place of
business from 180 Kimball Way, South San Francisco, California 94080 or remove
its books and records from such location or (ii) change its name, identity or
corporate structure to such an extent that any financing statement filed in
connection with this Supplemental Indenture would become misleading, unless in
the case of the preceding clause (i) or (ii) it shall have given the Trustee at
least 30 days prior written notice thereof and, prior to such action or event,
shall have taken appropriate action to preserve and protect the Trustee's
security interest under this Supplemental Indenture.
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SECTION 5.19. SUBSIDIARIES. The Company will not permit its
Subsidiaries or any other entities controlled by the Company to have any rights
in, or to exercise any control over, the Collateral, it being understood that
Pledged Securities released in accordance with Section 6.11(b) shall, upon such
release, cease to be Collateral and at such time shall cease to be subject to
the restrictions in this Section 5.19.
SECTION 5.20. WAIVER. The Company, for itself and its successors
and assigns, does hereby irrevocably waive and release all preemptive,
first-refusal and other similar rights, if any, to purchase any or all of the
Pledged Securities upon any sale thereof by the Trustee hereunder, whether such
right to purchase arises under the organizational documents of the issuer of
such Pledged Securities, by agreement, by operation of law, or otherwise.
SECTION 5.21. ADDITIONAL COLLATERAL IN RESPECT OF PLEDGED
SECURITIES. (1) In case any stock dividend shall be declared on any of the
Pledged Securities, or any shares of stock or fractions thereof shall be issued
pursuant to any stock split involving any of the Pledged Securities, or any
distribution of capital shall be made on any of the Pledged Securities or from
the issuer of any Pledged Securities, or any property shall be distributed upon
or with respect to the Pledged Securities or from the issuer of any Pledged
Securities pursuant to any recapitalization or reclassification of the capital
of the issuer of any Pledged Securities, or pursuant to a reorganization
thereof, the shares or other property so distributed shall be delivered to the
Trustee as additional collateral security for the Obligations. The Company will
forthwith deliver to the Trustee certificates therefor, accompanied by three
undated stock powers duly executed in blank by the Company for each such
certificate, with appropriate signature guarantees, in the case of capital stock
or such other instruments of transfer as are acceptable to the Trustee, and will
promptly thereafter deliver to the Trustee an Officers' Certificate describing
such stock and certifying that the same has been duly pledged to the Trustee and
deposited with the Trustee hereunder. The delivery of such stock powers and such
Officers' Certificate shall not be deemed for any purpose to be acts required
for creation of the Security Interest in such securities in favor of the Trustee
for the benefit of the Holders.
(2) If an Event of Default occurs, then during any period in
which an Event of Default is continuing, all cash dividends payable in respect
of the Pledged Securities shall be paid to the Trustee and retained by it as
part of the Collateral. The Trustee shall also be entitled to retain as part of
the Collateral the following, all of which shall be received directly by the
Trustee:
(A) all other or additional stock or securities or property
(other than cash) paid or distributed by way of dividend or otherwise, as the
case may be, in respect of the Pledged Securities;
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(B) all other or additional stock or other securities or property
(including cash) paid or distributed in respect of the Pledged Securities by way
of stock-split, spin-off, split-up, reclassification, combination of shares or
similar rearrangement; and
(C) all other or additional stock or other securities or property
(including cash) which may be paid in respect of the Collateral by reason of any
consolidation, merger, exchange of stock, conveyance of assets, liquidation,
dissolution, or similar corporate reorganization.
(3) All dividends, distributions or other payments which are
received by the Company contrary to the provisions of this Section 5.21 shall be
received in trust for the benefit of the Trustee, shall be segregated from other
property or funds of the Company and shall be forthwith paid over to the Trustee
by delivery to the Trustee as Collateral in the same form as so received (with
any necessary endorsement). If, upon the dissolution or liquidation (in whole or
in part) of any issuer of Pledged Securities, any sum shall be paid upon or with
respect to any of the Pledged Securities, such sum shall be paid over to the
Trustee to be held by the Trustee as additional collateral security for the
Obligations.
ARTICLE SIX
PLEDGE AND SECURITY INTEREST; COLLATERAL
SECTION 6.01. GRANT OF SECURITY INTEREST AND PLEDGE; COLLATERAL
ASSIGNMENT. As collateral security for the Obligations and for the other
purposes provided in this Supplemental Indenture, the Company hereby (x) grants
to the Trustee for the ratable benefit of the Holders a first priority security
interest in all of the Collateral, (y) pledges to the Trustee for the ratable
benefit of the Holders all of the Pledged Securities and (z) assigns, transfers,
hypothecates, mortgages, charges and sets over to the Trustee for the ratable
benefit of the Holders all of the Company's right, title and interest in and to
the Pledged Securities (and in and to the certificates or instruments evidencing
the Pledged Securities) and the DPI Investors' Rights Agreement, to be held by
the Trustee upon the terms and conditions set forth in this Supplemental
Indenture.
SECTION 6.02. RIGHTS OF TRUSTEE; LIMITATIONS ON TRUSTEE'S
OBLIGATIONS.
(a) COMPANY REMAINS LIABLE UNDER ACCOUNTS AND CONTRACTS. Anything
herein to the contrary notwithstanding, the Company shall remain liable under
each of the Accounts and Contracts that constitute part of the Collateral to
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observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise to each such Account and in accordance with and pursuant to the
terms and provisions of each such Contract. Except as specifically provided in
Sections 6.02(c) and 6.02(d), neither the Trustee nor any Holder shall have any
obligation or liability under any Account that constitutes part of the
Collateral (or any agreement giving rise thereto) or under any Contract that
constitutes part of the Collateral by reason of or arising out of this
Supplemental Indenture or the receipt by the Trustee of any payment relating to
such Account or Contract pursuant hereto, nor shall the Trustee be obligated in
any manner to perform any of the obligations of the Company under or pursuant to
any such Account (or any agreement giving rise thereto) or under or pursuant to
any such Contract, to make any payment, to make any inquiry as to the nature or
the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any such Account (or any agreement giving rise
thereto) or under any such Contract, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
(b) NOTICE TO CONTRACTING PARTIES. On or prior to the Issuance
Date, the Company shall notify all parties to the Contracts that constitute part
of the Collateral (and after the Issuance Date, the Company shall notify all
parties to any additional Contract that becomes part of the Collateral promptly
after such Contract becomes part of the Collateral) that (1) such Contracts have
been assigned as Collateral to the Trustee for the ratable benefit of the
Holders, (2) payments in respect thereof shall be made directly to the Trustee
or as the Trustee shall direct, (3) prior to notice to such party of the
occurrence of an Event of Default, copies of all notices given by such party to
the Company relating to such Contract shall also be given to the Trustee, at its
address set forth in such notice from the Company (or such other address
specified in writing by the Trustee), at the same time given to the Company and
(4) from and after notice to such party of the occurrence of an Event of Default
(until notice to such party that no Event of Default is continuing), all notices
by such party relating to such Contract shall be given to (and shall be
effective only when given to) the Trustee at its address set forth in such
notice from the Company (or such other address specified in writing by the
Trustee).
(c) PLEDGED SECURITIES AND STOCK POWERS. At or prior to the first
issuance of any Note on the Issuance Date, the Company shall deliver to the
Trustee certificates for the Pledged Securities, accompanied by three undated
stock powers, duly executed in blank by the Company, for each such certificate,
with appropriate signature guaranties. The delivery of such stock powers shall
not be deemed for any purpose to be acts required for creation of the Security
Interest in, or for the pledge of, the Pledged Securities in favor of the
Trustee for the benefit of the Holders.
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(d) DPI CONTRACTS. Prior to the issuance of any Notes, the
Trustee, DPI and the other parties referred to therein shall have executed and
delivered, one to the other, the agreement in the form set forth in SCHEDULE IV.
SECTION 6.03. TRUSTEE'S POWERS RESPECTING THE COLLATERAL.
(a) POWERS. The Company hereby irrevocably constitutes and
appoints the Trustee and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of the
Company or in its own name, from time to time in the Trustee's discretion, if an
Event of Default occurs, then during any period in which an Event of Default is
continuing, for the purpose of carrying out the terms of this Supplemental
Indenture, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Supplemental Indenture, and, without limiting the generality of
the foregoing, the Company hereby gives the Trustee during such period the power
and right, on behalf of the Company, without notice to or assent by the Company,
except any notice required by law, to do the following:
(i) to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of moneys due
under or with respect to any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Trustee for the purpose of collecting any and all such moneys
due under or with respect to any such Collateral whenever payable, in each case
in the name of the Company or its own name, or otherwise;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral and to pay all or any part of the premiums
therefor and the costs thereof;
(iii) (A) to direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Trustee or as the Trustee shall direct; (B) to ask or
demand for, collect, receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral; (C) to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in connection
with any of the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other right in respect
of any Collateral; (E) to defend any suit, action or
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proceeding brought against the Company with respect to any Collateral; (F) to
settle, compromise or adjust any suit, action or proceeding described in clause
(E) above and, in connection therewith, to give such discharges or releases as
the Trustee may deem appropriate; and (G) generally, to sell, transfer, pledge
and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Trustee were the absolute owner
thereof for all purposes, and to do, at the Trustee's option and the Company's
expense, at any time, or from time to time, all acts and things which the
Trustee deems necessary to protect, preserve or realize upon the Collateral and
the Trustee's Liens thereon and to effect the intent of this Supplemental
Indenture, all as fully and effectively as the Company might do; and
(iv) to exercise any and all voting power with respect to the
Pledged Securities.
