Exhibit 10.49
ISIN No. XS0167566016
Common Code 016756601
Swiss Security No. 1595470
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE ON CONVERSION OF
THIS NOTE (THE "SHARES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE
HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF THE COMPANY
THAT THIS NOTE AND THE SHARES MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED OR DISPOSED OF UNLESS THE NOTE OR THE SHARES AS THE CASE MAY BE, HAS
BEEN REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR
BLUE SKY LAWS OR EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS ARE
AVAILABLE.
IF THE HOLDER OF THIS NOTE WAS AN AFFILIATE OF THE COMPANY AT ANY TIME
DURING THE THREE MONTHS PRECEDING THE DATE OF ANY SUCH TRANSFER, THE FOREGOING
CONDITIONS MUST BE COMPLIED WITH REGARDLESS OF WHEN SUCH TRANSFER IS MADE.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE U.S. INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED
IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF
1986, AS AMENDED.
THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY ANY AGENCY OF THE
UNITED STATES GOVERNMENT.
HARKEN ENERGY CORPORATION
7% SENIOR CONVERTIBLE NOTES DUE 2007, SERIES F
GLOBAL NOTE
Harken Energy Corporation, a Delaware corporation (hereinafter, the
"Company," which term includes any successor to the Company), for value
received, hereby promises to pay to The Bank of New York Depository (Nominees)
Limited, upon presentation and surrender of this Global Note (the "Global Note")
the principal sum of SEVEN HUNDRED TWENTY THOUSAND DOLLARS (U.S. $720,000) (the
"Principal Amount") on March 31, 2007, and to pay interest thereon from and
including May 23, 2003, semi-annually in arrears on September 30 and March 31 in
each year, commencing September 30, 2003 (each an " Interest Payment Date"), at
the rate of 7% per annum, calculated on the basis of a 360-day year consisting
of twelve 30-day months, until the principal hereof is paid or payment thereof
is duly provided for; provided, however, that the Principal Amount payable upon
presentation and surrender may be reduced from time to time in connection with
conversions, redemptions, purchases, cancellations and similar events described
in the Terms and Conditions hereof, and such reductions shall be duly noted on
Schedule A hereto (which is incorporated herein by this reference as if set out
in full); and provided further that interest accruing after the date of a
reduction in Principal Amount shall be calculated with reference to the new
Principal Amount. While the Notes are registered in the name of the Common
Depository, payments of interest on each Note shall be paid by the Paying Agent
on each Interest
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Payment Date, commencing September 30, 2003, to the Holder of such Note as shown
on the Note Register at the close of business on the applicable Record Date,
such payment to be made in accordance with the rules and procedures of Euroclear
or Clearstream, as the case may be.
Upon failure of the Company to make any payment of interest or principal on
the date when due and payable, the outstanding principal balance of the Notes
and, to the extent permitted by law, interest thereon will bear interest at the
Default Rate beginning on the date such payment was due until the default is
cured.
Notwithstanding any other provision of the Notes to the contrary, in no
event shall the interest contracted for, charged or received in connection with
the Notes (including any other costs or considerations that constitute interest
under applicable law which are contracted for, charged or received pursuant to
the Notes) exceed the maximum rate of nonusurious interest allowed under
applicable law as presently in effect and to the extent an increase is allowable
by such laws, but in no event shall any amount ever be paid or payable greater
than the amount contracted for in the Notes, and all amounts paid by the Company
which constitute usurious interest under the applicable law shall be applied in
the manner described herein.
To the extent permitted by law, interest contracted for, charged or
received on the Notes shall be allocated over the entire term of the Notes, to
the end that interest paid on the Notes does not exceed the maximum amount
permitted to be paid thereon by law.
The principal and interest on the definitive Notes shall be payable at the
office or agency of the Company maintained for such purpose in the City of
London and the City of New York, New York, or at such other office of agency of
the Company as may be maintained for such purpose.
This Global Note has been issued pursuant to resolutions adopted by the
Board of Directors of the Company on November 7, 2002. This Global Note is a
permanent security and is exchangeable in whole for definitive Notes in bearer
form, with interest coupons attached, upon the event specified in the Terms and
Conditions herein.
Until transferred in full for the definitive Notes in certificated form,
this Global Note shall in all respects be ratably entitled to the same benefits
under, and subject to the same Terms and Conditions of the definitive Notes
authenticated and delivered hereunder.
This Global Note, the definitive Notes, and the Terms and Conditions shall
be governed by and construed in accordance with the laws of the State of New
York.
Unless the certificate of authentication hereon has been executed by the
Authenticating Agent by manual signature of one of its authorized signatories,
this Global Note shall not be entitled to any benefit under the Terms and
Conditions and shall not be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this book-entry Note to be duly
executed in its corporate name by the manual or facsimile signatures of the
undersigned duly authorized officers of the Company.
Dated as of May 23, 2003.
HARKEN ENERGY CORPORATION
By:
-------------------------------------
Anna M. Williams, Executive Vice
President-Finance and Chief
Financial Officer
[Corporate Seal]
ATTEST:
By:
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A. Wayne Hennecke, Senior Vice President-Finance and Secretary
CERTIFICATE OF AUTHENTICATION
This Global Note is the Note referred to in the within mentioned Terms and
Conditions.
THE BANK OF NEW YORK,
Authenticating Agent
Date: By:
---------------------- -------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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TERMS AND CONDITIONS OF THE NOTES
The U.S. $720,000 of 7% Senior Convertible Notes Due 2007, Series F (the
"Notes") of Harken Energy Corporation, a Delaware corporation (the "Company")
are constituted by, and authorized to be issued pursuant to these Terms and
Conditions and resolutions of the Board of Directors of the Company adopted on
November 7, 2002.
Copies of a paying and conversion agency agreement dated as of May 23, 2003
(the "Agency Agreement"), made between the Company and The Bank of New York, as
paying and conversion agent (the "Paying Agent and "Conversion Agent,"
respectively, which expressions shall include any successors and assigns) are
available for inspection during normal business hours by the holders of the
Notes ("Noteholders") and the Couponholders at the specified office of the
Paying Agent. The Noteholders are entitled to the benefit of, are bound by, and
are deemed to have notice of all the provisions of the Agency Agreement.
Certain terms not otherwise defined in the text hereof are defined in
Condition 19 herein.
1. Form, Denominations, and Title, and Certain Administrative Provisions
(A) The Notes if issued in definitive bearer form will be serially
numbered, in denominations of U.S. $1,000 or multiples thereof (the "Authorized
Denomination"), each with Coupons attached on issue, and with such numerical and
other identification designation as the Company shall deem desirable.
(B) Title to the Notes and to the Coupons in certificated form will pass
by delivery. The Company and the Paying Agent and Conversion Agent may (to the
fullest extent permitted by applicable laws) deem and treat the Holder of any
Note and the Holder of any Coupon as the absolute owner thereof for all purposes
(whether or not the Note or Coupon shall be overdue and notwithstanding any
notice to the contrary).
Beneficial interests in the Notes will be represented by a global note (the
"Global Note"), without interest coupons, which will be deposited with a common
depository (the "Common Depository") and held on behalf of Morgan Guaranty Trust
Company of New York, as operator of the Euroclear System ("Euroclear"), and
Clearstream, societe anonyme ("Clearstream"), for credit to the accounts
designated by the Noteholders at Euroclear and Clearstream. Except as provided
herein, certificates will not be issued in exchange for beneficial interests in
this Global Note.
(C) The Notes shall be executed on behalf of the Company by its Vice
President-Finance and Chief Financial Officer under its corporate seal or a
facsimile of such seal reproduced thereon and attested by its Senior Vice
President-Finance and Secretary or an Assistant Secretary. The signature of any
of these officers on the Notes may be manual or facsimile signatures of the
present or any future such authorized officer and may be imprinted or otherwise
reproduced on the Notes.
Notes bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time hereafter, the Company may deliver Notes
executed by the Company to the Authenticating Agent for authentication, together
with a Company order for the authentication and delivery of such Notes, and the
Authenticating Agent in accordance with such Company order shall authenticate
and deliver such Notes. Such Company order shall specify the amount of Notes to
be authenticated and the date on which the original issue of Notes is to be
authenticated.
The Global Note shall be dated as of the date of authentication.
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No Note shall be entitled to any benefit hereunder or be valid or
obligatory for any purpose until the certificate of authentication substantially
in the form hereto is duly executed by the Authenticating Agent by the manual
signature of an authorized signatory of such Authentication Agent, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder and is
entitled to the benefits of these Terms and Conditions.
In case the Company, pursuant to Conditions 3(B) and 3(C), shall be
consolidated or merged with or into any other Person or shall convey, transfer,
lease or otherwise dispose of its Properties and assets substantially as an
entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have entered into an amendment
hereto, any of the Notes authenticated or delivered prior to such consolidation,
merger, conveyance, transfer, lease or other disposition may, from time to time,
at the request of the successor Person, be exchanged for other Notes executed in
the name of the successor Person with such changes in phraseology and form as
may be appropriate, but otherwise in substance of like tenor as the Notes
surrendered for such exchange and of like principal amount; and the
Authenticating Agent, upon Company order of the successor Person, shall
authenticate and deliver Notes as specified in such request for the purpose of
such exchange.
(D) If the Common Depository referred to in Condition 1(F) notifies the
Company that it is unwilling or unable to continue as Common Depository for this
Global Note, the Company shall use its best efforts to identify and appoint a
successor depository within 90 days of such notice. Pending the preparation of
definitive Notes, if required herein, the Company may execute, and upon Company
order the Authenticating Agent shall authenticate and deliver, temporary Notes
which are printed, lithographed, typewritten, mimeographed or otherwise produced
and in the Authorized Denomination, substantially of the tenor of the definitive
Notes in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Notes may determine, as conclusively evidenced by their execution of such Notes.
If temporary Notes are required to be issued pursuant to these Conditions,
the Company will cause definitive Notes to be prepared thereafter without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company designated for such purpose without
charge to the Noteholder. Upon surrender for cancellation of any one or more
temporary Notes, the Company shall execute and the Authenticating Agent shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Notes of the Authorized Denomination or multiples thereof. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under these Terms and Conditions as the definitive Notes.
(E) Upon surrender for exchange of any Note at the office or agency of the
Company designated pursuant to these Conditions, the Company shall execute, and
the Authenticating Agent shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of the Authorized
Denomination or denominations of a like aggregate principal amount.
Furthermore, any Holder of this Global Note, by acceptance of this Global
Note, agrees that transfers of beneficial interest in such Global Note may be
effected only through a book-entry system maintained by the Holder of the Global
Note (or its agent), and that ownership of a beneficial interest in this Global
Note shall be required to be reflected by way of book entry.
All Notes issued upon any exchange of Notes shall be the valid obligations
of the Company, evidencing the same debt, and entitled to the same benefits
hereunder, as the Notes surrendered upon such exchange.
Every Note presented or surrendered for exchange shall (if so required by
the Company) be duly endorsed, or be accompanied by a written instrument of
transfer, in form satisfactory to the Company, duly executed by the Noteholder
thereof or such Noteholder's attorney duly authorized in writing.
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Except as otherwise provided herein, no service charge shall be made for
any exchange, conversion or redemption of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any exchange of Notes.
The Company shall not be required (i) to issue or exchange any Note during
a period beginning at the opening of business 15 days before the selection of
Notes to be redeemed hereunder and ending at the close of business on the day of
such mailing of the relevant notice of redemption, (ii) to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part, or (iii) to register the transfer of or
exchange of any Note during a period beginning five days before the date of
Maturity and ending on such date of Maturity.
(F) (1) This Global Note shall be delivered to the Common Depository.
Members of, or participants in, Euroclear and Clearstream ("Agent Members")
shall have no direct rights hereunder with respect to any Global Note held on
their behalf by the Common Depository, or under such Global Note. The Common
Depository may be treated by the Company, and any agent of the Company, as the
absolute owner of such Global Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company or any agent of the
Company from giving effect to any written certification, proxy or other
authorization furnished by the Common Depository or shall impair, as between the
Common Depository and the Agent Members, the operation of customary practices
governing the exercise of the rights of a Noteholder.
(2) Transfers of the Global Note shall be limited to transfers of the
Global Note in whole, but not in part, to the Common Depository, its successors
or their respective nominees. Interests of beneficial owners in the Global Note
may be transferred in accordance with the rules and procedures of the Common
Depository, Euroclear, Clearstream, and the provisions hereof. Definitive Notes
in bearer form shall be transferred to all beneficial holders in exchange for
their beneficial interests in the Global Note in accordance with the Common
Depository's procedures only if the Common Depository notifies the Company that
it is unwilling or unable to continue as Common Depository for the Global Note
and a successor depository is not appointed by the Company within 90 days of
such notice, or an Event of Default has occurred and is continuing and the
Company has received a request from any owner of a beneficial interest in the
Global Note for such a transfer or the Common Depository.
