EXHIBIT 10.26
THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON ITS CONVERSION HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
CELGENE CORPORATION
9.00% SENIOR CONVERTIBLE NOTE DUE JUNE 30, 2004
PPN No.: 151020 A@ 3 $3,500,000
No. R-1 July 6, 1999
CELGENE CORPORATION, a corporation duly organized and existing under the
laws of Delaware (the "Company") for value received, hereby promises to pay to
Xxxx Xxxxxxx Mutual Life Insurance Company, or registered assigns, the principal
sum of Three Million Five Hundred Thousand Dollars ($3,500,000) on June 30, 2004
and to pay interest thereon, from July 6, 1999, or from the most recent interest
payment date to which interest has been paid or duly provided for, semi-annually
on June 30 and December 31 in each year, commencing December 31, 1999, at the
rate of 9.00% per annum, until the principal hereof is due, and at the rate of
11.00% per annum on any overdue principal and premium, if any, and, to the
extent permitted by law, on any overdue interest. The interest so payable, and
punctually paid or duly provided for, on any interest payment date will be paid
to the person in whose name this Security (or one or more predecessor
Securities) is registered at the close of business on the regular record date
for such interest, which shall be the June 1 or December 1 (whether or not a
Business Day), as the case may be, next preceding such interest payment date.
Payment of the principal of (and premium, if any, on) this Security shall be
made upon the surrender of this Security to the Company, at its office at 0
Xxxxxx Xxxx Xxxxx, Xxxxxx, XX 00000 (or such other office within the United
States as shall be notified by the Company to the holder hereof) (the
"Designated Office"), in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public and
private debts, by transfer to a U.S. dollar account maintained by the payee with
a bank in the United States of America. Payment of interest on this Security
shall be made by wire transfer to a U.S. dollar account maintained by the payee
with a bank in the United States of America, provided that if the holder shall
not have furnished wire instructions in writing to the Company no later than the
record date relating to an interest payment date, such payment may be made by
U.S. dollar check mailed to the address of the Person entitled thereto as such
address shall appear in the Company security register. This Security will rank
pari passu with all existing and future senior debt of the Company.
This Security is one of the Company's 9.00% Senior Convertible Notes due
June 30, 2004, limited to $15,000,000.00 aggregate principal amount, issued
pursuant to that certain Note Purchase Agreement dated July 6, 1999 (such
agreements, as amended, modified and supplemented from time to time, the "Note
Purchase Agreement") between the Company and the Purchasers named therein, and
the holder hereof is entitled to the benefits of the Note Purchase Agreement,
and may enforce the agreements contained herein and therein and exercise the
remedies provided for hereby and thereby or otherwise available in respect
hereof and thereof, all in accordance with the terms hereof and thereof.
1. Optional Redemption With Premium. This Security is subject to redemption
upon not less than 30 nor more than 60 days' notice by mail, at any time on or
after July 6, 2001, as a whole or in part, (in any amount that is an integral
multiple of $1000) at the election of the Company, at a redemption price of 103%
the principal amount thereof, together with accrued interest to the redemption
date, but interest installments whose stated maturity is on or prior to such
redemption date will be payable to the holder of this Security, or one or more
predecessor Securities, of record at the close of business on the relevant
record dates referred to on the face hereof; provided, however, that the Company
may not redeem this Security on or prior to July 6, 2002 unless the Closing
Price of the Common Stock exceeds 225% of the Conversion Price for each Trading
Day in a period of 20 Consecutive Trading Days commencing not earlier than July
6, 2001. The term "Conversion Price" on any day shall equal $1,000 divided by
the Conversion Rate in effect on each such day.
2. Conversion. (a) The holder of this Security is entitled at any time on
or after July 6, 2000 and before the close of business on June 30, 2004 (or, in
case this Security or a portion hereof is called for redemption or the holder
hereof has exercised its fight to require the Company to repurchase this
Security or a portion hereof, then in respect of this Security or such portion
hereof, as the case may be, until and including, but (unless the Company
defaults in making the payment due upon redemption or repurchase, as the case
may be) not after, the close of business on the redemption date or the
Repurchase Date, as the case may be) to convert this Security (or any portion of
the principal amount hereof that is an integral multiple of $1,000), into fully
paid and nonassessable shares (calculated as to each conversion to the nearest
1/100 of a share) of Common Stock of the Company at the rate of 52.63 shares of
Common Stock for each $1,000 principal amount of Security (or at the current
adjusted rate if an adjustment has been made as provided below) (the "Conversion
Rate") by surrender of this Security, duly endorsed or assigned to the Company
or in blank to the Company at the Designated Office, accompanied by written
notice to the Company that the holder hereof elects to convert this Security (or
if less than the entire principal amount hereof is to be converted, specifying
the portion hereof to be converted). Upon surrender of this Security for
conversion, the holder will be entitled to receive the interest accruing on the
principal amount of this Security then being converted from the interest payment
date next preceding the date of such conversion to such date of conversion. No
payment or adjustment is to be made on conversion for dividends on the Common
Stock issued on conversion hereof. No fractions of shares or scrip representing
fractions of shares will be issued on conversion, but instead of any fractional
interest, the Company shall pay a cash adjustment,
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computed on the basis of the Closing Price of the Common Stock on the date of
conversion, or, at its option, the Company shall round up to the next higher
whole share. This Security shall be deemed to have been converted immediately
prior to the close of business on the day of surrender hereof for conversion, in
accordance with the foregoing provisions, and at such time the rights of the
holder hereof, as a holder hereof, shall cease, and the Person or Persons
entitled to receive the Common Stock issuable on conversion shall be treated by
all Persons as the holder or holders of such Common Stock at such time. Upon any
partial conversion of this Security, the Company, at its expense, will forthwith
issue and deliver to, or upon the order of the holder hereof, a new Convertible
Note or Convertible Notes in principal amount equal to the unconverted principal
amount of such surrendered Convertible Note, such new Convertible Note or
Convertible Notes to be dated and to bear interest from the date to which
interest has been paid on such surrendered Convertible Note.