The Company hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable until the Company shall have paid and
performed in full all of the Obligations.
(b) VOTING AND OTHER RIGHTS. The Company shall be entitled to
exercise in a manner not inconsistent with the provisions of this Supplemental
Indenture or the other Transaction Documents all voting power with respect to
the Pledged Securities, except as provided in Section 6.03(a)(iv) in case an
Event of Default shall have occurred and be continuing. The Company will provide
the Trustee with at least ten Business Days notice of any permitted or proposed
exercise by the Company of any voting or other rights with respect to the
Pledged Securities unless the Company receives less than ten Business Days'
notice of such action, in which case the Company shall give the Trustee such
notice thereof as may be reasonable and practical under the circumstances. The
Company hereby appoints the Trustee, with full power of substitution, as the
Company's attorney-in-fact to vote the Pledged Securities, if an Event of
Default has occurred, during any period an Event of Default is continuing and to
exercise other rights with respect thereto, if an Event of Default has occurred,
during any period an Event of Default is continuing. On the Closing Date, the
Company will deliver to the Trustee an irrevocable proxy, duly executed in form
satisfactory to the Trustee, authorizing and directing the Trustee to vote in
its sole discretion all Pledged Securities, if an Event of Default has occurred,
during any period an Event of Default is continuing and to exercise all other
rights pertaining to such securities, if an Event of Default has occurred,
during any period an Event of Default is continuing.
(c) OTHER POWERS. The Company also authorizes the Trustee, if an
Event of Default has occurred, and from time to time during any period in which
an Event of Default is continuing, to execute, in connection with the sale
provided for herein, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
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(d) REGISTRATION AND ENDORSEMENTS OF PLEDGED SECURITIES. If an
Event of Default has occurred, then during any period an Event of Default is
continuing, (1) at any time and from time to time the Trustee may cause all or
any of the Pledged Securities to be transferred into its name or into the name
of its nominee or nominees and (2) the Trustee shall have the right, for and in
the name, place and stead of the Company and acting as its attorney-in-fact if
necessary, to execute endorsements, assignments and other instruments of
conveyance or transfer with respect to all or any of the Pledged Securities
whenever any such execution is required or permitted hereunder.
(e) NO DUTY ON TRUSTEE'S PART. The powers conferred on the
Trustee hereunder are solely to protect the Trustee's interests in the
Collateral and shall not impose any duty upon the Trustee to exercise any such
powers. The Trustee shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither it nor any of
its officers, directors, employees or agents shall be responsible to the Company
for any act or failure to act hereunder, except for their own gross negligence
or willful misconduct.
SECTION 6.04. PERFORMANCE BY TRUSTEE OF COMPANY'S OBLIGATIONS. If
the Company fails to perform or comply with any of its agreements contained
herein and the Trustee, as provided for by the terms of this Supplemental
Indenture and following reasonable notice to the Company, shall itself perform
or comply, or otherwise cause performance or compliance, with such agreement,
the expenses of the Trustee incurred in connection with such performance or
compliance shall be payable by the Company to the Trustee on demand and shall
constitute Obligations secured hereby.
SECTION 6.05. REMEDIES IN GENERAL. If an Event of Default has
occurred, then during any period an Event of Default is continuing, the Trustee
may exercise, in addition to all other rights and remedies granted to it in this
Supplemental Indenture and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, if an
Event of Default has occurred, then during any period an Event of Default is
continuing, the Trustee, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below or expressly provided for) to or upon the
Company or any other Person (all and each of which demands, defenses,
advertisements and notices are, to the extent permitted by applicable law,
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, license, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), at public or private sale or sales, at any
exchange, broker's board or office of the Trustee or elsewhere upon such terms
and
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conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Trustee shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Company, which right or equity is hereby waived, to the extent
permitted by applicable law, or released.
The Company further agrees that, if an Event of Default has
occurred, then during any period an Event of Default is continuing, at the
Trustee's request, to assemble the Collateral and make it available to the
Trustee at places which the Trustee shall reasonably select, whether at the
Company's premises or elsewhere. The Trustee shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Trustee hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in such order as the Trustee may elect,
and only after such application and after the payment by the Trustee of any
other amount required by any provision of law, need the Trustee account for the
surplus, if any, to the Company. To the extent permitted by applicable law, the
Company waives all claims, damages and demands it may acquire against the
Trustee arising out of the exercise by it of any rights hereunder, provided,
that nothing contained in this Section 6.05 shall relieve the Trustee from
liability arising solely from its gross negligence or willful misconduct. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least ten
days before such sale or other disposition. The Company shall remain liable for
any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Trustee to collect such
deficiency.
SECTION 6.06. REMEDIES WITH RESPECT TO PLEDGED SECURITIES. (a)
Without limiting the effect of Section 6.05, the Trustee shall have the further
rights with respect to the Pledged Securities set forth in this Section 6.06.
Upon the occurrence and during the continuance of an Event of Default, the
Trustee shall have, without obligation to resort to other security or to
recourse against any guarantor or other party secondarily liable, the right at
any time and from time to time to sell, resell, assign and deliver, in the
Trustee's discretion, all or any of the Pledged Securities, in one or more
parcels at the same or different times, and all right, title, interest, claim
and demand therein and right of redemption thereof, at public or private sale,
for cash, upon credit or for immediate or future delivery, and at such price or
prices and on such terms as the Trustee may determine, the Company hereby
agreeing that upon any such sale any and all equity and right of redemption
shall be automatically waived and released without any further action on the
part of the Company, and in connection therewith the Trustee
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may grant options, all without any demand, advertisement or notice, all of which
are hereby expressly waived. In the event of any such sale, the Trustee shall,
at least ten days before the sale, give the Company notice of its intention to
sell which notice the Company agrees is reasonable. Upon each such sale, the
Trustee or the Company may purchase all or any of the Pledged Securities being
sold, free of any equity or right of redemption. The proceeds of each such sale
shall be applied to the payment of all costs and expenses of every kind for sale
or delivery, including reasonable compensation to the agents and attorneys of
the Trustee, and all other expenses, liabilities and advances made or incurred
by the Trustee in connection therewith, and after deducting such costs and
expenses from the proceeds of sale, the Trustee shall apply any residue to the
payment of the Obligations in such order as the Trustee may deem fit. Upon the
occurrence and during the continuance of an Event of Default, the Trustee shall
also have, without obligation to resort to other security or to recourse against
any guarantor or other party secondarily liable and in addition to the other
remedies provided in this Section 6.06, the right at any time and from time to
time, but not the obligation, to exercise ownership of the Pledged Securities
and to take all actions as may be permitted under applicable law.
(b) If at any time when the Trustee shall determine to exercise
its right to sell all or any part of the Pledged Securities pursuant to hereto,
such Pledged Securities or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the 1933 Act, the Trustee may, in
its sole and absolute discretion, sell such Pledged Securities or part thereof
by private sale in such manner and under such circumstances as the Trustee may
deem necessary or advisable in order that such sale may legally be effected
without such registration provided that at least ten days' notice of the time
and place of any such sale shall be given to the Company. Without limiting the
generality of the foregoing, in any such event the Trustee, in its sole and
absolute discretion (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under the 1933 Act, (ii) may
approach and negotiate with a single possible purchaser to effect such sale, and
(iii) may restrict such sale to a purchaser who will represent and agree that
such purchaser is purchasing for its own account, for investment, and not with a
view to the distribution or sale of such Pledged Securities or part thereof. In
the event of any such sale, the Trustee shall incur no responsibility or
liability for selling all or any part of the Pledged Securities at a price which
the Trustee, in its sole and absolute discretion, may in good faith deem
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.
SECTION 6.07. LIMITATION ON DUTIES REGARDING PRESERVATION OF
COLLATERAL. The Trustee's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under the Code or
otherwise, shall be to
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deal with it in the same manner as the Trustee deals with similar property for
its own account. Neither the Trustee or any Holder nor any of their respective
directors, officers, employees, members, partners or agents shall be liable for
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Company or otherwise.