(3) In connection with any transfer of beneficial interests in this
Global Note to beneficial owners pursuant to subsection (2) of this Condition,
the Common Depository shall reflect on its books and records the date and a
decrease in the Principal Amount of this Global Note in an amount equal to the
principal amount of the beneficial interests in this Global Note to be
transferred, and the Company shall execute, and the Authenticating Agent shall
authenticate and deliver, one or more definitive Notes in bearer form of like
tenor and amount.
(4) In connection with the transfer of the beneficial interests in
the entire Global Note to beneficial owners pursuant to subsection (2) of this
Condition, this Global Note shall be deemed to be surrendered to the Conversion
and Paying Agent for cancellation, and the Company shall execute, and the
Authenticating Agent shall authenticate and deliver, to each beneficial owner
identified by the Common Depository, in exchange for its beneficial interest in
this Global Note, an equal aggregate principal amount of definitive Notes in
bearer form.
(5) Any definitive Note in bearer form delivered in exchange for an
interest in this Global Note pursuant to subsection (2) or subsection (3) of
this Condition shall bear the applicable legend regarding transfer restrictions
applicable to the bearer Note as counsel to the Company shall advise the
Company.
(6) The Holder of this Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Noteholder is
entitled to take under these Terms and Conditions.
(7) Any definitive Note in bearer form delivered in exchange for an
interest in this Global Note pursuant to subsection (2) or (3) of this Condition
will prior to delivery to the Noteholder have all matured Coupons as of such
delivery date, which are attached to such bearer Note, cancelled and voided by
the Authenticating Agent.
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(8) Nothing contained herein shall be deemed to authorize any
transfers (by book-entry or otherwise) of this Global Note otherwise than in
accordance with the Securities Act. Unless otherwise required by applicable law,
neither the Company nor the Common Depository shall recognize or give effect to
any attempt to transfer (by book entry or otherwise) or convert any Note or any
interest therein in violation of the Securities Act.
(G) The Noteholders by acceptance of the Notes hereby covenant and agree
that neither the Notes nor the Conversion Shares will be offered, sold,
transferred, pledged, converted or otherwise disposed of unless the Notes and/
or the Conversion Shares have been registered under the Securities Act or any
applicable state securities or blue sky laws or exemptions from the registration
requirements of such laws are available.
(H) If (i) any mutilated Note or Coupon is surrendered to the
Authenticating Agent, or (ii) the Company and the Authentication Agent receive
evidence to their satisfaction of the destruction, loss or theft of any Note or
Coupon, and there is delivered to the Company and the Authenticating Agent such
security and/or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Authenticating
Agent that such Note or Coupon has been acquired by a bona fide purchaser, the
Company shall execute and upon Company order the Authenticating Agent shall
authenticate and deliver, in exchange for any such mutilated Note or Coupon or
in lieu of any such destroyed, lost or stolen Note or Coupon, a new Note or
Coupon of like tenor and principal amount, bearing a number not
contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Note or Coupon has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note or Coupon, pay such Note or Coupon, as the case
may be.
Upon the issuance of any new Note or Coupon under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Authenticating Agent) connected
therewith.
Every new Note or Coupon issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note or Coupon shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note or Coupon shall be at any time enforceable by anyone, and shall be
entitled to all benefits hereunder equally and proportionately with any and all
other Notes or Coupons duly issued hereunder.
The provisions of this Condition are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Note or Coupon.
Any new Note issued under this Condition 1(H) in lieu of any destroyed,
lost or stolen Note shall be issued by the Authenticating Agent with all matured
Coupons as of such date of issuance cancelled or voided.
2. Status
The Notes and any Coupons are direct, unconditional and unsecured
obligations of the Company and will rank pari passu, without any preference
among themselves. The Notes and any Coupons will rank senior to all Subordinated
Obligations of the Company, present and future, but, in the event of bankruptcy
or insolvency of the Company, only to the extent permitted by the applicable
laws relating to creditors' rights. The Notes will not be secured by any assets
or property of the Company. The Notes and any Coupons will rank pari passu with
all other present and future Indebtedness of the Company (including the
Company's 5.0% Senior Convertible Notes due 2003) other than Subordinated
Obligations. The Notes will rank senior to all existing and future Subordinated
Obligations.
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3. Covenants
(A) The Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights
(charter and statutory) and franchises of the Company; provided, however, that
the Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer in
the best interests of the Company and the conduct of its business, and that the
loss thereof is not disadvantageous in any material respect to the Noteholders;
and provided, further, that nothing contained in this Condition 3(A) shall
prohibit any transaction permitted by Condition 3(B) or Condition 3(C) herein.
(B) The Company will not merge or consolidate with or sell, convey,
transfer or lease or otherwise dispose of all, or substantially all of its
Properties and assets substantially as an entirety to any Person, unless: (a)
either (i) the Company shall be the surviving Person or (ii) the Person (if
other than the Company) formed by such consolidation or into which the Company
is merged or the Person which acquired by conveyance or transfer, or which
leases, the Properties and assets of the Company substantially as an entirety
(1) shall be a Person organized and validly existing under the laws of the
United States of America, any state thereof or the District of Columbia and (2)
shall expressly assume, by a written instrument, the Company's obligation for
the due and punctual payment of the principal of and interest on all the Notes
and the performance and observance of every Term and Condition contained herein
and in the Agency Agreement.
(C) Upon any consolidation of the Company with or merger of the Company
with or into any other Person or any conveyance, transfer or lease of the
Properties and assets of the Company substantially as an entirety to any person,
the successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under the Terms and Conditions contained herein with the same effect as if such
successor Person had been named as the Company herein, and in the event of any
such conveyance or transfer, the Company, except in the case of a lease, shall
be discharged of all obligations and covenants under the Notes and may be
dissolved and liquidated.
(D) The Company will maintain in at least one European city an office or
agency where Notes may be presented or surrendered for payment, where Notes may
be surrendered for conversion or exchange and where notices and demands to or
upon the Company in respect of the Notes may be served. The corporate trust
office of the Paying Agent at One Canada Square, 48/th/ Floor, London, E14 5AL,
England shall be such office or agency of the Company, unless the Company shall
designate and maintain some other offices or agencies for one or more of such
purposes pursuant to the terms of the Agency Agreement. The Company will give
prompt written notice to the Noteholders of any change in the location of any
such offices or agencies.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of Europe) where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind any
such designation; provided, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency in
Europe for such purposes. The Company will give prompt written notice to the
Noteholders of any such designation or rescission and any change in the location
of any such other office or agency.
(E) The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or upon the income,
profits or Property of the Company and (b) all lawful claims for labour,
materials and supplies which, if unpaid, might by law become a Lien upon the
Property of the Company; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
(F) The Company will not amend its Certificate of Incorporation or Bylaws
except as required by law, except in respect to such amendments that the Board
of Directors reasonably determines do not materially adversely
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affect the rights of the Noteholder, or except to the extent that such amendment
would not have a material adverse effect on (a) the ability of the Company to
perform its obligations under the Notes or (b) the rights of the Noteholders,
except that neither (i) increases in the number of Shares and issuance thereof
with related securities, nor (ii) designations of Preferred Stock of the
Company, modifications of the terms of such designations and issuance thereof
with related securities, nor (iii) modification or expansion of the indemnity
provisions provided by the Company to its directors and officers, nor (iv)
change of the Company's registered agent shall be deemed an amendment hereunder.
(G) To the extent permitted by law, the Company will provide to the Paying
Agent or to any Noteholder such statements, certificates or other documentation
concerning the organization or operations of the Company as may be reasonably
necessary to establish any exceptions or exemptions from United States federal
income tax withholding and reporting requirements.
(H) The Company shall file a registration statement on Form S-3 (or such
other form as the Company may determine is appropriate or required under the
rules of the Commission), within ninety (90) days following the Issue Date in
respect of all Shares that may be issuable at any time upon the conversion of
the Notes. If the Notes are not Freely Tradeable, and an event occurs under
condition 6(C) hereof which causes the Company to issue additional Conversion
Shares as to which Rule 416 of Regulation C under the Securities Act does not
apply, the Company shall file a registration statement with respect to such
shares on Form S-3 (or other form as the Company may determine is appropriate or
required under the Commission) within ninety (90) days following such event. The
Company shall use its best efforts to cause the Commission to declare such
registration statement(s) (and any necessary amendments thereto) effective. The
Company shall also use its best efforts to maintain the effectiveness of such
registration statement(s), and to refile such a registration statement from time
to time in the event its effectiveness lapses, until all such Shares that either
are issued or that may be issued are Freely Tradable in the United States.
While any Conversion Right remains exercisable, the Company will use its
best efforts to list and maintain a listing of all Shares issued upon conversion
or redemption of the Note on a Stock Exchange. In the event a Stock Exchange
requires stockholder approval in order to complete the listing of the Shares to
be so issued upon conversion or redemption of the Notes, then the Company will
use its best efforts to obtain such stockholder approval at the earliest
possible stockholder meeting. In this event, the conversion or redemption in
Shares will occur only if and when stockholder approval has been obtained. If
the Company is unable to obtain or maintain such listing of Shares, it will
forthwith give not less than 30 calendar days notice to the Noteholder of the
listing, de-listing or quotation or lack of quotation of the Shares (as a class)
by any such Stock Exchange.
(I) If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of or interest on any of the Notes,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Paying Agent of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the Notes, it
will, on or before 3:00 p.m. (London time) on the Business Day immediately
preceding each due date of the principal of or interest on any Notes, deposit
with a Paying Agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal or interest.
Pursuant to the terms of the Agency Agreement, the Paying Agent shall agree
with the Company, subject to the provisions of this Condition, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of or
interest on Notes in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided; and
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(2) notify the Company by facsimile transmission or by telex if the
Paying Agent has not, by the due date for the payment of any principal and/or
interest in respect of the Notes or Coupons received unconditionally the full
amount of such principal and interest due.
Any money deposited with the Paying Agent, or then held by the Company, in
trust for the payment of the principal of or interest on any Note and remaining
unclaimed for two years after such principal or interest has become due and
payable shall be paid to the Company on the Company order, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the Authorized Newspapers, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
4. Interest
The Notes bear interest from (and including) May 23, 2003 (the "Issue
Date"), at the rate of seven percent (7%) per annum, payable semi-annually in
arrears on September 30 and March 31 in each year (each an "Interest Payment
Date"), the first such payment to be made on September 30, 2003, in respect of
the period from (and including) the Issue Date to (but excluding) September 30,
2003, and the interest payable will equal U.S. $350.00 per U.S. $10,000
principal amount of the Notes for each complete semi-annual interest period.
Each Note will cease to bear interest (i) from its due date for redemption
unless the Company shall default in the payment of the Redemption Price, in
which event interest shall continue to accrue as provided in herein, or (ii)
where the Conversion Right shall have been voluntarily exercised by the
Noteholder, from the Conversion Date, or (iii) in the case of a Mandatory
Conversion, from the Mandatory Conversion Date.
Interest is calculated on the basis of a 360 day year consisting of 12
months of 30 days each and, in the case of an incomplete month, the number of
days elapsed.
5. Payments
For so long as the Notes are represented by a Global Note, beneficial
interests in this Global Note will be shown on, and transfers thereof will be
effected only through, records maintained by, and in accordance with the rules
and procedures of, Euroclear or Clearstream, as the case may be.
While the Notes are registered in the name of the Common Depository,
Payments of interest on each Note shall be paid by the Agent on each Interest
Payment Date, commencing September 30, 2003, to the Holder of such Note as shown
on the Note Register at the close of business on the applicable Record Date,
such payment to be made in accordance with the rules and procedures of such
Common Depository and in accordance with the rules and procedures of Euroclear
or Clearstream, as the case may be.
In case of certificated Notes, payments of principal in respect of each
Note and any net proceeds payable under Condition 6(D) will only be made,
against presentation and surrender (or, in the case of part payment only,
endorsement) of the relevant Note at the specified office of the Paying Agent.
Payments of interest due on the Notes on an Interest Payment Date will be made
against presentation and surrender (or, in the case of part payment only,
endorsement) of the relevant Coupons at the specified office of the Paying
Agent. All payments of principal and interest shall be made in U.S. dollars.