As promptly as possible after the conversion of this Security, in whole or
in part, and in any event within ten (10) days thereafter, the Company, at its
expense, will issue and deliver a certificate or certificates for the number of
full shares of Common Stock issuable upon such conversion.
(b) The Conversion Rate shall be subject to adjustments from time to time
as follows:
(1) In case the Company shall pay or make a dividend or other distribution
on any class of capital stock of the Company payable in shares of Common Stock,
the Conversion Rate in effect at the opening of business on the day following
the Determination Date for such dividend or other distribution shall be
increased by dividing such Conversion Rate by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on such Determination Date 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 increase to become effective immediately after the
opening of business on the day following such Determination Date. For the
purposes of this paragraph (1), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company will not pay any dividend or
make any distribution on shares of Common Stock held in the treasury of the
Company.
(2) Subject to the last sentence of paragraph (7) of this Section 2(b), in
case the Company shall issue rights, options, warrants or convertible securities
entitling the holders thereof to subscribe for or purchase shares of Common
Stock at a price per share less than the current market price per share
(determined as provided in paragraph (8) of this Section 2(o)) of the Common
Stock on the Determination Date for such distribution, the Conversion Rate in
effect at the opening of business on the day following such Determination Date,
shall be increased by dividing such Conversion Rate by a fraction of
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which the numerator shall be the number of shares of Common Stock outstanding at
the close of business on such Determination Date plus the number of shares of
Common Stock which the aggregate amount received by the Company upon the
issuance of such rights, options, warrants or convertible securities plus the
aggregate amount receivable by the Company upon the exercise or conversion of
such rights, options, warrants or convertible securities would purchase at such
current market price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on such Determination Date plus the
number of shares of Common Stock so offered for subscription or purchase, such
increase to become effective immediately after the opening of business on the
day following such Determination Date provided, that no such adjustment need to
be made in the case of the granting by the Company to employees or directors of
the Company or consultants to the Company of Common Stock and/or options to
purchase Common Stock and the issuance of Common Stock upon the exercise of such
options. For the purposes of this paragraph (2), the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not
issue any rights, options, warrants or convertible securities in respect of
shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall each be subdivided
into a greater number of shares of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision or
combination becomes effective.
(4) Subject to the last sentence of paragraph (7) of this Section 2(b), in
case the Company shall, by dividend or otherwise, distribute evidences of its
indebtedness, shares of any class of capital stock, or other property (including
securities, but excluding (i) any rights, options, warrants or convertible
security referred to in paragraph (2) of this Section 2(b) (ii) any dividend or
distribution paid exclusively in cash, (iii) any dividend or distribution
referred to in paragraph (1) of this Section 2(b) and (iv) any merger or
consolidation to which Section 2(h) applies), the Conversion Rate shall be
adjusted so that the same shall equal the rate determined by dividing the
Conversion Rate in effect immediately prior to the close of business on the
Determination Date for such distribution by a fraction of which the numerator
shall be the current market price per share (determined as provided in paragraph
(8) of this Section 2(b)) of the Common Stock on such Determination Date less
the then fair market value (as determined in good faith by the Board of
Directors of the Company) of the portion of the assets, shares or evidences of
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indebtedness so distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such adjustment to become effective immediately prior to the opening of business
on the day following such Determination Date provided, that no such adjustment
need be made in the case of an underwritten public offering of Common Stock in
which the shares of Common Stock are sold to the public at a price per share
equal to or in excess of 95% of the market price per share of the Common Stock
as of the date of the pricing of such underwritten public offering. If the Board
of Directors determines the fair market value of any distribution for purposes
of this paragraph (4) 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 current
market price per share pursuant to paragraph (8) of this Section 2(b).
(5) In case the Company shall, by dividend or otherwise, make a Cash
Distribution, then, and in each such case, immediately after the close of
business on the Determination Date for such Cash Distribution, the Conversion
Rate shall be adjusted so that the same shall equal the rate determined by
dividing the Conversion Rate in effect immediately prior to the close of
business on such Determination Date by a fraction (a) the numerator of which
shall be equal to the current market price per share (determined as provided in
paragraph (8) of this Section 2(b)) of the Common Stock on such Determination
Date less an amount equal to the quotient of(l) the amount of such Cash
Distribution divided by (2) the number of shares of Common Stock outstanding on
such Determination Date and (b) the denominator of which shall be equal to the
current market price per share (determined as provided in paragraph (8) of this
Section 2(b)) of the Common Stock on such Determination Date.