SECTION 6.08. POWERS COUPLED WITH AN INTEREST. All authorizations
and agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest until the Company has paid and performed in full
all of its obligations under the Transaction Documents.
SECTION 6.09. TERMINATION OF SECURITY INTEREST; RELEASE OF
COLLATERAL.
(a) Upon the payment and performance in full by the Company of
the Obligations, the Security Interest shall terminate and all rights to the
Collateral shall revert to the Company. At any time and from time to time prior
to such termination of the Security Interest, the Trustee shall release any of
the Collateral only (1) in accordance with Article Fifteen of the Original
Indenture, (2) in accordance with Section 6.11(b) or (3) with the prior written
consent of the Majority Holders.
(b) Upon any such termination of the Security Interest, the
Trustee will, at the expense of the Company, promptly execute and deliver to the
Company such documents and take such other actions as the Company shall
reasonably request to evidence the termination of the Security Interest and
deliver to the Company all Collateral so released then in its possession.
SECTION 6.10. CONCERNING THE TRUSTEE. The Company acknowledges
that the rights and responsibilities of the Trustee under this Supplemental
Indenture with respect to any action taken by the Trustee or the exercise or
nonexercise by the Trustee of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Supplemental Indenture shall, as between the Trustee and the Holders, be
governed by the Original Indenture and this Supplemental Indenture and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Trustee and the Company, except as expressly provided in
Section 6.09, the Trustee shall be conclusively presumed to be acting as agent
for the Holders with full and valid authority so to act or refrain from acting,
and the Company shall not be under any obligation to make any inquiry respecting
such authority. The Trustee hereby waives for the benefit of the Holders any
claim, right or Lien of the Trustee against the Collateral arising under
applicable law or arising from any business or transaction between the Trustee
and the Company other than pursuant to this Supplemental Indenture or any of the
other Transaction Documents.
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SECTION 6.11. SUBSTITUTION OF COLLATERAL. (a) If
(i) the Company shall have deposited as Collateral with the
Trustee, in trust, funds or Government Obligations, the principal of and
interest on which when due will, together with any other funds in which,
at the time of such deposit and at the end of the 92-day period referred
to herein, the Trustee has a perfected first priority security interest
for the benefit of the Holders, and without the necessity for investment
or reinvestment of such funds or for further investment or reinvestment
of the principal amount of or interest on such Government Obligations,
provide funds sufficient to pay at maturity or upon repurchase pursuant
to Article VII all of the Notes, including principal and interest due or
to become due to the Maturity Date or earlier repurchase pursuant to
Article VII;
(ii) notice of such deposit shall have been given to the Holders,
within ten days after the date of such deposit;
and the Company shall also pay or cause to be paid all other sums payable
hereunder by the Company, then on the date which is 92 days after the date of
such deposit by the Company with the Trustee, so long as during such 92-day
period no Event of Default specified in clause (5) or (6) of Section 5.01 of the
Original Indenture and no event which with notice or passage of time, or both,
would become an Event of Default specified in clause (5) or (6) of Section 5.01
of the Original Indenture has occurred, then on demand of the Company
accompanied by a Company Certificate and an opinion of counsel and at the cost
and expense of the Company, the Trustee shall release to the Company all
Collateral other than the Collateral so deposited and shall execute and deliver
to the Company such documents and take such other actions as the Company shall
reasonably request to evidence the termination of the Security Interest in the
Collateral so released and deliver to the Company all such Collateral so
released then in the Trustee's possession.
(b) If, by reason of the Company's obligations under Section 8.2
of the DPI Merger Agreement, the Company shall become obligated to surrender to
DPI shares of DPI Common Stock that are Pledged Securities, the Company shall be
entitled to release from the Lien of this Supplemental Indenture shares of DPI
Common Stock that are Pledged Securities in accordance with this Section
6.11(b). In order to obtain such release of shares of DPI Common Stock that
constitute Pledged Securities, DPI shall:
(1) furnish to the Trustee an Officers' Certificate stating
(A) the amount in dollars of the obligation of the Company to DPI
pursuant to Section 8.2 of the DPI Merger Agreement in respect of which
the
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Company is obligated to surrender shares of DPI Common Stock that
constitute Pledged Securities;
(B) the value per share of DPI Common Stock for purposes of
Section 8.2 of the DPI Merger Agreement;
(C) the number of shares of DPI Common Stock that constitute
Pledged Securities and that are required to be surrendered by the
Company to DPI pursuant to Section 8.2 of the DPI Merger Agreement and
which the Company is seeking release;
(D) that at or before the delivery of such Officers' Certificate
to the Trustee, the Company has delivered to the Trustee as Collateral
under this Supplemental Indenture one or more certificates for a number
of shares of DPI Common Stock equal to the number of shares of DPI
Common Stock identified in paragraph (C) of such Officers' Certificate,
in accordance with this Section 6.11(b); and
(E) that all conditions precedent in the Original Indenture and
this Supplemental Indenture for the release of the shares of DPI Common
Stock requested in such Officers' Certificate have been satisfied;
(2) furnish to the Trustee all documents, certificates and
opinions required by Article Fifteen of the Original Indenture in
connection with such release of shares of DPI Common Stock that
constitute Collateral;
(3) deliver to the Trustee as Collateral under this Supplemental
Indenture one or more certificates for a number of shares of DPI Common
Stock equal to the number of shares of DPI Common Stock to be so
released, accompanied by three undated stock powers, duly executed in
blank by the Company, for each such stock certificate, with appropriate
signature guaranties; provided, however, that the delivery of such stock
powers shall not be deemed for any purpose to be acts required for
creation of the Security Interest in, or for the pledge of, such shares
of DPI Common Stock in favor of the Trustee for the benefit of the
Holders; and
(4) furnish to the Trustee an Opinion of Counsel that (A) the
release of such shares of DPI Common Stock and the substitution therefor
of the shares of DPI Common Stock delivered to the Trustee in accordance
with the immediately preceding clause (3) shall not be subject to
avoidance by a trustee under Section 547(b) of the federal Bankruptcy
Code in a case in which the Company is the debtor and (B) all conditions
precedent in the Original Indenture and this
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Supplemental Indenture for the release of the shares of DPI Common Stock
requested in such Officers' Certificate have been satisfied.
ARTICLE SEVEN
REPURCHASE UPON A REPURCHASE EVENT
SECTION 7.01. REPURCHASE RIGHT. If a Repurchase Event occurs, in
addition to any other right of the Holders, each Holder shall have the right, at
such Holder's option, to require the Company to repurchase the Repurchase
Portion of such Holder's Notes, or any portion thereof by depositing an amount
in cash with the Trustee equal to the applicable Repurchase Price payable to
such Holder on or before the applicable Repurchase Date for such Repurchase
Event. Each Holder shall have the right to require the Company to repurchase the
Repurchase Portion of such Holder's Notes or any portion of the Repurchase
Portion of such Holder's Notes if a Repurchase Event occurs at any time while
any portion of the principal amount of any Note held by such Holder is
outstanding at a price equal to the Repurchase Price.
SECTION 7.02. NOTICES; METHOD OF EXERCISING REPURCHASE RIGHTS,
ETC. (a) On or before the fifth Business Day after the occurrence of a
Repurchase Event, the Company shall give to the Trustee and each Holder a
Company Notice of the occurrence of the Repurchase Event and of the repurchase
right set forth herein arising as a result thereof. Such Company Notice shall
set forth:
(i) the date by which the repurchase right must be exercised, and
(ii) a description of the procedure (set forth in this Section
7.02) which a Holder must follow to exercise the repurchase right.
No failure of the Company to give a Company Notice or defect therein shall limit
any Holder's right to exercise the repurchase right or affect the validity of
the proceedings for the repurchase of any Note or portion hereof.
(b) To exercise the repurchase right, a Holder shall deliver to
the Company, with a copy to the Trustee, on or before the 20th day after a
Company Notice (or if no such Company Notice has been given, within 40 days
after such Holder first learns of the Repurchase Event) a Holder Notice setting
forth the name of such Holder and the principal amount of Notes to be
repurchased from such Holder. A Holder Notice may be revoked by the Holder
giving such notice at any time prior to the time the Company pays the applicable
Repurchase Price to such Holder.