Each such payment and any payment of the net proceeds of the sale of Shares
pursuant to Condition 6(D) will be made at the specified office of any Paying
Agent, at the option of the Holder, by U.S. dollar cheque mailed to an address,
or delivered in accordance with the Holder's instructions, or by transfer to a
U.S. dollar account maintained by the Holder in accordance with the holder's
instructions, subject in all cases to any applicable fiscal or other laws and
regulations, but without prejudice to the provisions of Condition 9.
10
If, at any time, in the opinion of the Company or of the Paying Agent,
payments in U.S. dollars cannot be so made, payments will be made in U.S.
dollars in such other manner as may be approved by the Company and the Paying
Agent and notice of the alternative manner of payment will be given to the
Noteholders in accordance with Condition 15.
Each Note must be presented for redemption together with all unmatured
Coupons relating to such Note, failing which the full amount of any missing
unmatured Coupon (or, in the case of payment not being made in full, that
proportion of the full amount of the missing unmatured Coupons which the amount
so paid bears to the total amount due) will be deducted from the amount due for
payment. Each amount so deducted will be paid in the manner mentioned above
against presentation and surrender (or, in the case of part payment only,
endorsement) of such missing Coupon at any time before the expiry of six (6)
years after the Relevant Date in respect of the relevant Note (whether or not
such Coupon would otherwise have become void pursuant to Condition 10), or, if
later, five (5) years after the date on which such Coupon would have become due,
but not thereafter.
All monies paid by the Company to the Paying Agent for the payment of
principal or interest on any Note which remain unclaimed at the end of two (2)
years after the principal on such Note will have become due and payable will be
repaid to the Company and the Holder of such Note or any Coupon appertaining
thereto will thereafter have only the rights of a creditor of the Company as
described in these Terms and Conditions or such rights as may be otherwise
provided by applicable law.
A Holder shall be entitled to present a Note or Coupon for payment only on
a Presentation Date and shall not be entitled to any further interest or other
payment if a Presentation Date is after the due date.
When making payments to Noteholders or Couponholders, fractions of one cent
will be rounded down to the nearest whole cent.
The name of the initial Paying Agent and Conversion Agent and its initial
specified office is set out at the end of these Terms and Conditions. The
Company reserves the right at any time to vary or terminate the appointment of
the Paying Agent or Conversion Agent and to appoint additional or other Paying
Agents or Conversion Agents. Notice of any termination or appointment and of any
changes in specified offices will be given to the Noteholders promptly by the
Company in accordance with Condition 15.
6. Conversion
(A) Optional Conversion by the Noteholders; Conversion Period and Price
(i) Noteholders have the right, subject as provided herein and to
any applicable laws and regulations, to require the Company to convert all or
any of their Notes at their principal amount into Shares at any time during the
Conversion Period ("Conversion Right"). The Conversion Period begins after the
earlier to occur of (I) the close of the effective date of a Registration
Statement filed by the Company with the Commission with respect to the Shares or
(II) the date such Shares may be sold pursuant to the exemption from
registration under the Securities Act provided by Rule 144 or other exemption
from registration under the Securities Act, and ends upon the earliest to occur
of (A) the second Business Day prior to the later of March 31, 2007, or the date
on which all principal and interest on the Note is repaid in full, (B) if such
Notes shall have been called for redemption pursuant to Condition 7, the close
of the second Business Day prior to the Redemption Date, or (C) the effective
date of a Mandatory Conversion. Upon conversion, the right of the converting
Noteholder to repayment of the principal amount of the Note to be converted
(and, subject as provided in Condition 6(B)(iv), accrued and unpaid interest
thereon) shall be extinguished and released, and in consideration and in
exchange therefor the Company shall allot and issue Shares credited as paid up
in full as provided in this Condition 6.
The number of Shares to be issued on conversion of a Note will be
determined by dividing the principal amount of the Note to be converted, plus
accrued and unpaid interest thereon, by the Conversion Price, (as defined below)
in effect on the Conversion Date, with the result being rounded down to the
nearest whole number.
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(ii) A Conversion Right may only be exercised in respect of the
Authorized Denomination or multiples thereof of Notes. If more than one Note is
converted at any one time by the same Holder, the number of Shares to be issued
upon such conversion will be calculated on the basis of the aggregate principal
amount of the Notes to be converted. Fractions of Shares will not be issued on
conversion and no cash adjustments will be made in respect thereof.
(iii) Except for conversions pursuant to Condition 7(B)(iii), the
price at which Shares will be issued upon the exercise of a Conversion Right
(the "Conversion Price") initially will be U.S. $0.50. The Conversion Price will
be subject to adjustment in accordance with the manner provided in Condition
6(C). The Company shall give notice of any adjustment of the Conversion Price in
accordance with Condition 15 within ten (10) Business Days with effective date
of such adjustment.
(iv) Notwithstanding the provisions of paragraph (i) of this
Condition 6(A), if the Company shall default in making payment in full in
respect of any Note which shall have been called for redemption or shall fail to
issue Shares in respect of any Conversion or redemption, then, from the Relevant
Date, interest shall continue to accrue on such Note and the Conversion Right
attaching to such Note will continue to be exercisable (unless already exercised
by the Company pursuant to Condition 6(D)) up to, and including the close of
business (at the place where the Note is deposited in connection with the
exercise of the Conversion Right) on the date upon which the full amount of the
monies payable in respect of such Note has been duly received by the Paying
Agent or, the date of the issuance of the Conversion Shares or redemption
Shares.
(B) Procedure for Conversion
(i) To exercise the Conversion Right attaching to any Note, the
Holder thereof must complete, execute and deposit at his own expense during
normal business hours at the specified office of the Conversion Agent, a notice
of conversion (a "Conversion Notice") in the form for the time being currently
obtainable from the specified office of such Conversion Agent, together with the
relevant Note and any amount to be paid by the Noteholder pursuant to this
Condition 6(B)(i). The form of Conversion Notice is attached hereto as
Exhibit A.
The Conversion Date must fall at a time when the Conversion
Right attaching to that Note is expressed in these Conditions to be exercisable
and will be deemed to be the date of the surrender of the Note and delivery of
such Conversion Notice and, if applicable, any payment to be made or indemnity
given under these Conditions in connection with the exercise of such Conversion
Right.
A Noteholder delivering a Note for conversion must pay any taxes
and capital, stamp, issue and registration duties arising on conversion (other
than any taxes or capital, or stamp duties payable in the U.S. or required by
any Stock Exchange, by the Company in respect of the allotment and issue of
Shares and listing of the Shares on conversion). A Conversion Notice delivered
shall be irrevocable.
(ii) As soon as practicable, and in any event not later than fourteen
(14) calendar days after the Conversion Date, the Company will in the case of
Notes converted on exercise of the Conversion Right or a Note being converted in
accordance with Condition 6(D) and in respect of which a Conversion Notice or
has been delivered and the relevant Note, together with all Outstanding Coupons,
and amounts payable by the relevant Noteholder deposited as permitted by
sub-paragraph (i) above, cause the person or persons designated for the purpose
in the Conversion Notice to be registered as holder(s) of the relevant number of
Shares and will make a certificate or certificates for the relevant Shares
available for collection at the Company's principal office in Houston, Texas or
at the Company's transfer agent in New York, New York, or, if so requested in
the relevant Conversion Notice, will deliver such certificate or certificates to
the person and at the place specified in the Conversion Notice, at the risk of
the Noteholder, together with any other securities, property or cash required to
be delivered upon conversion and such assignments and other documents (if any)
as may be required by law to effect the transfer thereof.
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(iii) The person or persons specified for that purpose will be deemed
for all purposes to be the Holder of record of the number of Shares issuable
upon conversion with effect from the Conversion Date or Mandatory Conversion
Date, as the case may be. The Shares issued upon conversion of the Notes will in
all respects rank pari passu with the issued and outstanding Shares of Common
Stock in issue on the relevant Conversion Date or Mandatory Conversion Date, as
the case may be, except for any right excluded by mandatory provisions of
applicable law. A Holder of Shares issued on conversion of Notes shall not be
entitled to any rights for any record date which precedes the relevant
Conversion Date or Mandatory Conversion Date, as the case may be.
(iv) If any notice requiring the redemption of any Notes is given
pursuant to Condition 7(B) on or after the fifteenth (15/th/) calendar day prior
to the record date in respect of any dividend payable in respect of the Shares
and such notice specifies a date for redemption falling on or prior to the next
following Interest Payment Date, interest shall (subject as hereinafter
provided) accrue on Notes which shall have been delivered for conversion on or
after such record date from the preceding Interest Payment Date; provided, that
the relevant Noteholder's entitlement to interest on any Note, in the event that
the Shares allotted on conversion thereof shall carry an entitlement to receive
such dividend, shall be limited to the amount by which the interest such
Noteholder would have received had no conversion taken place exceeds the amount
of the dividend received on such Shares. Any such interest shall be paid by the
Company not later than fourteen (14) calendar days after the relevant Conversion
Date by U.S. dollar cheque drawn on, or by transfer to U.S. dollar account
maintained by the payee with, a bank outside the United States in accordance
with instructions given by the relevant Noteholder.
(C) Adjustment of Conversion Price
(i) Dividends or Distributions of Common Stock. In case the Company
shall pay or make a dividend or other distribution on its Common Stock
exclusively in Common Stock or shall pay or make a dividend or other
distribution on any other class of capital stock of the Company which dividend
or distribution includes Common Stock, the Conversion Price in effect at the
opening of business on the day next 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 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 next
following the date fixed for such determination. For the purposes of this
Condition 6(C)(i), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. For the avoidance
of doubt, this Condition does not apply to dividends or other distributions in
shares of the Common Stock pursuant to the terms of the securities to which such
dividend or other distribution may be made.
(ii) Dividends or Distributions of Rights, Warrants or Options to
Purchase Common Stock. In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights, warrants or options entitling
the holders thereof to subscribe for or purchase shares of Common Stock at a
price per share less than the Market Price per share (determined as further
defined in certain circumstances in paragraph (vii) of this Condition 6(C)) of
the Common Stock on the date fixed for the determination of stockholders
entitled to receive such rights, warrants or options, the Conversion Price in
effect at the opening of business on the day following the date fixed for such
determination 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 date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such Market Price and the denominator shall be the
number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, outstanding at the close of business on
the date fixed for such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
For the purposes of this paragraph (ii), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of the
Company. The Company shall not issue any rights, warrants or options in respect
of shares of Common Stock held in the treasury of the Company.
13
(iii) Dividends or Distributions in Cash. In case the Company shall,
by dividend or otherwise, make a distribution to all holders of its Common Stock
exclusively in cash in an aggregate amount that, together with (1) the aggregate
amount of any other 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 Conversion Price adjustment pursuant to
this 6(C)(iii) has been made and (2) the aggregate of any cash plus the fair
market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Company's
Board of Directors), as of the expiration of the tender or exchange offer
referred to below, of consideration payable in respect of any tender or exchange
offer by the Company or a 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 Conversion Price adjustment pursuant to
paragraph (vi) of this Condition 6(C) has been made, exceeds five percent (5%)
of the product of the Market Price per share(determined as further defined in
certain circumstances in paragraph (vii) of this Condition 6(C)) of the Common
Stock on the date fixed for stockholders entitled to receive such distribution
times the number of shares of Common Stock outstanding on such date, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
paragraph (iii) by a fraction of which the numerator shall be the Market Price
per share (determined as provided Section Condition 6(C)(vi)) of the Common
Stock on the date of such effectiveness less the amount of cash so distributed
applicable to one share of Common Stock and the denominator shall be such Market
Price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the date fixed
for the payment of such distribution.