(6) In case the Company or any Subsidiary shall make an Excess Purchase
Payment, then, and in each such case, immediately prior to the opening of
business on the day after the tender offer in respect of which such Excess
Purchase Payment is to be made expires, the Conversion Rate shall be adjusted so
that the same shall equal the rate determined by dividing the Conversion Rate in
effect immediately prior to the close of business on the Determination Date for
such tender offer by a fraction (a) the numerator of which shall be equal to the
current market price per share (determined as provided in paragraph (8) of this
Section 2(b)) of the Common Stock on such Determination Date less an amount
equal to the quotient of (A) the Excess Purchase Payment divided by (B) the
number of shares of Common Stock outstanding (including any tendered shares) as
of the Determination Date less the number of all shares validly tendered and not
withdrawn as of the Determination Date and (b)the denominator of which shall be
equal to the current market price per share (determined as provided in paragraph
(8) of this Section 2(b)) of the Common Stock as of such Determination Date.
(7) The reclassification of Common Stock into securities other than Common
Stock (other than any reclassification upon a consolidation or merger to which
Section 2(h)
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applies) shall be deemed to involve (a) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the effective date of such
reclassification shall be deemed to be the Determination Date), and (b) a
subdivision or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such reclassification into the
number of shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of paragraph
(3) of this Section 2(b)). Rights, options, warrants or convertible securities
issued by the Company entitling the holders thereof to subscribe for or purchase
shares of Common Stock, which rights, options, warrants or convertible
securities (i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable and (iii) are also issued in respect of future
issuances of Common Stock, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events ("Trigger Event"), shall for purposes
of this Section 2(b) not be deemed issued until the occurrence of the earliest
Trigger Event.
(8) Except as otherwise provided in the last sentence of this subsection
(8) of Section 2(0) for the purpose of any computation under paragraphs (2),
(4), (5) or (6) of this Section 2(b) the current market price per share of
Common Stock on any date shall be calculated by the Company and be deemed to be
the average of the daily Closing Prices for the five (5) consecutive Trading
Days selected by the Company commencing not more than ten (10) Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex date" with respect to the issuance or distribution requiring
such computation. For purposes of this paragraph, the term "ex date", when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way in the applicable securities market or on the
applicable securities exchange without the fight to receive such issuance or
distribution. The current market price with respect to any option issued to any
employee or director of the Company or consultant to the Company shall be the
fair market value on the date of grant determined by reference to the market
price on the day of the grant of such option or to the market price at the close
of business on the Trading Day immediately preceding such grant.
(9) No adjustment in the Conversion Rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(9)) would require an increase or decrease of at least one percent in such rate;
provided, however, that any adjustments which by reason of this paragraph (9)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 2 shall be made
to the nearest cent or to the nearest one-hundredth of a share, as the case may
be.
(10) The Company may make such increases in the Conversion Rate, for the
remaining term of the Securities or any shorter term, in addition to those
required by
paragraphs (1), (2), (3), (4), (5) and (6) of this Section 2(b) as it
considers to be advisable in order to avoid or diminish any income tax to
any holders of shares of Common Stock resulting from any dividend or
distribution of stock or issuance of rights, options, warrants or
convertible securities to purchase or subscribe for stock or from any event
treated as such for income tax purposes.
(c) Whenever the Conversion Rate is adjusted as provided in Section 2(b),
the Company shall compute the adjusted Conversion Rate in accordance with
Section 2(b) and shall prepare a certificate (the "Conversion Rate Certificate")
signed by the Senior Financial Officer of the Company setting forth the adjusted
Conversion Rate and showing in reasonable detail the facts upon which such
adjustment is based, and shall promptly deliver such certificate to the holder
of this Security. If the holders of the Convertible Notes and the Company cannot
agree in writing as to the adjusted Conversion Rate in accordance with Section
2(b), the holders of the Convertible Notes and the Company shall determine the
adjusted Conversion Rate in accordance with the following procedure. The holders
of the Convertible Notes and the Company shall each appoint one registered
securities broker, licensed with the Securities and Exchange Commission to sell
securities to the public, which broker shall be a senior vice president,
managing director or equivalent of a major securities brokerage company with
offices in New York, New York. Each of such brokers shall have no less than ten
(10) years experience in such field, shall be unaffiliated with, and their
employer securities brokerage company shall be unaffiliated with, the holders of
the Convertible Notes and the Company and shall not have previously participated
in any underwriting of the Company's Common Stock in any public offering or
provided any Material investment banking or corporate advisory services to the
Company. The holders of the Convertible Notes and the Company shall make their
appointments promptly and, in any event, within thirty (30) days from the date
of the Conversion Rate Certificate. The two brokers shall meet and shall be
instructed to render a determination of the adjusted Conversion Rate to the
holders of the Convertible Notes and the Company within sixty (60) days of the
date of the Conversion Rate Certificate. If the two brokers cannot agree, then
each broker shall render their independent determination and the two brokers
shall simultaneously therewith provide the name of a third broker acceptable to
the two brokers meeting the criteria set forth above. The third broker shall be
instructed to render a determination of the adjusted Conversion Rate within
thirty (30) days of his or her appointment. The two closest determinations of
the adjusted Conversion Rate shall be averaged and shall constitute the adjusted
Conversion Rate. If the two brokers cannot agree upon a third broker, the
selection of a third broker shall be submitted to binding arbitration in New
York, New York under the rules of the American Arbitration Association. In the
event that the difference between the Company's calculation of the adjusted
Conversion Rate and the calculation of the adjusted Conversion Rate determined
by the foregoing process is five percent (5%) or greater then the costs and
expenses of the brokers and any arbitration shall be paid by and be the
obligation of the Company and in the event that such difference is less than
five percent (5%) the holders of the Convertible Notes (as a group) shall each
pay its pro rata share of 50% of such costs and expenses and the Company shall
pay 50% of such costs and expenses.