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(c) If a Holder shall have given a Holder Notice with respect to
a Repurchase Event, then on or before the applicable Repurchase Date for such
Repurchase Event the Company shall deposit with the Trustee in immediately
available funds an amount equal to the aggregate Repurchase Price payable to the
Holders, which amount shall be held in trust by the Trustee and applied by the
Trustee as provided in this Section 7.02. On the applicable Repurchase Date, (or
such later date as a particular Holder surrenders the Note or Notes to be
repurchased to the Trustee duly endorsed for transfer to the Trustee of the
portion of the outstanding principal amount thereof to be repurchased), the
Trustee shall pay the applicable Repurchase Prices to the respective Holders who
have so exercised repurchase rights (x) in the case of any Holder who is the
Holder of one or more Notes in an aggregate principal amount in excess of $1.0
million, by wire transfer of immediately available funds to such accounts as
specified by such Holder in writing to the Trustee at least one Business Day
prior to the applicable payment date and (y) in all other cases, by check mailed
to such Holder on the applicable payment date at its registered address;
provided, however, that if the aggregate amount deposited by the Company with
the Trustee to pay the Repurchase Prices in connection with a particular
Repurchase Event shall be less than the aggregate amount of the Repurchase
Prices payable to all such Holders, then the amount paid to each such Holder
shall be an amount equal to the product obtained by multiplying (x) the total
amount so deposited by the Company with the Trustee in respect of the exercise
of repurchase rights by the Holders by reason of such Repurchase Event times (y)
a fraction of which the numerator is the amount of the Repurchase Price so
payable to such Holder and the denominator is the aggregate amount of Repurchase
Prices so payable to all such Holders.
SECTION 7.03. OTHER. (a) If the Company fails to deposit with the
Trustee on or before the applicable Repurchase Date the Repurchase Price of any
Note (or portion thereof) as to which the repurchase right has been properly
exercised pursuant to this Article Seven, then the Repurchase Price for such
Note (or the portion thereof) which is required to have been so repurchased
shall bear interest to the extent not prohibited by applicable law from the
applicable date the Company was required to make such deposit with the Trustee
until so deposited at the Default Rate.
(b) The Company shall notify a Holder giving a Holder Notice of
any claim by the Company of manifest error in such Holder Notice promptly, but
in no event later than five Business Days, after such Holder gives such notice
and no such claim of error shall limit or delay performance of the Company's
obligation to repurchase such portion of the Notes which is not in dispute and
(ii) such notice shall be deemed for all purposes to be in proper form unless
the Company notifies such Holder within one Business Day after such notice has
been given (which notice from the Company shall specify all defects in such
notice) and any Holder Notice containing any such defect shall nonetheless be
effective on the date given if such Holder promptly undertakes in writing to
correct all such defects.
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(c) In case of any Repurchase Event as specified in clause (b) of
the definition of such term, the Company shall be entitled to satisfy its
obligations to repurchase Notes under this Article VII by causing a third party
to make payment on the applicable Repurchase Date of the applicable Repurchase
Prices of all Notes required to be repurchased by the Company, in which case the
Company shall notify the Holders of such fact, with a copy to the Trustee, at
least five Business Days prior to such Repurchase Date; provided, however, that
nothing herein shall relieve the Company of its obligation for payment of such
Repurchase Prices if such third party shall fail to pay the same when due.
SECTION 7.04. FORM OF COMPANY NOTICE. A Company Notice shall be
in the following form:
COMPANY NOTICE
(8% SENIOR SECURED CONVERTIBLE NOTE DUE 2004)
TO:
----------------------------------------
(Name of Holder)
(1) A Repurchase Event described in clause ____ the definition of
that term for the 8% Senior Secured Convertible Notes due 2004 (the "Notes") of
Axys Pharmaceuticals, Inc., a Delaware corporation (the "Company"), occurred on
_____________. As a result of such Repurchase Event, the Holders are entitled to
exercise repurchase rights pursuant to Article Seven of the Supplemental
Indenture.
(2) Each Holder's repurchase right must be exercised on or before
_____________.
(3) At or before the date set forth in the preceding paragraph
(2), a Holder must deliver to the Company a Holder Notice, in the form set forth
in Section 7.05 of the Supplemental Indenture; and
(4) In order to receive payment of the Repurchase Price, such
Holder must also surrender to the Trustee the Note or Notes to be repurchased,
duly endorsed for transfer to the Trustee of the portion of the principal amount
to be repurchased.
(5) Capitalized terms used herein and not otherwise defined
herein have the respective meanings provided in the Note, the Original Indenture
and the Supplemental Indenture.
Date AXYS PHARMACEUTICALS, INC.
-----------------------------------
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By:
------------------------------
Title:
cc: U. S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
550 South Hope Street
Suite 500
Los Angeles, California 90071
Attention: Mr. Brad Scarbrough, Assistant Vice President
SECTION 7.05. FORM OF HOLDER NOTICE. A Holder Notice shall be in
substantially the following form:
HOLDER NOTICE
8% SENIOR SECURED CONVERTIBLE NOTE DUE 2004
TO: AXYS PHARMACEUTICALS, INC.
(1) Pursuant to the terms of the 8% Senior Secured Convertible
Note due 2004 (the "Note"), the undersigned Holder hereby elects to exercise its
right to require repurchase by the Company pursuant to Article Seven of the
Supplemental Indenture of $______ principal amount of the Note, accrued and
unpaid interest on such principal amount and, if applicable, Default Interest
thereon, at the Repurchase Price provided in the Supplemental Indenture.
(2) Capitalized terms used herein and not otherwise defined
herein have the respective meanings provided in the Note, the Original Indenture
and the Supplemental Indenture.
Date: NAME OF HOLDER:
----------------
By
------------------------------------------
Signature of Registered Holder
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(Must be signed exactly as name
appears in the Note.)
cc: U. S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
550 South Hope Street
Suite 500
Los Angeles, California 90071
Attention: Mr. Brad Scarbrough, Assistant Vice President
ARTICLE EIGHT
CONVERSION
SECTION 8.01. RIGHT TO CONVERT. Subject to and upon compliance
with the provisions of this Supplemental Indenture, the Holders shall have the
right, at the Holders' option, at any time prior to the close of business on the
Maturity Date (except that, if a Holder shall have exercised repurchase rights
under Article Seven of this Supplemental Indenture, such conversion right shall
terminate with respect to the portion of such Holder's Note or Notes to be
repurchased on the last Trading Day prior to the later of (x) the date of such
repurchase and (y) the date the Company pays or deposits in accordance with
Section 9.14 the applicable Repurchase Price, unless in any such case the
Company shall default in payment due upon repurchase thereof) to convert the
principal amount of such Holder's Note, or any portion of such principal amount
which is at least $10,000 (or such lesser principal amount thereof as shall be
outstanding at such time) into that number of fully paid and non-assessable
shares of Common Stock (as such shares shall then be constituted) obtained by
dividing (1) the principal amount of such Note or portion thereof being
converted by (2) the Conversion Price in effect on the applicable Conversion
Date, by giving a Conversion Notice in the manner provided in Section 8.02 of
this Supplemental Indenture; provided, however, that, if at any time any Note is
converted in whole or in part pursuant to this Section 8.01, the Company does
not have available for issuance upon such conversion as authorized and unissued
shares or in its treasury at least the number of shares of Common Stock required
to be issued pursuant hereto, then, at the election of the converting Holder
made by notice from such Holder to the Company, such Note (or portion thereof as
to which conversion has been requested), to the extent that sufficient shares of
Common Stock are not then available for issuance upon conversion, shall be
converted into the right to receive from the Company, in lieu of the shares of
Common Stock into which such Note or such portion thereof would otherwise be
converted and which the Company is unable to issue, payment in an amount equal
to the product obtained by multiplying (x) the number of shares of Common Stock
which the Company is unable
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to issue times (y) the arithmetic average of the Market Price for the Common
Stock during the five consecutive Trading Days immediately prior to the
applicable Conversion Date. Any such payment shall, for all purposes of such
Note, be deemed to be a payment of principal plus a premium equal to the total
amount payable less the principal portion of such Note converted as to which
such payment is required to be made because shares of Common Stock are not then
available for issuance upon such conversion. In connection with conversion of a
Note or portion thereof, the Holder shall not be entitled to payment or credit
in respect of accrued and unpaid interest on such Note or portion thereof
converted and such interest shall not be deemed to have been paid to such
Holder. A Holder is not entitled to any rights of a holder of Common Stock until
such Holder has converted a Note to Common Stock, and only to the extent such
Note is deemed to have been converted to Common Stock under this Article Eight.
For purposes of Sections 8.05 and 8.06, whenever a provision references the
shares of Common Stock into which a Note (or a portion thereof) is convertible
or the shares of Common Stock issuable upon conversion of a Note (or a portion
thereof) or words of similar import, any determination required by such
provision shall be made as if a sufficient number of shares of Common Stock were
then available for issuance upon conversion in full of the Notes.
SECTION 8.02. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF
COMMON STOCK ON CONVERSION. (a) In order to exercise the conversion privilege
with respect to a Note, the Holder shall give a Conversion Notice (or such other
notice which is acceptable to the Company) to the Company and the Trustee or to
the office or agency designated by the Company for such purpose by notice to the
Holders. A Conversion Notice may be given by telephone line facsimile
transmission to the numbers set forth on the form of Conversion Notice.