(iv) All Other Distributions or Dividends. Subject to the last
sentence of this paragraph (iv), in case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock evidences of its
indebtedness, shares of any class of capital stock, securities, cash or Property
(excluding any rights, warrants or options referred to in Condition 6(C)(ii),
any dividend or distribution paid exclusively in cash and any dividend or
distribution referred to in Condition 6(C)(i), 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 effectiveness of the
Conversion Price reduction contemplated by this paragraph (iv) by a fraction of
which the numerator shall be the Market Price per share (determined as further
defined in certain circumstances in paragraph (vii) of this Condition 6(C)) of
the Common Stock on the date of such effectiveness less the fair market value
(as determined in good faith by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Company's Board of
Directors and shall, in the case of securities being distributed for which prior
thereto there is an actual or when issued trading market, be no less than the
value determined by reference to the average of the Market Price over the period
specified in the succeeding sentence), on the date of such effectiveness, of the
portion of the evidences of indebtedness, shares of capital stock, securities,
cash and Property so distributed applicable to one share of Common Stock and the
denominator shall be such Market Price per share of the Common Stock, such
reduction to become effective immediately prior to the opening of business on
the day next following the date fixed for the payment of such distribution (such
date to being referred to as the "Reference Date"). If the Board of Directors
determines the fair market value of any distribution for purposes of this
paragraph (iv) by reference to the actual or when issued trading market for any
securities comprising such distribution, it must in doing so consider the prices
in such market over the same period used in computing the Market Price per share
pursuant to paragraph (vi) of this Condition 6(C). For purposes of this
paragraph (iv), any dividend or distribution that includes shares of Common
Stock or rights, warrants or options to subscribe for or purchase shares of
Common Stock shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, cash, Property, shares of capital stock or securities
other than such shares of Common Stock or such rights, warrants or options
(making any Conversion Price reduction required by this paragraph (iv))
immediately followed by (2) a dividend or distribution of such shares of Common
Stock or such rights, warrants or options (making any further Conversion Price
reduction required by Condition 6(C)(i) or (ii)), except (A) the Reference Date
of such dividend or distribution as defined in this Condition 6(C)(iv) shall be
substituted as "the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution," "the date fixed for the
determination of stockholders entitled to receive such rights, warrants or
options," and "the date fixed for such determination" within the meaning of
Condition 6(C)(i) and Condition 6(C)(ii) and (2) any shares of Common Stock
included in such dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" within the
meaning of Condition 6(C)(i)).
14
(v) Subdivision of Common Stock. In case outstanding shares of
Common Stock shall be subdivided into a greater number of shares of Common
Stock, the Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case outstanding shares of Common
Stock shall each be combined into a smaller number of shares of Common Stock,
the Conversion Price in effect at the opening of business on the day following
the day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(vi) Tender or Exchange Offer for Common Stock. In case a tender or
exchange offer made by the Company or any Subsidiary for all or any portion of
the Common Stock shall expire and such tender or exchange offer shall involve an
aggregate consideration having a fair market value (as determined in good faith
by the Board of Directors, whose determination shall be conclusive and described
in a resolution of the Company's Board of Directors) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it may be amended) that, together with (A) the aggregate of
the cash plus the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Company's Board of Directors), as of the expiration of the other tender
or exchange offer referred to below, of consideration payable in respect of any
other tender or exchange offer by the Company or a Subsidiary for all or any
portion of the Common Stock concluded within the preceding 12 months and in
respect of which no Conversion Price adjustment pursuant to this paragraph (vi)
has been made and (B) the aggregate amount of any distributions to all holders
of the Common Stock made exclusively in cash within the preceding 12 months and
in respect of which no Conversion Price adjustment pursuant to Condition 6(C)(v)
has been made, exceeds five percent (5%) of the product of the Market Price per
share (determined as provided in Condition 6(C)(vii)) of the Common Stock on the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, the Conversion Price
shall be reduced (but not increased) so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the Expiration Time by a fraction of which the numerator shall be (1) the
product of the Market Price per share (determined as provided in Condition
6(C)(vii)) of the Common Stock at the Expiration Time times the number of shares
of Common Stock outstanding (including any tendered or exchanged shares) at the
Expiration Time minus (2) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and the denominator shall be the product of (1) such Market
Price per share at the Expiration Time times (2) such number of outstanding
shares at the Expiration Time less the number of Purchased Shares, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time.
(vii) Determination of Market Price. For the purpose of any
computation of the Market Price under this paragraph (vii) and Conditions
6(C)(ii), (iv) and (v) when certain circumstances described therein have
occurred within ten (10) Business Days of the event giving rise to the
adjustment in the Conversion Price, (A) 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
paragraphs (i), (ii), (iii), (iv), (v) or (vi) above ("Other Event") occurs on
or after the tenth Stock Exchange Business Day prior to the date in question and
prior to the "ex" date for the issuance or distribution requiring such
computation (the "Current Event"), the closing price for each Stock Exchange
Business Day prior to the "ex" date for such Other Event shall be adjusted by
multiplying such closing price by the same fraction by which the Conversion
Price is so required to be adjusted as a result of such Other Event, (B) if the
"ex" date for any Other Event occurs after the "ex" date for the Current Event
and on or prior to the date in question, the closing price for each Stock
Exchange Business Day on and after the "ex" date for such Other Event shall be
adjusted by multiplying such closing 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, (C) if the "ex" date for any Other Event occurs on the "ex" date
for the Current Event, one of those events shall be deemed for purposes of
clauses (A) and (B) of this proviso to have an "ex" date occurring prior to the
"ex" date for the other event, and (C) if the "ex" date for the Current Event is
on or prior to the date in question, after taking into account any adjustment
required
15
pursuant to clause (B) of this proviso, the closing price for each Stock
Exchange Business Day on or after such "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value on the date in question
(as determined in good faith by the Board of Directors in a manner consistent
with any determination of such value for purposes of Condition 6(C)(iii) or
Condition 6(C)(iv) or (C), whose determination shall be conclusive and described
in a resolution of the Company's Board of Directors) of the portion of the
rights, warrants, options, evidences of indebtedness, shares of capital stock,
securities, cash or Property being distributed applicable to one share of Common
Stock. For the purpose of any computation under Condition 6(C)(vi), the Market
Price per share of Common Stock on any date in question shall be deemed to be
the Market Price on the date selected by the Company commencing on or after the
latest (the "Commencement Date") of (A) the date 20 Stock Exchange Business Days
before the date in question, (B) the date of commencement of the tender or
exchange offer requiring such computation, and (C) the date of the last
amendment, if any, of such tender or exchange offer involving a change in the
maximum number of shares for which tenders are sought or a change in the
consideration offered, and ending not later than the date of the Expiration Time
of such tender or exchange offer (or, if such Expiration Time occurs before the
close of trading on a Stock Exchange Business Day, not later than the Stock
Exchange Business Day immediately preceding the date of such Expiration Time);
provided, however, that if the "ex" date for any Other Event (other than the
tender or exchange offer requiring such computation) occurs on or after the
Commencement Date and on or prior to the date of the Expiration Time for the
tender or exchange offer requiring such computation, the closing price for each
Stock Exchange Business Day prior to the "ex" date for such Other Event shall be
adjusted by multiplying such closing price by the same 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, (A) when used with respect
to any issuance or distribution, means the first date on which the Common Stock
trades regular way on the relevant exchange or in the relevant market from which
the closing price was obtained without the right to receive such issuance or
distribution, (B) 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 (C) when used with respect to
any tender or exchange 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 or exchange offer.
(viii) Further Reductions for Federal Income Tax. The Company may make
such reductions in the Conversion Price, in addition to those required by
Conditions 6(C) (i), (ii), (iii), (iv), (v), and (vi), as it considers to be
advisable in order that any event treated for Federal income tax purposes as a
dividend of stock or stock rights shall not be taxable to the recipients.
(ix) Adjustments to be Carried Forward. No adjustment in the
Conversion Price shall be required unless such adjustment would require an
increase or decrease of at least five percent (5%) in the Conversion Price;
provided, however, that any adjustments which by reason of this paragraph (ix)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment.
(x) Notice of Adjustments of Conversion Price
Whenever the Conversion Price is adjusted as herein provided the
Company shall compute the adjusted Conversion Price in accordance with Section
Condition 6(C) and shall prepare a certificate signed by the chief financial
officer of the Company setting forth the adjusted Conversion Price and showing
in reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be delivered to the Paying Agent and the Conversion
Agent, and the Company shall cause notice thereof to be published in accordance
with Condition 15 at least ten (10) Business Days in advance of the effective
date of such adjustment.
(D) Mandatory Conversion
(i) Each Noteholder acknowledges and agrees that provided the Shares
into which the Notes would be converted are Freely Tradeable and listed on a
Stock Exchange, the Company may, at its own cost (save those expenses or taxes
referred to in Condition 6(D)(iii)), at any time following ninety days from the
Effective Date, elect to exercise the Conversion Right on behalf of each and
every Noteholder in respect of all of the Notes Outstanding at the Conversion
Price applicable as of the date fixed by the Company for such conversion (the
16
"Mandatory Conversion Date"), provided that the average of the Market Price of
the Shares over the Stock Exchange Business Days in any thirty (30) consecutive
calendar day period following the Effective Date, is equal to or greater than
one hundred twenty-five percent (125%) of the Conversion Price. The Company will
give notice in the manner set out in Condition 15 that the criteria for
Mandatory Conversion under this Condition 6(D) has been met within 30 days of
having met such criteria. The form of Company Conversion Notice is attached
hereto as Exhibit B.
(ii) At least 45 calendar days prior to the Mandatory Conversion
Date, the Company shall cause written notice of the Mandatory Conversion Date to
be given to the Paying and Conversion Agent. Not less than 30 and not more than
60 calendar days prior to the Mandatory Conversion Date, the Company shall cause
written notice of the Mandatory Conversion Date to be given to the Paying Agent,
the Conversion Agent and the Noteholders (in accordance with Condition 15).
Following such notice, each of the Noteholders will be required on or before the
Mandatory Conversion Date to deliver or procure delivery of its Notes with all
unmatured Coupons relating to such Notes together with a duly completed
Conversion Notice to the specified office of the Conversion Agent, during its
usual business hours for such purposes and perform together with the Company,
the obligations applicable to it on conversion specified in this Condition 6.
Failure to deliver the Conversion Notice shall not affect the conversion of such
Notes pursuant to the terms of this Condition 6(D).
(iii) If any Noteholder with respect to whose Notes Mandatory
Conversion (pursuant to this Condition 6) is to take place shall fail to perform
its obligations specified in this Condition 6 or shall have a registered address
in any territory where, in the absence of any registration statement or other
special formalities or legal requirements, the issue, allotment, transfer or
delivery of the Shares arising on Mandatory Conversion in the reasonable opinion
of the Company, is or could be unlawful or impracticable, subject to applicable
law, Company shall make arrangements for the sale of such Shares to a third
party at the best consideration reasonably obtainable by the Company and arrange
for the Paying Agent to pay to such Noteholder the consideration received by it
in respect of such Shares (after any deduction required to reimburse any
reasonable and proper expenses incurred in arranging any such sale or any taxes
payable in connection therewith arising solely as a result of the Noteholder's
failure to perform its obligations under this Condition 6(D)).
(iv) From and after the Mandatory Conversion Date and upon compliance
by the Company of its obligations hereunder with respect to such conversion, the
Notes shall cease to constitute Indebtedness of the Company and shall thereafter
be only deemed to represent the right to receive Shares.
(E) Notice of Certain Corporate Action
In case of the occurrence of one or more of the events that are listed
herein, the Company shall cause to be mailed to the Paying Agent and the
Conversion Agent and to be published in the manner provided under Condition 15
hereof within ten (10) Business Days after the date on which notice is sent to
the holders of the Company's Common Stock. Such events are: (i) the Company
shall declare a dividend (or any other distribution) on its Common Stock payable
(1) otherwise than exclusively in cash, or (2) exclusively in cash in an amount
that would require a Conversion Price adjustment pursuant to Condition
6(C)(iii); or (ii) the Company shall authorize the granting to the holders of
its Common Stock of rights, warrants or options to subscribe for or purchase any
shares of capital stock of any class or of any other rights (excluding employee
stock options); or (iii) of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding up of
the Company; or (v) the Company or any Subsidiary of the Company shall commence
a tender or exchange offer for all or a portion of the Company's outstanding
shares of Common Stock (or shall amend any such tender or exchange offer); The
Notice shall state (i) the date on which a record is to be taken for the purpose
of such dividend, distribution or granting of rights, warrants or options, 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, rights, warrants or
options are to be determined, or (ii) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other Property deliverable upon such re-
17
classification, consolidation, merger, sale, transfer, dissolution, liquidation
or winding up, or (iii) the date on which such tender offer commenced, the date
on which such tender offer is scheduled to expire unless extended, the
consideration offered and the other material terms thereof (or the material
terms of any amendment thereto).