(d) In case:
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(1) the Company shall declare a dividend or other distribution on its
Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively
in cash in an amount that would require any adjustment pursuant to Section 2(b);
or
(2) the Company shall authorize the granting to the holders of its Common
Stock of rights, options, warrants or convertible securities to subscribe for or
purchase any shares of capital stock of any class or of any other rights; or
(3) of any reclassification of the Common Stock of the Company, or of any
consolidation, merger or share exchange to which the Company is a party and for
which approval of any shareholders of the Company is required, or of the
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company; or
(4) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company; or
(5) the Company or any Subsidiary shall commence a tender offer for all or
a portion of the Company's outstanding shares of Common Stock (or shall amend
any such tender offer);
then the Company shall cause to be delivered to the holder of this Security, at
least 20 days (or 10 days in any case specified in clause (1) or (2) above)
prior to the applicable record, expiration or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights, options, warrants or
convertible securities 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, options, warrants or convertible securities are to be
determined, (y) the date on which the right to make tenders under such tender
offer expires or (z) the date on which such reclassification, consolidation,
merger, share exchange, conveyance, transfer, sale, lease, 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 reclassification, consolidation, merger, share exchange,
conveyance, transfer, sale, lease, dissolution, liquidation or winding up.
Neither the failure to give such notice nor any defect therein shall affect the
legality or validity of the proceedings described in clauses (1) through (5) of
this Section 2(d).
(e) The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Security, the full number of shares
of Common Stock then issuable upon the conversion of this Security.
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(f) Except as provided in the next sentence, the Company will pay any and
all taxes and duties that may be payable in respect of the issue or delivery of
shares of Common Stock on conversion of this Security. The Company shall not,
however, be required to pay any tax or duty which may be payable in respect of
any transfer involved in the issue and delivery of shares of Common Stock in a
name other than that of the holder of this Security, and no such issue or
delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of any such tax or duty, or has established to
the satisfaction of the Company that such tax or duty has been paid.
(g) The Company agrees that all shares of Common Stock which may be
delivered upon conversion of the Security, upon such delivery, will have been
duly authorized and validly issued and will be fully paid and nonassessable (and
shall be issued out of the Company's authorized but unissued Common Stock) and,
except as provided in the second sentence of Section 2(f), the Company will pay
all taxes, liens and charges with respect to the issue thereof.
(h) In case of any consolidation of the Company with any other Person, any
merger of the Company into another Person or of another Person into the Company
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company)
or any conveyance, sale, transfer or lease of all or substantially all of the
properties and assets of the Company, the Person formed by such consolidation or
resulting from such merger or which acquires such properties and assets, as the
case may be, shall execute and deliver to the holder of this Security a
supplemental agreement providing that such holder has the right, during the
period this Security shall be convertible as specified in Section 2(a), to
convert this Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease (including any Common Stock retainable) by a holder of the
number of shares of Common Stock of the Company into which this Security might
have been converted immediately prior to such consolidation, merger, conveyance,
sale, transfer or lease, assuming such holder of Common Stock of the Company (i)
is not a Person with which the Company consolidated, into which the Company
merged or which merged into the Company or to which such conveyance, sale,
transfer or lease was made, as the case may be (a "Constituent Person"), or an
Affiliate of a Constituent Person and (ii) failed to exercise its rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer
or lease (provided that if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer,
or lease is not the same for each share of Common Stock of the Company held
immediately prior to such consolidation, merger, conveyance, sale, transfer or
lease by others than a Constituent Person or an Affiliate of a Constituent
Person and in respect of which such rights of election shall not have been
exercised ("Non-electing Share"), then for the purpose of this Section 2(h) the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease by the holders of
each Non-electing Share shall be deemed to be the kind and amount so receivable
per share by a plurality of the Non-electing Shares). Such supplemental
agreement shall provide for adjustments which, for events subsequent to the
effective date of such
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supplemental agreement, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 2. The above provisions of this
Section 2(h) shall similarly apply to successive consolidations, mergers,
conveyances, sales, transfers or leases. In this paragraph, "securities of the
kind receivable" upon such consolidation, merger, conveyance, transfer, sale or
lease by a holder of Common Stock means securities that, among other things, are
registered and freely transferable under the Securities Act, and listed and
approved for quotation in all securities markets, in each case to the same
extent as such securities so receivable by a holder of Common Stock.