(b) As promptly as practicable, but in no event later than three
Trading Days (if the converting Holder has requested delivery through the
facilities of The Depository Trust Company), after a Conversion Notice is given
by a Holder, the Company shall issue and shall deliver to such Holder or such
Holder's designee the number of full shares of Common Stock issuable upon such
conversion of such Holder's Note or portion thereof in accordance with the
provisions of this Article and deliver a check or cash in respect of any
fractional interest in respect of a share of Common Stock arising upon such
conversion, as provided in Section 8.02(f) and, if applicable, any cash payment
required pursuant to the proviso to the first sentence of Section 8.01 (which
payment, if any, shall be paid no later than three Trading Days after the
applicable Conversion Date).
(c) Each conversion of a Note (or portion thereof) shall be
deemed to have been effected on the applicable Conversion Date, and the person
in whose name any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become on such
Conversion Date the holder of
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record of the shares represented thereby; provided, however, that if a
Conversion Date is a date on which the stock transfer books of the Company shall
be closed such conversion shall constitute the person in whose name the
certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the applicable
Conversion Date.
(d) A Conversion Notice shall be deemed for all purposes to be in
proper form unless the Company notifies the Holder giving such Conversion Notice
by telephone line facsimile transmission within two Trading Days after such
Conversion Notice has been given (which notice from the Company shall specify
all defects in such Conversion Notice) and any Conversion Notice containing any
such defect shall nonetheless be effective on the date given if such Holder
promptly undertakes to correct all such defects. No such claim of error shall
limit or delay performance of the Company's obligation to issue upon such
conversion the number of shares of Common Stock which are not in dispute. The
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of shares of Common Stock or
other securities or property on conversion of any Note in a name other than that
of the Holder converting such Note, and the Company shall not be required to
issue or deliver any such shares or other securities or property unless and
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of any such tax or shall have established to the
reasonable satisfaction of the Company that such tax has been paid. A Holder
shall be responsible for the amount of any withholding tax payable in connection
with any conversion of such Holder's Note.
(e) (1) If a Holder shall have given a Conversion Notice in
accordance with the terms of this Supplemental Indenture, the Company's
obligation to issue and deliver the certificates for Common Stock shall be
absolute and unconditional, irrespective of any action or inaction by the
Trustee or such Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any person or any
action to enforce the same, any failure or delay in the enforcement of any other
obligation of the Company to the Trustee or the Holders, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Trustee, any Holder or any other person of any obligation to the
Company or any violation or alleged violation of law by the Trustee, any Holder
or any other person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to such Holder in connection with
such conversion; provided, however, that nothing herein shall limit or prejudice
the right of the Company to pursue any such claim in any other manner permitted
by applicable law. The occurrence of an event which requires an adjustment of
the Conversion Price as contemplated by Section 8.03 shall in no way restrict or
delay the right of the Holders to receive certificates for Common Stock upon
conversion of Notes and the Company shall
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use its best efforts to implement such adjustment on terms reasonably acceptable
to the Holders within three Trading Days of such occurrence.
(2) If the Company fails to issue and deliver the shares of
Common Stock to a converting Holder in connection with a particular conversion
of a Note promptly, but in no event later than five Trading Days (if the
converting Holder has requested delivery through the facilities of The
Depository Trust Company), after such Holder gives the Conversion Notice for
such conversion, in addition to any other liabilities the Company may have
hereunder and under applicable law (A) the Company shall pay or reimburse such
Holder on demand for all out-of-pocket expenses, including, without limitation,
reasonable fees and expenses of legal counsel, incurred by such Holder as a
result of such failure, (B) if as a result of such failure such Holder shall
suffer any direct damages or liabilities from such failure (including, without
limitation, margin interest and the cost of purchasing securities to cover a
sale (whether by such Holder or such Holder's securities broker) or borrowing of
shares of Common Stock by such Holder for purposes of settling any trade
involving a sale of shares of Common Stock made by such Holder during the period
beginning on the Issuance Date and ending on the date the Company delivers or
causes to be delivered to such Holder such shares of Common Stock, then the
Company shall upon demand of such Holder pay to such Holder an amount equal to
the actual direct, out-of-pocket damages and liabilities suffered by such Holder
by reason thereof which such Holder documents to the reasonable satisfaction of
the Company, and (C) such Holder may by written notice (which may be given by
mail, courier, personal service or telephone line facsimile transmission) or
oral notice (promptly confirmed in writing) to the Company, with a copy to the
Trustee, given at any time prior to delivery to such Holder of the shares of
Common Stock issuable in connection with such exercise of such Holder's
conversion right, rescind such exercise and the Conversion Notice relating
thereto, in which case such Holder shall thereafter be entitled to convert that
portion of such Note as to which such exercise is so rescinded and to exercise
its other rights and remedies with respect to such failure by the Company.
Notwithstanding the foregoing the Company shall not be liable to any Holder
under clause (B) of the immediately preceding sentence to the extent the failure
of the Company to deliver or to cause to be delivered such shares of Common
Stock results from fire, flood, storm, earthquake, shipwreck, strike, war, acts
of terrorism, crash involving facilities of a common carrier, acts of God, or
any similar event outside the control of the Company (it being understood that
the action or failure to act of the Trustee shall not be deemed an event
outside the control of the Company except to the extent resulting from fire,
flood, storm, earthquake, shipwreck, strike, war, acts of terrorism, crash
involving facilities of a common carrier, acts of God, the bankruptcy,
liquidation or reorganization of the Trustee under any bankruptcy, insolvency or
other similar law or any similar event outside the control of the Trustee). A
converting Holder shall notify the Company in writing (or by telephone
conversation, confirmed in writing) as promptly as practicable following the
third Trading Day after such Holder gives a Conversion Notice if such
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Holder becomes aware that such shares of Common Stock so issuable have not been
received as provided herein, but any failure so to give such notice shall not
affect such Holder's rights under the Original Indenture, this Supplemental
Indenture, the Notes or otherwise.
(f) No fractional shares of Common Stock shall be issued upon
conversion of any Note but, in lieu of any fraction of a share of Common Stock
which would otherwise be issuable in respect of such conversion, the Company may
round the number of shares of Common Stock issued on such conversion up to the
next highest whole share or may pay lawful money of the United States of America
for such fractional share, based on a value of one share of Common Stock being
equal to the Market Price of the Common Stock on the applicable Conversion Date.
SECTION 8.03. ADJUSTMENT OF CONVERSION PRICE. The Conversion
Price shall be adjusted from time to time by the Company as follows:
(a) In case the Company shall on or after the Issuance Date pay a
dividend or make a distribution to all holders of the outstanding Common Stock
in shares of Common Stock, the Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the Record Date fixed for such determination and the denominator
shall be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following the
Record Date. If any dividend or distribution of the type described in this
Section 8.03(a) is declared but not so paid or made, the Conversion Price shall
again be adjusted to the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.
(b) In case the Company shall on or after the Issuance Date issue
rights or warrants (other than any rights or warrants (including the Preferred
Share Purchase Rights) referred to in Section 8.03(d)) to all holders of its
outstanding shares of Common Stock entitling them (for a period expiring within
45 days after the date fixed for the determination of stockholders entitled to
receive such rights or warrants) to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market Price on the Record Date
fixed for the determination of stockholders entitled to receive such rights or
warrants, the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect at the
opening of business on the date after such Record Date by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding at the
close of business on the Record Date plus the number of shares which the
aggregate offering
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price of the total number of shares so offered would purchase at such Current
Market Price, and the denominator shall be the number of shares of Common Stock
outstanding on the close of business on the Record Date plus the total number of
additional shares of Common Stock so offered for subscription or purchase. Such
adjustment shall become effective immediately after the opening of business on
the day following the Record Date fixed for determination of stockholders
entitled to receive such rights or warrants. To the extent that shares of Common
Stock are not delivered pursuant to such rights or warrants, upon the expiration
or termination of such rights or warrants, the Conversion Price shall be
readjusted to the Conversion Price 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. In the event that such rights or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed. In determining
whether any rights or warrants entitle the holder to subscribe for or purchase
shares of Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received for such rights or
warrants, the value of such consideration, if other than cash, to be determined
by the Board of Directors.
(c) In case the outstanding shares of Common Stock shall on or
after the Issuance Date be subdivided into a greater number of shares of Common
Stock, the Conversion Price in effect at the opening of business on the earlier
of the day following the day upon which such subdivision becomes effective and
the day on which "ex-" trading of the Common Stock begins with respect to such
subdivision shall be proportionately reduced, and conversely, in case
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Price in effect at the opening of
business on the earlier of the day following the day upon which such combination
becomes effective and the day on which "ex-" trading of the Common Stock with
respect to such combination begins shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately after
the opening of business on the earlier of the day following the day upon which
such subdivision or combination becomes effective and the day on which "ex-"
trading of the Common Stock begins with respect to such subdivision or
combination.