(F) Consolidation, Amalgamation or Merger
In the event that the Company shall be a party to any transaction,
including without limitation any (i) recapitalization or reclassification of the
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 of the Common Stock), (ii) any consolidation of the Company with, or
merger of the Company into, any other person, any merger of another person into
the Company (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of all of the outstanding shares of Common
Stock of the Company), (iii) any sale or transfer of all or substantially all of
the assets of the Company, or (iv) any compulsory share exchange pursuant to
which the Common Stock is converted into the right to receive other securities,
cash or other Property, the Company will forthwith notify the Noteholders of
such event in accordance with Condition 15 and, then lawful provision shall be
made as part of the terms of such transaction whereby the Holder of each Note
then Outstanding shall have the right (during the period in which such Note is
convertible) to convert such Note into the class and amount of shares and other
securities and property receivable upon such transaction by a holder of such
number of shares of Common Stock which would have been liable to be issued upon
conversion of such Note immediately prior to the transaction. So far as legally
possible, the Company shall cause the Person formed by such consolidation or
resulting from such merger or which acquired such assets or which acquired the
Company's Shares, as the case may be, to execute and deliver the Paying Agent on
behalf of each of the Noteholders an amendment to these Terms and Conditions as
provided for under Condition 17. Such amendment shall provide for adjustments
which, for events subsequent to the effective date of such amendment, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Condition. The above provisions of this Condition 6(F) shall similarly
apply to successive transactions of the foregoing type.
(G) Conversion Prohibited Under Certain Circumstances
The Note shall not be convertible into Conversion Shares as provided in
this Condition 6 nor may it be redeemed for Shares as provided in Condition
7(B)(iii) herein if the Stock Exchange on which the Shares are listed requires
the approval by the stockholders of the Company of the issuance of the Shares
which may be issued upon the exercise of the conversion rights contained in this
Condition 6 or issued pursuant to Condition 7(B)(iii) and the stockholders fail
to approve such issuances of the Shares at an annual meeting or special meeting
held to approve such issuances.
7. Redemption and Purchase
(A) Unless previously redeemed, converted or purchased and canceled as
provided herein, the Company will redeem the Notes at their principal amount on
March 31, 2007.
(B) (i) If as a result of any change in, or amendment to, the laws or
regulations of the U.S. or any political sub-division of, or any authority in,
or of, the U.S. having power to tax, or any change in the application or
official interpretation of such laws or regulations, which change or amendment
becomes effective after March 31, 2002, the Company has or will become obliged
to pay additional amounts as provided or referred to in Condition 8 (and such
amendment or change has been evidenced by the delivery by the Company to the
Paying Agent (who shall, in the absence of manifest error, accept such
certificate and opinion as sufficient evidence thereof) of (x) a certificate
signed by two officers of the Company on behalf of the Company stating that such
amendment or change has occurred (irrespective of whether such amendment or
change is then effective), describing the facts leading thereto and stating that
such obligation cannot be avoided by the Company taking reasonable measures
available to it and (y) an opinion of independent legal advisers of recognized
standing to the effect that such amendment or change has occurred (irrespective
of whether such amendment or change is then effective), the Company may at its
option, having given not less than 30 nor more than 60 calendar days' notice to
the Noteholders in accordance with Condition 15 (which notice shall be
irrevocable), redeem all the Notes but not some only, at their principal amount
18
together with interest (if any) accrued to (but excluding) the Redemption Date,
provided that no notice of redemption shall be given earlier than 90 calendar
days before the earliest date on which the Company would be required to pay such
additional amounts were a payment in respect of the Notes then due.
(ii) The Company may, at its option and after having given not less
than 30 nor more than 60 calendar days' notice to the Noteholders in accordance
with Condition 15 (which notice shall be irrevocable), redeem the Notes for
cash, in whole or in part, at their principal amount together with interest (if
any) accrued to (but excluding) the Redemption Date. If the Company elects to
redeem less than all the Notes, Company will select which Notes to redeem by
lot, random, or such other method as it shall deem fair and appropriate. Upon
expiry of any such notice period as is referred to in this Condition 7(B) (and
subject as provided above), the Company shall be bound to redeem Notes at their
principal amount, together with interest accrued to but excluding the Redemption
Date.
(iii) Provided that the Shares which may be issued pursuant to this
paragraph shall be Freely Tradeable and listed on a Stock Exchange, commencing
March 31, 2006, the Company may redeem upon not less than 30 nor more than 60
days notice, pursuant and subject the Conditions listed above, up to 50% of the
Outstanding Notes for Shares and, on March 31, 2007, the scheduled Maturity
Date, the Company may redeem upon not less than 30 nor more than 60 days notice
any Outstanding Notes for Shares. For the avoidance of doubt, the aggregate
principal amount of Notes that may be redeemed commencing on March 31, 2006,
shall be 50% of the principal amount of the Notes then Outstanding on such date.
If the Company elects to redeem the Notes for Shares, each Note will be redeemed
for the number of shares of Common Stock equal to 110% of the sum of the face
value of the Note plus interest accrued and unpaid thereon divided by the
average of the Market Price of the Shares over the 30 Stock Exchange Business
Day period preceding the date of notice of such redemption. If the Company
elects to redeem less than all the Notes, the Company will select which Notes to
redeem by lot, random, or such other method as it shall deem fair and
appropriate. Upon expiry of any such notice period as is referred to in this
Condition 7(B) (and subject as provided above), the Company shall be bound to
redeem Notes as described above.
(C) Subject to applicable law, the Company or any of its Subsidiaries may
at any time purchase Notes together with unmatured Coupons in any manner and at
any price in the open market or by private treaty. If purchases are made by
tender, tenders must be available to all Noteholders alike. Notes purchased by
the Company or any of its Subsidiaries will forthwith be surrendered for
cancellation and shall no longer be deemed Outstanding.
(D) All Notes which are redeemed by the Company will forthwith be canceled
(together with all related unmatured Coupons attached to or surrendered with the
Notes) and may not be reissued or resold.
8. Taxation
All payments in respect of the Notes by the Company shall be made without
withholding or deduction for, or on account of, any present or future taxes,
duties, assessments or governmental charges of whatever nature ("Taxes") imposed
or levied by or on behalf of the U.S. or any political sub-division of, or any
authority in, or of, the U.S. having power to tax, unless the withholding or
deduction of the Taxes is required by law. In that event, the Company will pay
such additional amounts as may be necessary in order that the net amounts
received by the Noteholders and Couponholders after the withholding or deduction
shall equal the respective amounts which would have been receivable in respect
of the Notes or, as the case may be, Coupons in the absence of the withholding
or deduction; except that no additional amounts shall be payable in relation to
any payment in respect of any Note or Coupon:
(A) to, or to a third party on behalf of, a Holder who is liable for the
Taxes in respect of the Note or Coupon by reason of such Holder having some
connection with the U.S. other than the mere holding of the Note or Coupon; and
(B) presented for payment more than 30 calendar days after the Relevant
Date except to the extent that a Holder would have been entitled to additional
amounts on presenting the same for payment on the last day of such period of 30
calendar days; or
19
(C) to, or to a third party on behalf of, a Holder who would not be liable
or subject to the withholding or deduction by making a declaration of
non-residence or other similar claim for exemption to the relevant tax
authority.
Any reference in these Terms and Conditions to any amounts in respect of
the Notes shall be deemed also to refer to any additional amounts which may be
payable under this Condition.
9. Additional Covenants
While any Conversion Right remains exercisable, the Company will, save with
the approval of an Extraordinary Resolution:
(1) at all times keep available for issuance free from any preemptive
rights out of its authorized but unissued capital such number of Shares as would
enable the Conversion Rights and all other rights of subscription and exchange
for and conversion pursuant to Condition 6 into Shares to be satisfied in full;
(2) maintain a listing for all the issued Shares and all Shares to be
issued on the exercise of the Conversion Rights on a Stock Exchange, it being
understood that if the Company is unable to obtain or maintain such listing of
Shares and will forthwith give notice to the Noteholders in accordance with
Condition 15 of the listing, de-listing or quotation or lack of quotation of the
Shares (as a class) by any such Stock Exchange; and
(3) not in any way modify the rights attaching to the Shares with respect
to voting, dividends or liquidation.
10. Prescription
Notes and Coupons will become void unless presented for payment within
periods of ten (10) years (in the case of principal) and five (5) years (in the
case of interest) from the Relevant Date in respect of the Notes or the Coupons,
as the case may be, subject to the provisions of Condition 5.
11. Events of Default and Enforcement
(A) Event of Default
"Event of Default," wherever used in these Terms and Conditions, means any
one of the following events (whatever the reason for such Event of Default,
whether voluntary or involuntary or effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) which shall have occurred and is
continuing:
(1) if default is made for a period of five (5) Business Days or more
in the payment of interest or principal due in respect of the Notes or any of
them; or
(2) if the Company fails to perform or observe any of its other
obligations, covenants, conditions or provisions under the Notes, these Terms
and Conditions, the Company's 5.0% Senior Notes due 2003, or the trust indenture
pursuant to which such 5.0% Senior Notes due 2003 were issued, and such failure
continues for the period of 30 calendar days (or such longer period as the
Majority Holders may in their absolute discretion permit) next following the
service by the one or more of the Holders on the Company of notice requiring the
same to be remedied; or
(3) if (i) any other Indebtedness of the Company becomes due and
payable prior to its Stated Maturity by reason of an event of default (howsoever
defined) or (ii) any such Indebtedness of the Company is not paid when due or,
as the case may be, within any applicable grace period or (iii) the Company
fails to pay when due (or, as the case may be, within any applicable grace
period) any amount payable by it under any present or future
20
guarantee for, or indemnity in respect of, any Indebtedness of any Person or
(iv) any security given by the Company or any subsidiary for any Indebtedness of
any Person or any guarantee or indemnity of Indebtedness of any Person by the
Company becomes enforceable by reason of default in relation thereto and steps
are taken to enforce such security save in any such case where there is a bona
fide dispute as to whether the relevant Indebtedness or any such guarantee or
indemnity as aforesaid shall be due and payable (following any applicable grace
period); provided, however, that in each such case the Indebtedness exceeds in
the aggregate U.S. $2,000,000 and in each such case such event continues
unremedied for a period of 30 calendar days (or such longer period as the
Majority Holders may in their sole discretion consent to in writing upon receipt
of written notice from the Company); or
(4) if the Company shall generally fail to pay its debts as such
debts come due (except debts which the Company may contest in good faith
generally) or shall be declared or adjudicated by a competent court to be
insolvent or bankrupt, shall consent to the entry of an order of relief against
it in an involuntary bankruptcy case, shall enter into any assignment or other
similar arrangement for the benefit of its creditors or shall consent to the
appointment of a custodian (including, without limitation, a receiver,
liquidator or Company); or
(5) if a receiver, administrative receiver, administrator or other
similar official shall be appointed in relation to the Company or in relation to
the whole or a substantial part its undertaking or assets or a distress,
execution or other process shall be levied or enforced upon or sued out against,
or an encumbrancer shall take possession of, the whole or a substantial part of
the assets of any of them and in any of the foregoing cases is not paid out or
discharged within 90 calendar days (or such longer period as the Majority
Holders may in their absolute discretion consent to in writing upon receipt of
written notice from the Company); or
(6) if the Company institutes proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking organization
under the laws of the Federal Bankruptcy Code or any similar applicable U.S.
federal, state or foreign law, or shall consent to the filing of any such
petition, or shall consent to the appointment of a receiver or liquidator or
trustee or assignee (or other similar official) in bankruptcy or insolvency of
it or its Property, or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as they come
due; or
(7) if a decree or order by a court having jurisdiction in the
premises shall have been entered adjudging the Company a bankrupt or insolvent,
or approving as properly filed a petition seeking the reorganization of the
Company under the Federal Bankruptcy Code or any other similar applicable U.S.
federal, state or foreign law, and such decree or order shall have continued
undischarged or unstayed for a period of 90 calendar days; or a decree or order
of a court having jurisdiction in the premises for the appointment of a receiver
or liquidator or trustee or assignee (or other similar official) in bankruptcy
or insolvency of the Company or of all or substantially all of its Property, or
for the winding up or liquidation of its affairs, shall have been entered, and
such decree or order shall have continued undischarged and unstayed for a period
of 90 calendar days; or
(8) if a warranty, representation, or other statement made by or on
behalf of the Company contained herein or any certificate or other agreement
furnished in compliance herewith is false in any material respect when made and
such falsity continues for a period of 30 calendar days (or such longer period
as the Majority Holders may in their absolute discretion permit) next following
the service by one or more of the Holders on the Company of notice requiring the
same to be remedied; or
(9) if there is any final judgment or judgments for the payment of
money exceeding in the aggregate U.S. $2,000,000 outstanding against the Company
which has been outstanding for more than 60 calendar days from the date of its
entry and shall not have otherwise been discharged in full or stayed by appeal,
bond or otherwise.