(i) The Company (i) will effect all registrations with, and obtain all
approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities Act, the Exchange
Act and state securities and Blue Sky laws) for the shares of Common Stock
issuable upon conversion of this Security to be lawfully issued and delivered as
provided herein, and thereafter publicly traded (if permissible under the
Securities Act) and qualified or listed as contemplated by clause (ii) (it being
understood that the Company shall not be required to register the Common Stock
issuable on conversion hereof under the Securities Act, except pursuant to the
Registration Rights Agreement between the Company and the initial holder of this
Security); and (ii) will list the shares of Common Stock required to be issued
and delivered upon conversion of Securities, prior to such issuance or delivery,
on each national securities exchange on which outstanding Common Stock is listed
or quoted at the time of such delivery, or if the Common Stock is not then
listed on any securities exchange, to qualify the Common Stock for quotation on
the Nasdaq National Market or such other inter-dealer quotation system, if any,
on which the Common Stock is then quoted.
(j) For purposes hereof: (references to Sections shall mean Sections of
this Security unless otherwise specified)
"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. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Business Day" means any day other than a Saturday, a Sunday or other day
which shall be in Boston, Massachusetts or New York, New York or a legal holiday
or a day on which commercial banks in Boston, Massachusetts or New York, New
York are required or authorized to be closed.
"Cash Distribution" means the distribution by the Company to holders of its
Common Stock of cash, other than any cash that is distributed upon a merger or
consolidation to which Section 2(h) applies or as part of a distribution
referred to in paragraph (4) of Section 2(b).
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"Change of Control" is defined in Section 3(f)(2).
"Closing" is defined in Section 1 of the Note Purchase Agreement.
"Closing Price" means, with respect to the Common Stock of the Company, for
any day, the reported last sale price per share on the Nasdaq National Market,
or, if the Common Stock is not admitted to trading on the Nasdaq National
Market, on the principal national securities exchange or inter-dealer quotation
system on which the Common Stock is listed or admitted to trading, or if not
admitted to trading on the Nasdaq National Market, or listed or admitted to
trading on any national securities exchange or inter-dealer quotation system,
the average of the closing bid and asked prices per share in the
over-the-counter market as furnished by any New York Stock Exchange member from
selected from time to time by the Company for that purpose.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company authorized at the date of this instrument as originally executed.
Subject to the provisions of Section 20a), shares issuable on conversion or
repurchase of this Security shall include only shares of Common Stock or shares
of any class or classes of common stock resulting from any reclassification or
reclassifications thereof; provided, however, that if at any time there shall be
more than one such resulting class, the shares so issuable on conversion of this
Security shall include shares of all such classes, and the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.
"Convertible Note(s)"shall mean one or more of the Company's 9.00% Senior
Convertible Notes due June 30, 2004.
"Conversion Price" is defined in Section 1.
"Conversion Rate" is defined in Section 2(a).
"Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"Designated Office" is defined in the Preamble.
"Determination Date" means, in the case of a dividend or other
distribution, including the issuance of rights, options, warrants or convertible
securities, to the date fixed for the determination of those entitled to receive
such dividend or other distribution, and in the case of a tender offer, the last
time that tenders could have been made pursuant to such tender offer.
11
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, licenses, written agreements or written governmental restrictions
relating to pollution and the protection of the environment or the release of
any materials into the environment, including but not limited to those related
to hazardous substances or wastes, air emissions and discharges to waste or
public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
"Excess Purchase Payment" means the product of(A) the excess, if any, of(i)
the amount of cash plus the fair market value (as determined in good faith by
the Company's Board of Directors) of any non-cash consideration required to be
paid with respect to one share of Common Stock acquired or to be acquired in a
tender offer made by the Company or any Subsidiary of the Company for all or any
portion of the Common Stock over (ii) the current market price per share as of
the last time that tenders could have been made pursuant to such tender offer
and (B) the number of shares validly tendered and not withdrawn as of the
Determination Date in respect of such tender offer.
"Event of Default" is defined in the preamble to Section 4.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor Federal statute, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, all as the same shall
be in effect from time to time.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Hazardous Materials" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
remediate, on of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
restricted, prohibited or penalized by any applicable Environmental Law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"holder" means, with respect to this Security or any other Convertible
Note, the Person in whose name it is registered in the register maintained by
the Company pursuant to Section 6(d).
12
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease (as defined
by GAAP), upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust agreements
and all similar arrangements).
"Make-Whole Amount" is defined in Section 4(g).
"Material" means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets, properties or
prospects of the Company and its Subsidiaries taken as a whole, or (b) the
ability of the Company to perform its obligations under the Note Purchase
Agreement, the Registration Rights Agreement and the Convertible Notes, or (c)
the validity or enforceability of this Agreement or the Convertible Notes.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such
term is defined in section 4001(a)(3) of ERISA).
"Note Purchase Agreement" is defined in the Preamble.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Purchaser(s)" XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY; XXXX XXXXXXX
VARIABLE LIFE INSURANCE COMPANY and XXXXXXX MEZZANINE PARTNERS
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date hereof among the Purchasers and the Company.