(d) In case the Company shall on or after the Issuance Date, by
dividend or otherwise, distribute to all holders of its Common Stock shares of
any class of capital stock of the Company (other than any dividends or
distributions to which Section 8.03(a) applies) or evidences of its
indebtedness, cash or other assets (including securities, but excluding any
rights or warrants referred to in Section 8.03(b) and dividends and
distributions paid exclusively in cash and excluding any capital stock,
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evidences of indebtedness, cash or assets distributed upon a merger or
consolidation to which Section 8.04 applies) (the foregoing hereinafter in this
Section 8.03(d) called the "Securities")), then, in each such case, subject to
the second paragraph of this Section 8.03(d), the Conversion Price shall be
reduced so that the same shall be equal to the price determined by multiplying
the Conversion Price in effect immediately prior to the close of business on the
Record Date with respect to such distribution by a fraction of which the
numerator shall be the Current Market Price on such date less the Fair Market
Value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) on such date of the portion of
the Securities so distributed applicable to one share of Common Stock and the
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following the
Record Date; provided, however, that in the event the then Fair Market Value (as
so determined) of the portion of the Securities so distributed applicable to one
share of Common Stock is equal to or greater than the Current Market Price on
the Record Date, in lieu of the foregoing adjustment, adequate provision shall
be made so that the Holders shall have the right to receive upon conversion of
the Notes (or any portion thereof) the amount of Securities each Holder would
have received had the Holder converted the Notes (or such portion thereof)
immediately prior to such Record Date. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared. If the Board of Directors
determines the Fair Market Value of any distribution for purposes of this
Section 8.03(d) by reference to the actual or when issued trading market for any
Securities comprising all or part of such distribution, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price, to the extent possible.
Rights or warrants distributed by the Company to all holders of
Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events (a "Trigger Event"): (i) are deemed to be transferred with such
shares of Common Stock; (ii) are not exercisable; and (iii) are also issued in
respect of future issuances of Common Stock, shall not be deemed to have been
distributed for purposes of this Section 8.03 (and no adjustment to the
Conversion Price under this Section 8.03 will be required) until the occurrence
of the earliest Trigger Event. If any such rights or warrants, including any
such existing rights or warrants distributed prior to the Issuance Date
(including the Preferred Share Purchase Rights), are subject to Trigger Events,
upon the satisfaction of each of which such rights or warrants shall become
exercisable to purchase different securities, evidences of indebtedness or other
assets, then the occurrence of each such Trigger Event shall be deemed to be
such date of issuance and Record Date with respect to new rights or warrants
(and a termination or expiration of the existing rights or warrants without
exercise by the holder thereof) (so that, by way of illustration and not
limitation, the
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dates of issuance of any such rights shall be deemed to be the dates on which
such rights become exercisable to purchase capital stock of the Company, and not
the date on which such rights may be issued, or may become evidenced by separate
certificates, if such rights are not then so exercisable). In addition, in the
event of any distribution of rights or warrants, or any Trigger Event with
respect thereto (including the Preferred Share Purchase Rights), that was
counted for purposes of calculating a distribution amount for which an
adjustment to the Conversion Price under this Section 8.03 was made (1) in the
case of any such rights or warrants which shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Price shall
be readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder or holders of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all holders
of Common Stock as of the date of such redemption or repurchase, and (2) in the
case of such rights or warrants (including the Preferred Share Purchase Rights)
which shall have expired or been terminated without exercise by any holders
thereof, the Conversion Price shall be readjusted as if such rights and warrants
had not been issued.
For purposes of this Section 8.03(d) and Sections 8.03(a) and
(b), any dividend or distribution to which this Section 8.03(d) is applicable
that also includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock to which Section 8.03(b) applies (or
both), shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, assets, shares of capital stock, rights or warrants
other than such shares of Common Stock or rights or warrants to which Section
8.03(b) applies (and any Conversion Price reduction required by this Section
8.03(d) with respect to such dividend or distribution shall then be made)
immediately followed by (2) a dividend or distribution of such shares of Common
Stock or such rights or warrants (and any further Conversion Price reduction
required by Sections 8.03(a) and (b) with respect to such dividend or
distribution shall then be made), except (A) the Record Date of such dividend or
distribution shall be substituted as "the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution", "Record
Date fixed for such determination" and "Record Date" within the meaning of
Section 8.03(a) and as "the date fixed for the determination of stockholders
entitled to receive such rights or warrants", "the Record Date fixed for the
determination of the stockholders entitled to receive such rights or warrants"
and "such Record Date" within the meaning of Section 8.03(b) and (B) any shares
of Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the Record Date fixed for such
determination" within the meaning of Section 8.03(a).
(e) In case the Company shall on or after the Issuance Date, by
dividend or otherwise, distribute to all holders of its Common Stock cash
(excluding
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any cash that is distributed upon a merger or consolidation to which Section
8.04 applies or as part of a distribution referred to in Section 8.03(d)) in an
aggregate amount that, combined with (1) the aggregate amount of any other such
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution, and in respect
of which no adjustment pursuant to this Section 8.03(e) has been made, and (2)
the aggregate of any cash plus the Fair Market Value (as determined by the Board
of Directors, whose determination shall be conclusive and set forth in a Board
Resolution) of consideration payable in respect of any Tender Offer by the
Company or any Subsidiary for all or any portion of the Common Stock concluded
within the 12 months preceding the date of payment of such distribution, and in
respect of which no adjustment pursuant to Section 8.03(f) has been made,
exceeds 10% of the product of (x) the Current Market Price on the Record Date
with respect to such distribution times (y) the number of shares of Common Stock
outstanding on such date, then, and in each such case, immediately after the
close of business on such date, unless the Company elects to reserve such cash
for distribution to the Holders upon the conversion of Notes (and shall have
made adequate provision by deposit with the Trustee) so that the Holders will
receive upon such conversion, in addition to the shares of Common Stock to which
the Holders are entitled, the amount of cash which the Holders would have
received if the Holders had, immediately prior to the Record Date for such
distribution of cash, converted the Notes into Common Stock, the Conversion
Price shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on such Record Date by a fraction (i) the numerator of which shall be
equal to the Current Market Price on the Record Date less an amount equal to the
quotient of (x) the excess of such combined amount over such 10% and (y) the
number of shares of Common Stock outstanding on the Record Date and (ii) the
denominator of which shall be equal to the Current Market Price on the Record
Date; provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that the Holders shall
have the right to receive upon conversion of the Notes (or any portion thereof)
the amount of cash the Holders would have received had the Holders converted
their Notes (or portion thereof) immediately prior to such Record Date. In the
event that such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such dividend or distribution had not been declared.
(f) In case a Tender Offer on or after the Issuance Date made by
the Company or any Subsidiary for all or any portion of the Common Stock shall
expire and such Tender Offer (as amended upon the expiration thereof) shall
require the payment to stockholders (based on the acceptance (up to any maximum
specified in the terms of the Tender Offer) of Purchased Shares (as defined
below)) of an aggregate consideration having a Fair Market Value (as determined
by the Board of Directors, whose determination shall be conclusive and described
in a Board Resolution) that combined together with (1) the aggregate of the cash
plus the Fair Market Value (as determined by the Board of Directors,
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whose determination shall be conclusive and described in a Board Resolution), as
of the expiration of such Tender Offer, of consideration payable in respect of
any other Tender Offers, by the Company or any Subsidiary for all or any portion
of the Common Stock expiring within the 12 months preceding the expiration of
such Tender Offer and in respect of which no adjustment pursuant to this Section
8.03(f) has been made and (2) the aggregate amount of any distributions to all
holders of the Company's Common Stock made exclusively in cash within 12 months
preceding the expiration of such Tender Offer and in respect of which no
adjustment pursuant to Section 8.03(e) has been made, exceeds 10% of the product
of (i) the Current Market Price as of the last time (the "Expiration Time")
tenders could have been made pursuant to such Tender Offer (as it may be
amended) times (ii) the number of shares of Common Stock outstanding (including
any tendered shares) at the Expiration Time, then, and in each such case,
immediately prior to the opening of business on the day after the date of the
Expiration Time, the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to close of business on the date of the Expiration Time by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding (including any tendered shares) at the Expiration Time multiplied by
the Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the sum of (x) the Fair Market
Value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the Tender Offer) of all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the Expiration
Time and the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction (if any) to become effective
immediately prior to the opening of business on the day following the Expiration
Time. In the event that the Company is obligated to purchase shares pursuant to
any such Tender Offer, but the Company is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such Tender Offer had not been made. If the application of
this Section 8.03(f) to any Tender Offer would result in an increase in the
Conversion Price, no adjustment shall be made for such Tender Offer under this
Section 8.03(f).