(B) Acceleration of Maturity; Rescission and Annulment
If an Event of Default (other than an Event of Default specified in
Condition 11(A)(6) or 11(A)(7)) occurs and is continuing, then and in every such
case the Majority Holders may declare the principal amount of all the Notes
21
and accrued and unpaid interest thereon to be due and payable immediately, by a
notice in writing to the Company, and upon any such declaration such principal
amount and accrued and unpaid interest shall become immediately due and payable.
If an Event of Default specified in Condition 11(A)(6) or Condition
11(A)(7) occurs and is continuing, then the principal amount of all the Notes
and all accrued and unpaid interest thereon shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
any Noteholder.
At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the
Majority Holders as hereinafter in this Condition provided, the Majority
Holders, with written notice to the Company, may rescind and annul such
declaration and its consequences if
(1) the Company has paid or deposited in a manner satisfactory to
such Holders a sum sufficient to pay
(i) all overdue interest on all Outstanding Notes,
(ii) all unpaid principal of any Outstanding Notes which has
become due otherwise than by such declaration of acceleration, and interest on
such unpaid principal at the rate prescribed therefor in the Notes,
(iii) to the extent that payment of such interest is legally
enforceable, interest on overdue interest at the rate prescribed therefor in the
Notes, and
(iv) all reasonable sums paid or advanced by the such Holders
hereunder; and
(2) all Events of Default, other than the non-payment of amounts of
principal of or interest on Notes which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Condition
11(K)
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
(C) Collection of Indebtedness and Suits for Enforcement by the Majority
Holders
The Company covenants that if
(1) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable and such default continues
for a period of five (5) Business Days, or
(2) default is made in the payment of the principal of any Note at
the Maturity thereof and such default continues for a period of five (5)
Business Days,
the Company will, upon demand of the Majority Holders, pay to the Holders of the
Notes, the whole amount then due and payable on the Notes for principal and
interest, and interest on any overdue principal and, to the extent that payment
of such interest shall be legally enforceable, upon any overdue installment of
interest, at the rate prescribed therefor in the Notes, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable expenses, disbursements and
advances of the Holders, their agents and counsel, and the reasonable
compensation of such agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Majority Holders in their name, may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such proceeding to
judgment or final decree and may enforce the same against the Company or any
other obligor upon the Notes and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the Property of the Company or any
other obligor upon the Notes, wherever situated.
22
If an Event of Default occurs and is continuing, the Majority Holders may
in their discretion proceed to protect and enforce their rights and the rights
of the other Noteholders by such appropriate judicial proceedings as such
Holders shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in these terms
and conditions or to enforce any other proper remedy.
(D) Majority Holders May File Proofs of Claim
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the Property of the Company or of such other obligor or their creditors, the
Majority Holders (irrespective of whether the principal of the Notes shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Majority Holders shall have made any demand on the
Company for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and to file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Holders (including any claim for the reasonable expenses, disbursements and
advances of such Holders, their agents and counsel) and of the other Noteholders
allowed in such judicial proceeding, and the reasonable compensation of such
agents and counsel, and
(2) to collect and receive any moneys or other Property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Noteholder to make such payments to the Majority Holders due them for the
reasonable expenses, disbursements and advances of such Holders, their agents
and counsel and the reasonable compensation of such agents and counsel, and to
pay to the Paying Agent (where one is appointed) all such other sums due under
the Notes. In the absence of such appointment, any such sums shall be paid for
the rateable benefit of all the Noteholders.
Nothing herein contained shall be deemed to authorize the Majority Holders,
except as permitted by law and these Terms and Conditions, to authorize or
consent to or accept or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Noteholder thereof, or to authorize the such Holder to vote in
respect of the claim of any Noteholder in any such proceeding, except to the
extent permitted by law.
(E) Majority Holders May Enforce Claims Without Possession of Notes
All rights of action and claims under these Terms and Conditions may be
prosecuted and enforced by the Majority Holders without the possession of any of
the Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Majority Holders shall be brought in their own
name and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Majority
Holders, their agents and counsel, be paid to the Paying Agent (where one is
appointed) for the rateable benefit of all the Noteholders in respect of which
such judgment has been recovered.
(F) Application of Money Collected
Any money collected by the Majority Holder pursuant to this Condition shall
be applied in the following order in case of the distribution of such money on
account of principal or interest, upon presentation of the Notes and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
23
FIRST: To the payment of the amounts then due and unpaid for principal
of and interest on the Notes in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Notes for principal and
interest, respectively; and
SECOND: The balance, if any, to the Person or Persons entitled
thereto.
(G) Unconditional Right of Holders to Receive Principal and Interest
Notwithstanding any other provision in these Terms and Conditions, the
Holder of any Note or of any Coupon, as the case may be, shall have the right,
which is absolute and unconditional, to receive payment, as provided herein and
in such Note of the principal of and interest on, such Note on the respective
Stated Maturity or expressed in such Note (or, in the case of redemption, on the
Redemption Date) or Coupon and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder; provided, that all monies paid by the Company to the Paying Agent for
the payment of principal or interest on any Note which remain unclaimed at the
end of two (2) years after the Stated Maturity or Redemption Date of such Note
will be repaid to the Company and the Holder of any Note or Coupon shall
thereafter have only the rights of a creditor of the Company or such rights as
may be otherwise provided by applicable law.
(H) Restoration of Rights and Remedies
If the Majority Holders or any Noteholder has instituted any proceeding to
enforce any right or remedy under these Terms and Conditions and such proceeding
has been discontinued or abandoned for any reason, or has been determined
adversely to the Majority Holders or to such Noteholder, then and in every such
case, subject to any determination in such proceeding, the Company, the Majority
Holders and the Noteholders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Majority Holders and the Noteholders shall continue as though no such proceeding
had been instituted.
(I) Rights and Remedies Cumulative
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes as provided herein, no right or
remedy herein conferred upon or reserved to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
(J) Delay or Omission Not Waiver
No delay or omission of the Majority Holders or Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Noteholders.
(K) Waiver of Past Defaults
Subject to Condition 11(B), the Majority Holders may on behalf of the
Holders of all the Notes waive any past default hereunder and its consequences,
except a default
(1) in respect of the payment of the principal of or interest on any
Note, or
(2) in respect of a covenant or provision hereof which under
Condition 17 cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
24
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of these Terms and Conditions; but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.
(L) Waiver of Stay or Extension Laws
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of these Terms and Conditions; and the Company (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law.
(M) Requirements Regarding Agents
(1) At any time after an Event of Default has occurred and is continuing
the Majority Holders shall notify in writing the Company and the Paying Agent,
and may by notice in writing to the Company and the Paying Agent:
(i) require the Paying Agent, until notified to the contrary by
Majority Holders, to hold all Notes and Coupons and all moneys, documents and
records held by it in respect of Notes and Coupons to the order of the Holders;
or
(ii) require the Paying Agent to deliver to the Holders on a pro rata
basis all funds held by it for the benefit of the Holders, and to deliver the
documents and records held by it in respect of Notes and Coupons to the Holders,
provided that such notice shall be deemed not to apply to any documents or
records which the relevant Paying Agent is obliged to release by any law or
regulation; and
(iii) require the Company to make all subsequent payments in respect
of the Notes and Coupons to or to the order of the Holders and not to the Paying
Agent.
(2) The Majority Holders shall notify the Paying Agent immediately upon
the cure or waiver of an Event of Default. Upon receipt of such notice, the
provisions of this Condition 11(M) shall no longer apply.
(3) Prior to taking any action under this Agreement at the direction of
any Person with respect to the Notes, the Paying Agent shall be entitled to
receive (and shall receive) indemnity or security satisfactory to it.
12. Liability Solely Corporate
No recourse shall be had for the payment of the principal of or interest on
any Notes or any part thereof, or for any claim based thereon or otherwise in
respect thereof, or of the indebtedness represented thereby, or upon any
obligation, covenant or agreement in these Terms and Conditions, against any
incorporator, or against any stockholder, officer or director, as such, past,
present or future, of the Company, or of any predecessor or successor Person,
either directly or through the Company or any such predecessor or successor
Person, whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, it being expressly agreed
and understood that the Notes and these Terms and Conditions which are a part
thereof are solely corporate obligations, and that no personal liability
whatsoever shall attach to, or be insured by, any such incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any predecessor or successor Person, either directly or through
the Company or any such predecessor or successor Person, because of the
indebtedness hereby authorized or under or by reason of any of the obligations,
covenants, promises or agreements contained in the Notes or the these Terms and
Conditions which constitute a part thereof or to be implied herefrom; and that
any such personal liability is hereby expressly waived and released as a
condition of, and as part of the consideration for the exchange transaction
pursuant to which the Notes were issued; provided, however, that nothing herein
contained shall be taken to prevent recourse to and the enforcement of the
liability, if any, of any stockholder or subscriber to capital stock of the
Company upon or in respect of shares of capital stock not fully paid
25
up.
13. Defeasance and Covenant Defeasance
(A) Company's Option to Effect Defeasance or Covenant Defeasance
The Company may, at its option by Board Resolution, at any time, with
respect to the Notes, elect to have either Condition 13(B) or Section 13(C)
applied to all Outstanding Notes upon compliance with the conditions set forth
below in this Condition, The Company shall promptly give notice of such election
to the Holders.
(B) Legal Defeasance and Discharge
Upon the Company's exercise under Condition 13(A) of the option applicable
to this Condition 13(B), the Company shall be deemed to have been discharged
from its obligations with respect to all Outstanding Notes on the date the
conditions set forth in Condition 13(D) are satisfied (hereinafter, "legal
defeasance"). For this purpose, such legal defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Outstanding Notes, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Condition 13(E) and the other Conditions of these Terms
and Conditions referred to in (1) and (2) below, and to have satisfied all its
obligations under such Notes, including the obligation to pay interest on the
Notes, and these Terms and Conditions insofar as such Notes are concerned (and
the Holders, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (1) the rights of Holders of
Outstanding Notes to receive, solely from the trust fund described in Condition
13(D) and as more fully set forth in such Condition, payments in respect of the
principal of and interest on such Notes when such payments are due, and (B) the
Company's obligations with respect to the Notes under Conditions 1(D), 1(E),
1(H), 3(D) or 3(L). Subject to compliance with this Condition, the Company may
exercise its option under this Condition 13(B) notwithstanding the prior
exercise of its option under Condition 13(C) with respect to the Notes.
(C) Covenant Defeasance
Upon the Company's exercise under Section Condition 13(A) of the option
applicable to this Condition 13(C), the Company shall be released from its
obligations under any covenant contained in Condition 3 (except Condition 3(D)
with respect to the Outstanding Notes on and after the date the conditions set
forth in Section 13(D)) are satisfied (hereinafter, "covenant defeasance"), and
the Notes shall thereafter be deemed not to be "Outstanding" for the purposes of
any request, demand, authorization, direction, declaration, notice, consent,
waiver or Act of Noteholders (and the consequences of any thereof) in connection
with such covenants, but shall continue to be deemed "Outstanding" for all other
purposes hereunder. For this purpose, such covenant defeasance means that, with
respect to the Outstanding Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Condition 11(A)(4) , but, except as specified above, the remainder of these and
the Notes shall be unaffected thereby.
(D) Conditions to Legal Defeasance or Covenant Defeasance
The following shall be the conditions to application of either Condition
13(B) or Section 13 (C) to the Outstanding Notes:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Paying Agent as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Notes, (A) money in an
amount, or (B) U.S. Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, money in an
amount, or (C) a
26
combination thereof, sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Paying Agent, to pay and discharge, and which shall be applied
by the Paying Agent to pay and discharge, the principal of and interest on the
Outstanding Notes on the Stated Maturity (or Redemption Date, if applicable) of
such principal or installment of interest; provided that the Paying Agent shall
have been irrevocably instructed to apply such money or the proceeds of such
U.S. Government Obligations to said payments with respect to the Notes; and
provided further that, upon the effectiveness of this Condition 13(D), the money
or U.S. Government Obligations deposited shall not be subject to the rights of
the Noteholders pursuant to the provisions of this Condition. Before or after
such a deposit, the Company may give to the Paying Agent a notice of its
election to redeem all of the Outstanding Notes at a future date in accordance
with Condition 7, which notice shall be irrevocable. Such irrevocable redemption
notice, if given, shall be given effect in applying the foregoing.
(2) No Default or Event of Default with respect to the Notes shall
have occurred and be continuing on the date of such deposit or, insofar as
paragraphs (6) and (7) of Condition 11(A) hereof are concerned, at any time
during the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until the
expiration of such period).