13
"Repurchase Date" is defined in Section 3(a).
"Repurchase Price" is defined in Section 3(a).
"Responsible Officer" means any Senior Financial Officer and any other
senior officer of the Company with responsibility for the administration of the
relevant covenants in this Security or in the Note Purchase Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor Federal statute, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder, all as the same shall be in effect
from time to time.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Subsidiary" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Trading Day" means (i) if the Common Stock is admitted to trading on the
Nasdaq National Market or any other system of automated dissemination of
quotations of securities prices, a day on which trades may be effected through
such system; (ii) if the Common Stock is listed or admitted for trading on the
New York Stock Exchange or any other national securities exchange, a day on
which such exchange is open for business; or (iii) if the Common Stock is not
admitted to trading on the Nasdaq National Market or listed or admitted for
trading on any national securities exchange or any other system of automated
dissemination of quotation of securities prices, a day on which the Common Stock
is traded regular way in the over-the-counter market and for which a closing bid
and a closing asked price for the Common Stock are available.
3. Right to Require Repurchase. (a) In the event that a Change in Control
shall occur, then the holder of this Security shall have the right, at such
holder's option, to require the Company to repurchase, and upon the exercise of
such right the Company shall repurchase, this Security, or any portion of the
principal amount hereof that is equal to $1,000 or any integral multiple
thereof, on the date (the "Repurchase Date") that is thirty (30) Trading Days
after the date on which the Company gives notice thereof to the holder of this
Security, at a purchase price equal to 100% of the principal amount of this
Security to be repurchased plus interest accrued to
14
the Repurchase Date (the "Repurchase Price"); provided, however, that
installments of interest on this Security whose stated maturity is on or prior
to the Repurchase Date shall be payable to the holder of this Security, or one
or more predecessor Securities, registered as such on the relevant Record Date
according to their terms. At the option of the Company, the Repurchase Price may
be paid in cash or subject to the fulfillment by the Company of the conditions
set forth in each of Section 5 and Section 6 and subject to the limitations set
forth in each of Section 5 and Section 6, by delivery of shares of Common Stock
or in common stock of any Person which succeeds the Company up to a maximum
amount often percent (10%) of the then issued and outstanding Common Stock or
common stock of such Person following any Change in Control, provided, however,
the cash plus the fair market value of such shares shall equal the Repurchase
Price. The Company agrees to give the holder of this Security notice of any
Change in Control, by facsimile transmission confirmed in writing by overnight
courier service, promptly and in any event within two (2) Trading Days of the
occurrence thereof.
(b) To exercise a repurchase right, the holder shall deliver to the Company
on or before the 10th Trading Day prior to the Repurchase Date, together with
this Security, written notice of the holder's exercise of such right, which
notice shall set forth the name of the holder, the number of shares of Common
Stock then owned by such holder and its affiliates, the principal amount of this
Security to be repurchased (and, if this Security is to be repurchased in part,
the portion of the principal amount thereof to be repurchased and the name of
the person in which the portion thereof to remain outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby and, in the event that the Repurchase
Price shall be paid in whole or in pan by the delivery of shares, as provided
above, the name or names (and the addresses) in which the certificates for
shares shall be issued. Such written notice shall be irrevocable, except that
the right of the holder to convert this Security (or the portion hereof with
respect to which the repurchase fight is being exercised) shall continue until
the close of business on the Repurchase Date (or if the Company elects to pay
the Repurchase Price by delivery of shares as provided above, until the close of
business on the Trading Day immediately preceding the first delivery of shares
with respect thereto).
(c) In the event a repurchase right shall be exercised in accordance with
the terms hereof, the Company shall pay or cause to be paid to the holder the
Repurchase Price in cash or shares, as provided above, together with accrued and
unpaid interest to the Repurchase Date; provided, however, that installments of
interest that mature on or prior to the Repurchase Date shall be payable in
cash, to the holders of this Security, or one or more predecessor Securities,
registered as such at the close of business on the relevant regular record date.
(d) If this Security (or portion thereof) is surrendered for repurchase and
is not so paid on or prior to the Repurchase Date, the principal amount of this
Security (or such portion hereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date at
eleven percent (11%) per annum, and shall remain convertible into Common Stock
until the principal of this Security (or portion thereof, as the case may be)
shall have been paid or duly provided for.
15
(e) If this Security is to be repurchased only in part, it shall be
surrendered to the Company at the Designated Office (with, if the Company so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company duly executed by, the holder hereof or his attorney
duly authorized in writing), and the Company shall execute and make available
for delivery to the holder without service charge, a new Security or Securities,
containing identical terms and conditions, each in an authorized denomination in
aggregate principal amount equal to and in exchange for the unrepurchased
portion of the principal of the Security so surrendered.
(f) For purposes of this Section 3.