(g) (1) In case at any time on or after the Issuance Date the
Company shall issue shares of its Common Stock or Common Stock Equivalents
(collectively, the "Newly Issued Shares"), other than an issuance pro rata to
all holders of its outstanding Common Stock, at a price below the Specified
Market Value of the
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Common Stock at the time of such issuance, then following such issuance of Newly
Issued Shares the Conversion Price shall be adjusted as provided in this Section
8.03(g). The Conversion Price following any such adjustment shall be determined
by multiplying the Conversion Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the sum of (a) the number of shares of
Common Stock outstanding immediately prior to the issuance of the Newly Issued
Shares (calculated on a fully-diluted basis assuming the conversion of all
options, warrants, purchase rights or convertible securities which are
exercisable at the time of the issuance of the Newly Issued Shares) plus (b) the
number of shares of Common Stock which the aggregate consideration, if any,
received by the Company for the number of Newly Issued Shares would purchase at
a price equal to the Specified Market Value of the Common Stock at the time of
such issuance, and the denominator shall be the sum of (X) the number of shares
of Common Stock outstanding immediately prior to the issuance of the Newly
Issued Shares (calculated on a fully-diluted basis assuming the exercise or
conversion of all options, warrants, purchase rights or convertible securities
which are exercisable or convertible at the time of the issuance of the Newly
Issued Shares) plus (Y) the number of Newly Issued Shares. The adjustment
provided for in this Section 8.03(g) may be expressed as the following
mathematical formula:
(O +(C / SMV))
NCP -------------- X CP
(O + N)
where:
C = aggregate consideration received by the Company for the Newly Issued
Shares
N = number of Newly Issued Shares
O = number of shares of Common Stock outstanding (on a fully diluted basis,
as described above) immediately prior to the issuance of the Newly
Issued Shares
SMV = Specified Market Value of the Common Stock at the time of issuance of
the Newly Issued Shares
CP = Conversion Price immediately prior to the issuance of the Newly Issued
Shares
NCP = Conversion Price immediately after the issuance of the Newly Issued
Shares
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(2) Notwithstanding the foregoing, no adjustment shall be made
under this Section 8.03(g) by reason of:
(A) the issuance by the Company of shares of Common Stock pro
rata to all holders of the Common Stock so long as (i) any adjustment to
the Conversion Price that is required by Section 8.03(a) is made and
(ii) the Company shall have given notice of such issuance thereof to the
Holders pursuant to Section 8.06;
(B) the issuance by the Company of Newly Issued Shares in an
offering for cash for the account of the Company that is underwritten on
a firm commitment basis and (i) is registered under the 1933 Act or (ii)
sold in an offering primarily to "qualified institutional buyers" as
defined in, and in a transaction under, Rule 144A under the 1933 Act;
(C) the issuance by the Company of shares of Common Stock upon
conversion of the Notes or upon exercise of the Warrants in accordance
with the terms hereof and thereof;
(D) the issuance by the Company of shares of Common Stock in
payment of interest on the Notes in accordance with the terms hereof and
thereof;
(E) the issuance by the Company of shares of Common Stock
pursuant to the exercise of options, warrants or other rights
outstanding as of the date of this Supplemental Indenture in accordance
with their respective terms in effect on the date of this Supplemental
Indenture; and
(F) the issuance by the Company of shares of Common Stock
pursuant to the Common Stock Purchase Agreement, dated as of July 21,
2000, between the Company and Acqua Wellington North American Equities
Fund, Ltd., as in effect on the date of this Supplemental Indenture.
(3) In case at any time on or after the Issuance Date the Company
shall issue shares of Common Stock or Common Stock Equivalents to any
Subsidiary, the Conversion Price shall be subject to adjustment as and to the
extent provided in this Section 8.03(g) by reason of such issuance. In case at
any time on or after the Issuance Date any Subsidiary shall sell any shares of
Common Stock or Common Stock Equivalents, such sale shall be deemed for purposes
of this Section 8.03(g) to be the issuance of such shares of Common Stock or
Common Stock Equivalents by the Company, and the Conversion Price shall also be
subject to further adjustment as and to the extent provided in this Section
8.03(g) by reason of such sale of shares of Common Stock or Common Stock
Equivalents by such Subsidiary.
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(h) The Company may make such reductions in the Conversion Price,
in addition to those required by Sections 8.03(a), (b), (c), (d), (e), (f), and
(g) 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.
(i) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of this
Section 8.03(i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
II shall be made by the Company and shall be made to the nearest cent or to the
nearest one hundredth of a share, as the case may be.
No adjustment need be made for a change in the par value of the
Common Stock or from par value to no par value or from no par value to par
value.
(j) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly, but in no event later than five Business Days
thereafter, give a notice to the Holders, with a copy to the Trustee, setting
forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment, but which statement shall not
include any information which would be material non-public information for
purposes of the 1934 Act. Failure to deliver such notice shall not affect the
effectiveness, legality or validity of any such adjustment.
(k) In any case in which this Section 8.03 provides that an
adjustment shall become effective immediately after a Record Date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
Holders in connection with any conversion of Notes after such Record Date and
before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment and (ii) paying to such Holder any amount in cash in
lieu of any fraction pursuant to Section 8.02(f).
(l) For purposes of this Section 8.03, 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
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company other than (i) dividends or distributions
payable only in shares of Common Stock and (ii) the Preferred Share Purchase
Rights.
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SECTION 8.04. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER
OR SALE. (a) If any of the following events occur, namely (i) any
reclassification or change of the 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 subdivision or combination), (ii) any
consolidation, merger or combination of the Company with another Person as a
result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for 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 Person as a result of which holders of Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock, then prior to such
reclassification, change, consolidation, merger, combination or sale the Company
or the successor or purchasing Person, as the case may be, shall execute with
the Trustee a written agreement providing that (x) the Notes shall be
convertible into the kind and amount of shares of stock and other securities or
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance by the holder of
a number of shares of Common Stock issuable upon conversion of the Notes
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance assuming such holder of Common Stock did not
exercise such holder's rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory 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 8.04 the kind and
amount of securities, cash or other property receivable upon such consolidation,
merger, statutory 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), (y) in the case of any such successor or purchasing
Person, upon such consolidation, merger, combination, sale or conveyance such
successor or purchasing Person shall be jointly and severally liable with the
Company for the payment and performance of all of the Company's obligations
under the Original Indenture, this Supplemental Indenture and the Notes and the
other Transaction Documents and (z) if registration or qualification is required
under the 1933 Act or applicable state law for the Notes, the Warrants or the
issuance to the Holders or the holders of the Warrants of the shares of such
shares of stock and other securities so issuable upon conversion of the Notes or
exercise of the Warrants, such registration or qualification shall be completed
prior to such reclassification, change, consolidation, merger, combination or
sale. Such written agreement shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article. If, in the case of any such reclassification, change, consolidation,
merger, combination, sale or
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conveyance, the stock or other securities and assets receivable thereupon by a
holder of shares of Common Stock includes shares of stock or other securities
and assets of a corporation other than the successor or purchasing corporation,
as the case may be, in such reclassification, change, consolidation, merger,
combination, sale or conveyance, then such written agreement shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the Holders as the Board of Directors shall
reasonably consider necessary by reason of the foregoing, including, to the
extent practicable, the provisions providing for the repurchase rights set forth
in Article Seven herein.
(b) The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
(c) If this Section 8.04 applies to any event or occurrence,
Section 8.03 shall not apply to such event or occurrence.
SECTION 8.05. RESERVATION OF SHARES; SHARES TO BE FULLY PAID;
LISTING OF COMMON STOCK.
(a) The Company shall reserve and keep available, free from
preemptive rights, out of its authorized but unissued shares of Common Stock or
shares of Common Stock held in treasury, solely for issuance upon conversion of
the Notes, and in addition to the shares of Common Stock required to be reserved
by the terms of the Warrants, sufficient shares to provide for the conversion of
the Notes from time to time as the Notes are converted.
(b) Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value, if any, of the shares of
Common Stock issuable upon conversion of the Notes, the Company will take all
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue shares of such Common Stock at
such adjusted Conversion Price.
(c) The Company covenants that all shares of Common Stock issued
upon conversion of the Notes will be fully paid and non-assessable by the
Company and free from all taxes, Liens and charges with respect to the issue
thereof.
(d) The Company covenants that if any shares of Common Stock to
be provided for the purpose of conversion of the Notes hereunder require
registration with or approval of any governmental authority under any federal or
state law before such shares may be validly issued upon conversion, the Company
will in good faith and as
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expeditiously as possible endeavor to secure such registration or approval, as
the case may be.