(3) No event or condition shall exist that pursuant to the provisions
of Condition 13(B) or 13(C) would prevent the Company from making payments of
the principal of or interest on the Notes on the date of such deposit or at any
time during the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until the
expiration of such period).
(4) Such legal defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under any material agreement
or material instrument to which the Company is a party or by which it is bound.
(5) In the case of an election under Condition 13(B), the Company
shall have delivered to the Paying Agent an Opinion of Counsel stating that the
Holders of the Outstanding Notes will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance had not occurred.
(f) The Company shall have delivered to the Paying Agent an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the legal defeasance under Section
13(B) or the covenant defeasance under Section 13(C) (as the case may be) have
been complied with.
(E) Deposited Money and U.S. Government Obligations to Be Held in Trust;
Other Miscellaneous Provisions
Subject to the provisions of the disposition of unclaimed moneys contained
herein, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Paying Agent pursuant to Condition 13(D) in respect
of the Outstanding Notes shall be held in trust and applied by the Paying Agent,
in accordance with the provisions of these terms and conditions, to the payment,
either directly or through the Paying Agent (including the Company acting as its
own Paying Agent) to the Holders of the Notes of all sums due and to become due
thereon in respect of principal and interest, but such money and U.S. Government
Obligations need not be segregated from other funds except to the extent
required by law.
(F) Reinstatement
If the Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with Condition 13(E) by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
these Terms and Condition shall be revived and reinstated as though no deposit
had occurred pursuant to Section Condition 13(B) or 13(C), as the case may be,
until such time as the Paying Agent is permitted to apply all such money or U.S.
Government Obligations in
27
accordance with Condition 13(E); provided, however, that no action taken in good
faith by the Company after a deposit of money or U.S. Government Obligations or
both pursuant to Condition 13(E) and prior to the revival and reinstatement of
obligations under these Terms and Conditions pursuant to this Condition 13(F)
shall constitute the basis for the assertion of an Event of Default pursuant to
Condition 11; and provided, further, that if the Company makes any payment of
principal of or interest on any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or U.S. Government Obligations
held by the Paying Agent.
14. Replacement of Notes and Coupons
As provided in Conditions 1(H), should any Note or Coupon be lost, stolen,
mutilated, defaced or destroyed, it may be replaced at the specified office of
the Paying Agent upon payment by the claimant of the expenses incurred in
connection with the replacement and on such terms as to evidence indemnity and
security as the Company may reasonably require. Mutilated or defaced Notes or
Coupons must be surrendered before replacements will be issued.
15. Notices
(A) Notices to all the Noteholders will be valid if published in one
Authorized Newspaper (unless another form of notice is permitted by these Terms
and Conditions) with a copy provided to RP&C International, Limited. Any notice
shall be deemed to have been given on the date of publication or, if so
published more than once, on the date of the first publication. If publication
as provided above is not practicable, notice will be given in such other manner,
and shall be deemed to have been given on such date, as the Company may approve.
(B) Couponholders will be deemed for all purposes to have notice of the
contents of any notice given to the Noteholders in accordance with this
Condition.
(C) Any request, demand, authorization, direction, declaration, notice,
consent, waiver, Extraordinary Resolution or Act of Noteholders or other
document provided or pertained by these Terms and Conditions (herein
collectively called "Notice") to be made upon, given or furnished to, or filed
with the Company by any Noteholder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if made, given, furnished
or filed in writing to or with the Company addressed to it at the address of its
principal office which shall initially be: Harken Energy Corporation, 580
WestLake Park Boulevard, Suite 600, Houston, Texas 77079, Attention: Mikel D.
Faulkner, Chief Executive Officer Tel. (281) 504-4000, Fax, (281) 504-4100; with
a copy to A. Wayne Hennecke, Senior Vice President-Finance and Secretary: Tel.
(281) 504-4040, Fax. (281) 504-4110.
16. Acts of Noteholders, Meetings of Noteholders
(A) Any Extraordinary Resolution, request, demand, authorization,
direction, declaration, notice, consent, waiver or other action provided by
these Terms and Conditions to be given or taken by Noteholders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such Noteholders in person or by agents duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of these Terms and Conditions and conclusive in favor of the Company, if
made in the manner provided in this Condition
(B) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such witness, notary public or other
such officer the execution thereof. Where such execution is by a signer acting
in a capacity other than such signer's individual capacity, such certificate or
affidavit shall also constitute sufficient
28
proof of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Company deems sufficient.
(C) Any Extraordinary Resolution, request, demand, authorization,
direction, notice, consent, waiver or other Act of the Holders of any Note shall
bind every future Holder of the same Note and the Holder of every Note issued
upon conversion or redemption thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Company or
any Paying or Conversion Agent in reliance thereon, whether or not notation of
such action is made upon such Note.
(D) The Noteholders may convene a meeting at any time and from time to
time to consider any matter affecting the Holders of the Notes, including the
modification of the Terms and Conditions and to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this these Terms and Conditions to be made, given or taken by
Holders of the Notes.
(E) Notice of every meeting of the Holders of the Notes, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given in the manner provided in Condition 15,
not less than 21 nor more than 180 days prior to the date fixed for the meeting.
(F) To be entitled to vote at any meeting of Holders of the Notes, a
Person shall be (i) a Holder of one or more Outstanding Notes, or (ii) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Notes by such Holder or Holders. The only Persons who shall be
entitled to be present or to speak at any meeting of Noteholders shall be the
Persons entitled to vote at such meeting and their counsel, any representatives
of the Company, and their respective counsel.
(G) The quorum at any meeting for passing any Extraordinary Resolution
will be one or more Persons present holding or representing 50% or more in
principal amount of the Outstanding Notes as of the date of the meeting, or at
any adjourned such meeting one or more Persons present whatever the principal
amount of the Notes held or represented by such Person and the vote required for
passing an Extraordinary Resolution at such meeting will be not less than a
majority of the principal amount of the Outstanding Notes and represented at
such meeting or adjournment thereof; provided, that at any meeting, the business
of which includes the modification of the provisions of the Terms and Conditions
and the provisions of these Terms and Conditions, the necessary quorum and vote
required for passing an Extraordinary Resolution will be one or more Persons
present holding or representing not less than a majority, or at any adjourned
such meeting not less than one-third, of the principal amount of the Outstanding
Notes. An Extraordinary Resolution passed at any meeting of the Holders of the
Notes will be binding on all Holders of the Notes, whether or not such
Noteholders are present at the meeting, and on the Holders of all Coupons.
17. Amendments to Terms and Conditions
(A) Amendments with Consent of Noteholders
With the consent of the Holders of a majority in principal amount of the
Notes Outstanding, the Company, when authorized by a Board Resolution, may amend
these Terms and Conditions for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions hereof or of
modifying in any manner the rights of the Noteholders hereunder; provided,
however, that no such amendment shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Note, or reduce the principal
amount thereof or the rate of interest thereon, or change the coin or currency
in which any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or
29
(2) reduce the percentage in principal amount of the Outstanding
Notes, the consent of whose Holders is required for any amendment of these terms
and conditions, or the consent of whose Holders is required for any waiver of
compliance with certain provisions of these Terms and Conditions or certain
defaults hereunder and their consequences provided for herein, or
(3) modify any of the provisions of Condition 11(K), except to
increase any such percentage or to provide that certain other provisions of
these Terms and Conditions be modified or waived without the consent of the
Holder of each Outstanding Note affected thereby,
(4) modify any of the provisions of these Terms and Conditions
relating to the subordination of the Notes in a manner adverse to the Holders
thereof, or
(5) modify any of the provisions of these Terms and Conditions
relating to Conversion Rights or redemption rights.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed amendment to the Terms and
Conditions, but it shall be sufficient if such Act shall approve the substance
thereof.
(B) Effect of Amendments
Upon the entering into of an amendment of these Terms and Conditions
pursuant to the terms hereof, these Terms and Conditions shall be modified in
accordance therewith, and amendment shall form a part of these Terms and
Conditions for all purposes; and every Holder of Notes theretofore or thereafter
delivered hereunder shall be bound thereby.
18. Governing Law
The Notes, including these Terms and Conditions, the Coupons, and the
Agency Agreement are governed by, and will be construed in accordance with, the
laws of the State of New York.
19. Definitions of Certain Terms
"Act," when used with respect to any Noteholder, has the meaning specified
in Condition 16.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Authenticating Agent" means The Bank of New York
"Authorized Denomination" means U.S. $1,000.
"Authorized Newspaper" means The Financial Times (European Edition) of
London, England. If such newspaper shall cease to be published, the Company
shall substitute for it another newspaper in Europe, customarily published at
least once a day for at least five (5) days in each calendar week, of general
circulation. If, because of temporary suspension of publication or general
circulation of such newspaper or for any other reason, it is impossible or, in
the opinion of the Company, impracticable to make any publication of any notice
required by these Conditions in the manner herein provided, such publication or
other notice in lieu thereof which is made by the Company in the exercise of its
reasonable discretion shall constitute a sufficient publication of such notice.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
30
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is a day on which banking institutions in the City of New York, New York,
and London, England are not authorized or obliged by law, regulation or
executive order to close.
"Capitalized Lease Obligation" means the amount of the liability under any
capital lease that, in accordance with GAAP, is required to be capitalized and
reflected as a liability on the balance sheet of the relevant Person.
"Clearstream" means Clearstream, societe anonyme.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted or, if at any time after the Issue Date such Commission is not
existing, then the body performing similar duties at such time.
"Common Depository" means the common depository appointed by Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System, and Clearstream, societe anonyme, which shall initially be The
Bank of New York, including the nominees and successors of any Common
Depository.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participation and other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether now outstanding or
issued after the Issue Date, and includes, without limitation, all series and
classes of such common stock.
"Company" means Harken Energy Corporation, until a successor Person shall
have become such pursuant to the applicable provisions of these Terms and
Conditions, and thereafter "Company" shall mean such successor Person.
"Conversion Agent" means any Person (including the Company acting as
Conversion Agent) authorized by the Company to effect conversions of the Notes
on behalf of the Company. Pursuant to the terms hereof, the Company has
initially appointed The Bank of New York to act as the Conversion Agent.
"Conversion Date" means the Business Day during the Conversion Period on
which the Conversion Right is exercised by delivery to the Conversion Agent of
the Note surrendered for conversion and the completed notice of a Noteholder's
intention to exercise its Conversion Right (as set forth in Exhibit A hereto)
with respect to any Note.
"Conversion Period" means, with respect to any Note, the period which
begins after the earlier to occur of (I) the close of the effective date of a
Registration Statement filed by the Company with the Commission with respect to
the Shares or (II) the date such Shares may be sold pursuant to the exemption
from registration under the Securities Act provided by Rule 144 or other
exemption from registration under the Securities Act, and ends upon the earliest
to occur of (A) the second Business Day prior to the later of March 31, 2007, or
the date on which all principal and interest on the Note is repaid in full, (B)
if such Notes shall have been called for redemption pursuant to Condition 7 of
these Terms and Conditions, the close of the second Business Day prior to the
Redemption Date, or (C) the effective date of a Mandatory Conversion.
"Conversion Price" means, in respect of a Conversion Right, initially U.S.
$0.50.
"Conversion Right" means the right of a Holder of any Note to convert such
Note into Conversion Shares.
"Conversion Shares" means the Shares into which the Notes are convertible.
"Corporation" includes corporations, limited liability companies, limited
and general partnerships, associations, joint-stock companies and business
trusts.
"Coupon" means bearer interest Coupons relating to the definitive Notes in
bearer form and any replacement Coupons issued therefore
f-FTW_186041_4_.doc 31
"Couponholder" means a Person who is the bearer of any Coupon.
"Default Rate" means, with respect to the Notes, ten percent (10%) per
annum.
"Effective Date" means the first Business Day following the date upon which
the Commission declares to be effective a registration statement filed by the
Company pursuant to the Securities Act relating to the Conversion Shares.
"Euroclear" means the Euroclear System.
"Extraordinary Resolution" means a resolution passed at a meeting of the
Noteholders duly convened and held in these Terms and Conditions.
"Federal Bankruptcy Code" means the Bankruptcy Act or Title 11 of the
United States Code, as amended from time to time.
"Freely Tradable" means, with respect to the Notes and the Conversion
Shares and redemption Shares, that under the Securities Act the holders thereof
may then offer and sell any amount of such outstanding securities to the public
in the United States without restrictions in transactions that are not brokers'
transactions (as defined in the Securities Act) either (i) pursuant to an
effective registration statement then in effect or (ii) pursuant to Rule 144(k).