(1) the term "beneficial owner" shall be determined in accordance with Rule
13d-3 promulgated by the Securities and Exchange Commission pursuant to the
Exchange Act; and
(2) a "Change in Control" shall be deemed to have occurred at the time,
after the original issuance of this Security, of:
(i) the acquisition by any Person of beneficial ownership, directly or
indirectly, through a purchase, merger or other acquisition transaction or
series of transactions, of shares of capital stock of the Company entitling such
Person to exercise 50% or more of the total voting power of all shares of
capital stock of the Company entitled to vote generally in the election of
directors (any shares of voting stock of which such Person is the beneficial
owner that are not then outstanding being deemed outstanding for purposes of
calculating such percentage) other than any such acquisition by the Company or
any employee benefit plan of the Company; or
(ii) any consolidation or merger of the Company with or into, any other
Person, any merger of another Person with or into the Company, or any
conveyance, transfer, sale, lease or other disposition of all or substantially
all of the assets of the Company to another Person (other than (a) any such
transaction (x) which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock and (y) pursuant
to which holders of Common Stock immediately prior to such transaction have the
entitlement to exercise, directly or indirectly, 50% or more of the total voting
power of all shares of capital stock entitled to vote generally in the election
of directors of the continuing or surviving Person immediately after such
transaction and (b) any merger which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock into solely shares
of common stock,
4. Events of Default. (a) "Event of Default", wherever used herein, means
any one of the following events (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment,
16
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) (A) default in the payment of any principal or premium, if any, upon
this Security when the same becomes due and payable, whether at maturity or at a
date fixed for prepayment or by declaration or otherwise or (B) default in the
payment of any interest upon this Security when it becomes due and payable, and
continuance of such default for a period of five (5) days; or
(2) default by the Company in the performance of its obligations in respect
of any conversion of this Security (or any portion hereof) in accordance with
Section 2; or
(3) failure by the Company to give any notice of a Change of Control
required to be delivered in accordance with Section 3(a); or
(4) default in the performance, or breach, of any material covenant or
warranty of the Company herein, in the Note Purchase Agreement, or in the
Registration Rights Agreements (other than a covenant or warranty a default in
the performance or breach of which is specifically dealt with elsewhere in this
Section 4(a)) and continuance of such default or breach for a period of 30 days
after the earlier to occur of(A) the Company's obtaining knowledge of such
default or (B) the Company's receiving written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(5) any representation or warranty made in writing by or on behalf of the
Company or by any officer of the Company furnished in connection with the
transactions contemplated hereby proves to have been false or incorrect in any
material respect on the date as of which made; or
(6) a final judgment or judgments for the payment of money aggregating in
excess of $250,000 are rendered against one or more of the Company and its
Subsidiaries and which judgments are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within 60
days after the expiration of such stay; or
(7) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company, or under any agreement,
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed by the
Company, with a principal amount then outstanding in excess of $1,000,000,
whether such indebtedness now exists or shall hereafter be created, which
default shall constitute a failure to pay the principal of such indebtedness (in
whole or in any pan greater than $1,000,000) when due and payable or shall have
resulted in such indebtedness (in whole or in any part greater than $1,000,000)
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable; or
17
(8) if(i) any Plan other than a Multiemployer Plan shall fail to
satisfy the minimum funding standards of ERISA or the Code for any plan year or
part thereof or a waiver of such standards or extension of any amortization
period is sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan other than a Multiemployer Plan shall have been or
is reasonably expected to be filed with the PBGC or the PBGC shall have
instituted proceedings under ERISA section 4042 to terminate or appoint a
trustee to administer any Plan other than a Multiemployer Plan or the PBGC shall
have notified the Company or any ERISA Affiliate that a Plan other than a
Multiemployer Plan may become a subject of any such proceedings, (iii) the
aggregate "amount of unfunded benefit liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans other than a Multiemployer Plan,
determined in accordance with Title IV of ERISA, shall exceed $250,000, (iv) the
Company or any ERISA Affiliate shall have incurred or is reasonably expected to
incur any liability pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, (v) the Company
or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the
Company or any Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either individually
or together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect. (As used in this Section 4(a)(8), the terms
"employee benefit plan" and "employee welfare benefit plan" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.); or
(9) if, as a result of any Change of Control or any other consolidation
or merger, the holding by the Purchasers or any assignees thereof of this
Security or the holding of any Common Stock or common stock of any Person
succeeding the Company, issued to the Purchasers or any assignees thereof after
conversion of this Security would constitute, with respect to any Plan (other
than a Multiemployer Plan) a prohibited transaction which would violate the
prohibitions of section 406 of ERISA or which would subject any "disqualified
person" (as defined in section 4975(e)(2) of the Code) to a tax pursuant to
section 4975(c)(1)(A)-(D) of the Code; or
(10) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
18
(11) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or similar relief under any applicable Federal or State
law, or the consent by it to the filing of such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or not paying its debts as they become due or the admission by it in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company in furtherance of any such action.
b) If an Event of Default (other than an Event of Default specified in
Section 4(a)(10) or 4(a)(11)) occurs and is continuing, then in every such case
the holder of this Security may declare the principal hereof to be due and
payable immediately, by a notice in writing to the Company, and upon any such
declaration such principal and all accrued interest hereon shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived, and the Company shall
forthwith upon any such acceleration pay to the holder of this Security (i) the
entire principal of and interest accrued on this Security, and (ii) in addition,
to the extent permitted by applicable law, an amount equal to the Make Whole
Amount, as liquidated damages and not as a penalty; and, in case of the
occurrence of an Event of Default of the character described in subdivisions
4(a)(10) or 4(a)(11) the principal of and accrued interest on this Security,
ipso facto shall become immediately due and payable without any declaration or
other act of the holder of this Security and without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
and the Company shall forthwith upon any such acceleration pay to the holder of
this Security (x) the entire principal of and interest accrued on this Security
and (y) in addition, if such Event of Default is "Voluntary" (as hereinafter
defined), to the extent permitted by applicable law, an amount equal to the
Make-Whole Amount, as liquidated damages and not as a penalty.