(e) The Company covenants that, so long as the Common Stock shall
be listed on the Nasdaq, the NYSE, the AMEX or any other national securities
exchange, the Company shall obtain and, so long as the Common Stock shall be so
listed on such market or exchange, maintain approval for listing thereon of all
Common Stock issuable upon conversion of or in payment of interest on the Notes.
SECTION 8.06. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. In case
on or after the Issuance Date:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock (other than in cash out of retained earnings);
or
(b) the Company shall authorize the granting to 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; or
(c) the Board of Directors shall authorize any reclassification
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 any consolidation or merger or
other business combination transaction to which the Company is a party and for
which approval of any stockholders of the Company is required, or the sale or
transfer of all or substantially all of the assets of the Company; or
(d) there shall be pending the voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
the Company shall give the Holders, as promptly as possible but in any event at
least ten Trading 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 are to be determined, or (y) the date
on which such reclassification, consolidation, merger, other business
combination transaction, 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 who shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, other business combination
transaction, sale, transfer, dissolution, liquidation or winding-up shall be
determined. Such notice shall not include any information which would be
material non-public information for
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purposes of the 1934 Act. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up. In the case of any such action of which the Company
gives such notice to the Holders or is required to give such notice to the
Holders, the Holders shall be entitled to give Conversion Notices which are
contingent on the completion of such action.
SECTION 8.07. ORIGINAL INDENTURE. The conversion provisions of
this Article Eight shall supersede Sections 1402, 1403, 1404 and 1409 of the
Original Indenture.
ARTICLE NINE
SUNDRY PROVISIONS
SECTION 9.01. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY. Except to the extent modified by this Supplemental Indenture, the
Company makes and reaffirms as of the date of execution of this Supplemental
Indenture all of its representations, warranties, covenants and agreements set
forth in the Original Indenture.
SECTION 9.02. TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals
contained herein shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity of this Supplemental Indenture.
SECTION 9.03. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein are for convenience only and shall not
affect the construction hereof.
SECTION 9.04. SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Supplemental Indenture by the Company shall bind its
successors and assigns, whether so expressed or not.
SECTION 9.05. SEPARABILITY CLAUSE. In case any provision in this
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 9.06. BENEFITS OF SUPPLEMENTAL INDENTURE. Nothing in this
Supplemental Indenture, express or implied, shall give to any Person, other than
the parties hereto, any Paying Agent, any Note Registrar and their successors
under the
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Original Indenture and the Holders of Notes, any benefit or any legal or
equitable right, remedy or claim under the Original Indenture.
SECTION 9.07. GOVERNING LAW. This Supplemental Indenture shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 9.08. COUNTERPARTS. This Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
SECTION 9.09. ENFORCEABLE OBLIGATION. The Company represents and
warrants that at the time of the original issuance of each Note it received the
full purchase price payable pursuant to the Note Purchase Agreements pursuant to
which such Note is being issued in an amount at least equal to the original
principal amount of such Note, and that each Note is an enforceable obligation
of the Company which is not subject to any offset, reduction, counterclaim or
disallowance of any sort.
SECTION 9.10. CERTAIN PERFORMANCE. The Company acknowledges and
agrees that, by reason of, among other things, the conversion rights of the
Holders, there shall be no adequate remedy at law for the Company's willful
failure to comply with the Original Indenture, this Supplemental Indenture or
the Notes, and that the repayment of principal of and interest on the Notes, and
payment by the Company of the other amounts payable by the Company, in
connection with an Event of Default, will not adequately compensate the Holders
for any loss or impairment of the conversion rights. The Company agrees that, in
addition to any other rights or remedies, the Trustee and the Holders shall be
entitled to specific performance by the Company of its obligations under, and an
injunction against any action that would constitute a failure by the Company to
comply with, the Original Indenture, this Supplemental Indenture and the Notes.
SECTION 9.11. AMENDMENTS. In addition to the requirements of
Section 902 of the Original Indenture, no supplemental indenture shall, without
the consent of the Holder of each Outstanding Note affected thereby, change the
obligations of the Company to redeem or repurchase Notes pursuant to Article
Seven of this Supplemental Indenture.
SECTION 9.12. REFERENCE TO AND EFFECT ON ORIGINAL INDENTURE. This
Supplemental Indenture shall be construed as supplemental to the Original
Indenture and all the terms and conditions of this Supplemental Indenture shall
be deemed to be part of the terms and conditions of the Original Indenture.
Except as set forth herein, the Original Indenture heretofore executed and
delivered is hereby ratified, approved and confirmed. The provisions of this
Supplemental Indenture shall for the purposes of
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this series of Securities supersede the provisions of the Original Indenture
heretofore executed and delivered to the extent such Original Indenture
heretofore executed and delivered is expressly inconsistent herewith. This
Supplemental Indenture is subject to the provisions of the Trust Indenture Act,
and shall, to the extent applicable, be governed by such provisions.
SECTION 9.13. NOTICES. Notwithstanding Sections 105 and 106 of
the Original Indenture, whenever under the provisions of the Original Indenture,
this Supplemental Indenture or the Notes any notice is required or permitted to
be given, such notice shall be in writing (except as otherwise specifically
provided in the Original Indenture, this Supplemental Indenture or the Notes)
and shall be sent by telephone line facsimile transmission to such telephone
line facsimile transmission number as shall be set forth below or shall have
been provided for purposes hereof by the Person entitled to such notice or, if
no such telephone line facsimile transmission number shall have been so
provided, may be sent by first class mail (postage prepaid), personal delivery
or courier (charges prepaid) addressed as follows:
If to the Company:
Axys Pharmaceuticals, Inc.
180 Kimball Way
South San Francisco, California 94080
Attention: Chief Financial Officer
Facsimile No.: (650) 829-1067
If to the Trustee:
U. S. Bank Trust National Association,
as Trustee
550 South Hope Street
Suite 500
Los Angeles, California 90071
Attention: Mr. Brad Scarbrough, Assistant Vice President
Facsimile No.: (213) 533-8729
and if to any Holder, at such Holder's telephone line facsimile transmission
number or address set forth in the Security Register for the Notes. Any notice
so sent by telephone line facsimile transmission, personal delivery or courier
shall be effective upon receipt,
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and any such notice sent by mail shall be effective three Business Days after
being deposited with the facilities of the United States Postal Service. The
Company or the Trustee may change its telephone line facsimile transmission
number or address for purposes of notices under the Original Indenture and
hereunder by giving three Business Days' notice to the other, in each case with
similar notice to all of the Holders. Any Holder may change its telephone line
facsimile transmission or address for purposes of notices under the Original
Indenture or hereunder by giving three Business Days' notice to the Trustee.
Whenever under the provisions of this Supplemental Indenture a Holder is
required or permitted to give any notice to the Company and such provision also
calls for giving a copy of such notice to the Trustee, if such Holder gives such
notice to the Company but fails to give such notice to the Trustee, such failure
shall not affect the validity of such notice.
SECTION 9.14. PAYMENT OF NOTES ON REPURCHASE; DEPOSIT OF
REPURCHASE PRICE, ETC. If any Note or any portion of any Note is to be
repurchased as provided in Article Seven and any notice required in connection
therewith shall have been given as provided therein and the Company shall have
otherwise complied with the requirements of this Supplemental Indenture with
respect thereto, then the Note or Notes or the portion or portions thereof to be
so repurchased and with respect to which any such notice has been given shall
become due and payable on the date stated in such notice at the applicable
Repurchase Price. On and after the repurchase date so stated in such notice,
provided that the Company shall have deposited with the Trustee on or prior to
such repurchase date, an amount sufficient to pay the applicable Repurchase
Price interest on such Note or Notes or the portion or portions thereof to be so
redeemed or repurchased shall cease to accrue, and such Note or Notes or such
portion thereof shall be deemed not to be Outstanding and shall not be entitled
to any benefit with respect to principal of or interest on the portion to be so
repurchased except to receive payment of the applicable Repurchase Price. On
presentation and surrender of such Note or Notes or such portion or portions
thereof, such Note or Notes or the specified portion or portions thereof shall
be paid and repurchased at the applicable Repurchase Price. If a portion of any
Note is to be repurchased, upon surrender of such Note to the Trustee in
accordance with the terms hereof, the Company shall execute and deliver to the
Holder of such note without service charge, a new Note or Notes, having the same
date as the Note so surrendered and containing identical terms and conditions,
in such denomination or denominations as requested by such Holder in aggregate
principal amount equal to, and in exchange for, the unrepurchased portion of the
principal amount of the Note so surrendered.
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IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
AXYS PHARMACEUTICALS, INC.
By: /s/ William J. Newell
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Name: William J. Newell
U. S. BANK TRUST NATIONAL
ASSOCIATION, AS TRUSTEE
By: /s/ Cindy Brown
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Name: Cindy Brown
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