For purposes of determining whether such securities are Freely Tradable, it
shall be assumed that no person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company has ever held such securities from and after their issuance.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, as applied from time to
time by the Company and its Subsidiaries in the preparation of its financial
statements.
"Guaranty" means all obligations of any Person (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation, of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including without
limitation all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any Property or assets constituting security therefor, or (ii) to advance or
supply funds (1) for the purchase or payment of such Indebtedness or obligation,
or (2) to enable the recipient of such funds to maintain certain financial
conditions (e.g. agreed amount of working capital) under loan or similar
documents, or (iii) to lease Property or to purchase securities or other
Property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under these Terms and
Conditions, a Guaranty in respect of any Indebtedness shall be deemed to be
Indebtedness equal to the principal amount and accrued interest of such
Indebtedness which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Holder or Noteholder" means a Person in whose name a Note is registered on
the Paying Agent's books, or if a Note is not in registered form, a Person who
is a bearer of a Note or Coupon, as the case may be.
"Indebtedness" of any Person means and includes all present and future
obligations of such Person, which shall include all obligations (i) which in
accordance with generally accepted accounting principles in the United States
shall be classified upon a balance sheet of such Person as liabilities of such
Person, (ii) for borrowed money, (iii) which have been incurred in connection
with the acquisition of Property (including, without limitation, all obligations
of such Person evidenced by any debenture, bond, note, commercial paper or other
similar security, but excluding, in any case, obligations arising from the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection), (iv) secured by any Lien existing on Property owned by
such Person, even
f-FTW_186041_4_.doc 32
though such Person has not assumed or become liable for the payment of such
obligations, (v) created or arising under any conditional sale or other title
retention agreement with respect to Property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of such Property, (vi) which are Capitalized Lease Obligations, (vii)
for all Guaranties, whether or not reflected in the balance sheet of such Person
and (viii) which are all reimbursement and other payment obligations (whether
contingent, matured or otherwise) of such Person in respect of any acceptance or
documentary credit. Notwithstanding the foregoing, Indebtedness shall not
include (i) Indebtedness incidental to the operation of the business of the
Person in the ordinary course and in the aggregate not material to the business
and operations of the Person, (ii) Indebtedness for which the Company or any of
its Subsidiaries are the sole obligors and obligees, and (iii) Indebtedness
represented by purchase, rental or lease obligations not to exceed $1,000,000 in
any period of 12 months for any Person and its Subsidiaries.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"Issue Date" means May 23, 2003.
"Lien" means any mortgage, charge, pledge, lien, security interest or
encumbrance of any kind whatsoever, including any interest in Property securing
an obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute or contract,
and including but not limited to the security interest lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purposes of these Terms and Conditions, the Company
or its Subsidiary shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes.
"Majority Holders" means the Holders of a majority of the principal amount
of Notes Outstanding.
"Mandatory Conversion" means conversion of the Notes at the option of the
Company pursuant to Condition 6D.
"Market Price" means the daily closing sale price of the Shares for a Stock
Exchange Business Day on a Stock Exchange.
"Maturity," when used with respect to any Note, means the date on which the
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity or the Redemption Date and whether by declaration
of acceleration, call for redemption or otherwise.
"Outstanding," when used with respect to Notes, means, as of the date of
determination, all Notes theretofore issued, except: (1) Notes heretofore
cancelled by the Paying and Conversion Agent or delivered to the Paying and
Conversion Agent for cancellation; (2) Notes, or portions thereof, for whose
payment or redemption money in the necessary amount has been theretofore
deposited any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Notes; provided that, if such Notes are to be
redeemed, notice of such redemption has been duly given or provision therefor
satisfactory to the a Paying Agent has been made; (3) Notes, except to the
extent provided in Conditions 13 (B) and 13(C), with respect to which the
Company has effected defeasance and/or covenant defeasance as provided in
Condition 13; and (4) Notes which have been paid pursuant to or in exchange for
or in lieu of which other Notes have been issued, however, that in determining
whether the Holders of the requisite principal amount of Outstanding Notes have
taken any Act or given or made any Extraordinary Resolution, Notes owned by the
Company or any other obligor upon the Notes or any Affiliate of the Company
(other than Persons whose Affiliate relationship arises solely from ownership of
Conversion Shares) or such other obligor shall be disregarded and deemed not to
be Outstanding.
f-FTW_186041_4_.doc 33
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of or interest on any
Notes on behalf of the Company. Pursuant to the terms and conditions hereof, the
Company has initially appointed The Bank of New York as the Paying Agent
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participation or other equivalents (however designated) of such
Person's preferred or preference stock whether now outstanding or issued on or
after the Issue Date, and includes, without limitation, all classes and series
of preferred or preference stock.
"Presentation Date" means the date on which a Note is presented by a
Noteholder for payment of principal or a Coupon is presented by the Couponholder
for payment of interest, as the case may be, or if such date is not a Business
Day in London and New York, the next date which is a Business Day in each of the
foregoing cities.
"Property" or "Properties" means any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, and any interest therein.
"Record Date" means the 15th day preceding each Interest Payment Date
whether or not a Business Day.
"Redemption Date," when used with respect to any Note to be redeemed, in
whole or in part, means the date fixed for such redemption by or pursuant to
these Terms and Conditions.
"Redemption Price," when used with respect to any Note and Coupons to be
redeemed, means the price at which they are to be redeemed pursuant to the terms
hereof, plus accrued and upaid interest to, but excluding, the Redemption Date,
if applicable expressed in a number of Conversion Shares into which such Note
shall be converted in the event the Notes and/or Coupons are to be redeemed for
Shares and, in the event of any other redemption, a cash amount.
"Relevant Date" means the date on which the payment first becomes due;
provided, that if the full amount of the money payable has not been received by
the Paying Agent on or before the due date, it shall mean the date on which, the
full amount of the money having been so received, notice to that effect shall
have been duly given to the Noteholders by the Company in accordance with
Condition 15.
"Rule 144A" means Rule 144A, as amended, promulgated by the Commission
pursuant to the Securities Act.
"Rule 144" means Rule 144, as amended, promulgated by the Commission
pursuant to the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated from time to time by the Commission pursuant
thereto.
"Shares" means the common stock, par value U.S. $0.01, of the Company (and
all other (if any) shares or stock resulting from any sub-division,
consolidation or reclassification of such shares).
"Special Record Date" means the date established by the Paying Agent
as provided herein as a record date for the payment of defaulted principal of or
interest on the Notes.
"Stated Maturity," when used with respect to any Indebtedness or any
installment of principal thereof or interest thereon, means the date specified
in such Indebtedness as the fixed date on which the principal of such
Indebtedness or such installment of principal or interest is due and payable.
f-FTW_186041_4_.doc 34
"Stock Exchange" means any United States national or regional stock
exchange or quotation service such as NASDAQ National Market System or any
similar quotation service maintained by the National Quotation Bureau or any
successor thereto.
"Stock Exchange Business Day" means any day (other than a Saturday or
Sunday) on which the a Stock Exchange is open for business.
"Subordinated Obligation" means any Indebtedness of the Company outstanding
on such date which is contractually subordinate or junior in right of payment to
the Notes.
"Subsidiary" of any Person means any Corporation of which at least a
majority of the shares of stock having by the terms thereof ordinary voting
power to elect a majority of the Board of Directors of such Corporation
(irrespective of whether or not at the time stock of any other class or classes
of such Corporation shall have or might have voting power by reason of the
happening of any contingency) is directly or indirectly owned or controlled by
the Person.
"U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
The Paying Agent and Conversion Agent is:
The Bank of New York
Attention: Global Finance Unit
101 Barclay, Floor 21W
New York, New York 10286
f-FTW_186041_4_.doc 35
SCHEDULE A
Principal Amount of this Global Note
The aggregate principal amount of this Global Note is as shown by the
latest entry made by or on behalf of the Paying Agent in the fourth column
below. Reductions in the outstanding principal amount of this Global Note
following redemption, conversion into shares of Common Stock, or the purchase
and cancellation of Notes are entered in the second and third columns below.
- ----------------------------------------------------------------------------------------------------------------
Reasons for change Outstanding
in principal Notation made by or on
The outstanding Amount of this Behalf of the Paying Agent
Principal amount of Global (other than
Global Amount of Note following such In respect of the initial
Date Note Such change Change Principal amount
- ----------------------------------------------------------------------------------------------------------------
.. , 2003 Not applicable Not applicable Not applicable
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
f-FTW_186041_4_.doc 36
SCHEDULE B
Interest Payments in respect of this Global Note
The following payments of interest in respect of this Global Note have been
made:
- ----------------------------------------------------------------------------------------------------
Amounts of interest Notation made by and on behalf of the
Date made Due and payable Amount of interest paid Paying Agent
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
f-FTW_186041_4_.doc 37
EXHIBIT A
---------
HOLDER'S CONVERSION NOTICE
To: [Conversion Agent]
The undersigned Holder of the 7% Senior Convertible Notes Due 2007, Series
F (the "Notes") in the aggregate principal amount of U.S. $_____________
tendered herewith hereby irrevocably exercises the option to convert such
Note(s) into shares of Common Stock in accordance with the Terms and Conditions
of the Notes relating to the issuance by Harken Energy Corporation of an
aggregate of U.S. $720,000 of the Notes and directs that the Conversion Shares
issuable and deliverable upon such conversion be issued and delivered to the
undersigned in the name and at the address set forth below.
If the Conversion Shares are to be issued in the name of a Person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith a certificate in proper form
certifying that the applicable restrictions on transfer have been complied with.
All terms used and not otherwise defined herein have the respective
meanings set forth in the Terms and Conditions.
DATE:
--------------------
----------------------------------
Name of Holder
----------------------------------
Signature(s) of Holder
Address for Delivery
of Share Certificates
----------------------------------
----------------------------------
----------------------------------
Name for Registration
of Share Certificates (if
Different than Holder):
----------------------------------
f-174662.1 A-1
EXHIBIT B
---------
COMPANY'S CONVERSION NOTICE
To: Conversion Agent
Harken Energy Corporation (the "Company") hereby irrevocably exercises the
option to convert all of the 7% Senior Convertible Notes Due 2007, Series F (the
"Notes") of the Company that have not been previously converted and are
Outstanding at the date of this notice into shares of its Common Stock, in
accordance with the Terms and Conditions, pursuant to which the Company has
issued an aggregate of U.S. $720,000 of the Notes, and confirms that the
Conversion Shares issuable and deliverable upon conversion shall be issued and
delivered to the Noteholders in accordance with the instructions for
registration and delivery of the Conversion Shares to each Holder, to be
provided by each Holder to the Conversion Agent.
The Company is entitled to exercise its option to convert because (i)
ninety (90) days has elapsed from the Effective Date, (ii) the average of the
Market Price of the Common Stock over the Stock Exchange Business Days during
the thirty (30) consecutive calendar day period beginning on ________________
and ending on ____________ (being a date after the Effective Date) equaled or
exceeded 125% of the Conversion Price, and (iii) the Conversion Shares were
Freely Tradeable on the date such threshold was met and for the 30 calendar day
period after such date.
All terms used and not otherwise defined herein shall have the respective
meanings set forth in the Terms and Conditions.
DATE: HARKEN ENERGY CORPORATION
------------------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
f-174662.1 B-1
EXHIBIT C
---------
COMPANY'S NOTICE OF REDEMPTION FOR SHARES
To: [Paying and Conversion Agent]
Harken Energy Corporation (the "Company") hereby irrevocably exercises the
option to convert _______ United States dollars (U.S. $_______ ) principal
amount of the 7% Senior Convertible Notes Due 2007, Series F (the "Notes") of
the Company that have not been previously converted and are Outstanding at the
date of this notice into shares of its Common Stock, in accordance with the
Terms and Conditions, pursuant to which the Company has issued an aggregate of
U.S. $720,000 of the Notes, and confirms that the Conversion Shares issuable and
deliverable upon conversion shall be issued and delivered to the Noteholders in
accordance with the instructions for registration and delivery of the Conversion
Shares to each Holder, to be provided by each Holder to the Conversion Agent.
Each Note so redeemed will be redeemed for the number of Shares of Common
Stock equal to 110% of the face value of the Note plus interest accrued and
unpaid thereon divided by US $_______________ , which represents the average of
the Market Price of the Common Stock over the 30 Stock Exchange Days day period
immediately preceding the pricing date.
All terms used and not otherwise defined herein shall have the respective
meanings set forth in the Terms and Conditions.
DATE: HARKEN ENERGY CORPORATION
--------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
C-1