For purposes of this section 4(a), "Voluntary" shall mean an Event of
Default of the character described in subdivisions 4(a)(10) or 4(a)(11) which
shall have been (X) procured by the Company or any officer, director,
stockholder or Affiliate of the Company or (y) primarily the result of action or
inaction by the Company or by any officer, director, stockholder or Affiliate of
the Company.
(c) In case any one or more of the Events of Default specified in section
4(a) shall have occurred, and irrespective of whether this Security has become
or has been declared immediately due and payable under section 4(a), the holder
of this Security may proceed to protect and enforce its rights either by suit in
equity or by action at law, or both. The Company stipulates that the remedies at
law of the holder of this Security in the event of any Default or threatened
Default by the Company in the performance of or compliance with any covenant or
agreement in
19
this Security, the Note Purchase Agreement or the Registration Rights Agreement
are not and will not be adequate and that, to the fullest extent permitted by
law, such terms may be specifically enforced by a decree for the specific
performance thereof, whether by an injunction against a violation thereof or
otherwise.
(d) No remedy conferred in this Security, the Note Purchase Agreement or
the Registration Rights Agreement is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or thereunder or now or hereafter
existing at law or in equity or by statute or otherwise.
(e) No course of dealing between the Company and any of its Subsidiaries,
on the one hand, and the holder of this Security, on the other hand, and no
delay by any such holder in exercising any rights hereunder or under the Note
Purchase Agreement or the Registration Rights Agreement shall operate as a
waiver of any rights of such holder.
(f) In case any one or more of the Events of Default specified in section
4(a) shall have occurred, all amounts to be applied to the prepayment or payment
of this Security shall be applied, after the payment of all related costs and
expenses incurred by the holder of this Security (including, without limitation,
compensation to any and all trustees, liquidators, receivers or similar
officials and reasonable fees, expenses and disbursements of counsel) in such
order of priority as is determined by the holder of this Security.
(g) The term "Make-Whole Amount" means, with respect to this Security, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of this Security over
the amount of such Called Principal, provided that the Make-Whole Amount may in
no event be less than zero. For the purposes of determining the Make-Whole
Amount, the following terms have the following meanings:
"Called Principal" means, with respect to this Security, the principal of
this Security that has become or is declared to be immediately due and payable
pursuant to Section 4(b).
"Discounted Value" means, with respect to the Called Principal of this
Security, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on this Security is payable) equal to
the Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of this
Security, 150 basis points over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "PX-I" of the Bloomberg Financial Markets Services Screen
for actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such
20
Settlement Date, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release H.
15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury xxxx
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the duration closest to and greater than the Remaining
Average Life and (2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called Principal, the number
of years (calculated to the nearest one-twelfth year) obtained by dividing (i)
such Called Principal into (ii) the sum of the products obtained by multiplying
(a) the principal component of each Remaining Scheduled Payment with respect to
such Called Principal by (b) the number of years (calculated to the nearest
one-twelfth year) that will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payment" means, with respect to the Called Principal of
this Security, all payments of such Called Principal and interest thereon that
would be due after the Settlement Date with respect to such Called Principal if
no payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of this Security, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date.
"Settlement Date" means, with respect to the Called Principal of this
Security, the date on which such Called Principal or has become or is declared
to be immediately due and payable pursuant to Section 4(b).
5. Consolidation, Merger, Etc. (a) The Company shall not consolidate with
or merge into any other Person or, directly or indirectly, convey, transfer,
sell or lease all or substantially all of its properties and assets to any
Person, and the Company shall not permit any Person to consolidate with or merge
into the Company or, directly or indirectly, convey, transfer, sell or lease all
or substantially all of its properties and assets to the Company, unless:
(1) in case the Company shall consolidate with or merge into another Person
or convey, transfer, sell or lease all or substantially all of its properties
and assets to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance, transfer or
sale, or which leases, all or substantially all the properties and assets of the
Company shall be a corporation, limited
21
liability company, partnership or trust, shall be organized and validly existing
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an agreement supplemental
hereto, executed and delivered to the holder of this Security in form
satisfactory to the holder, the due and punctual payment of the principal of
(and premium, if any) and interest on this Security and the performance or
observance of every covenant of this Security on the part of the Company to be
performed or observed, including the conversion rights provided herein (which
shall thereafter relate to common stock of such successor, on a basis reasonably
designed to preserve the economic value to the holder of this Security of such
conversion rights);
(2) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or a Subsidiary of the
Company as a result of such transaction as having been incurred by the Company
or such Subsidiary of the Company at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing;
(3) the Company has delivered to the holder of this Security an officers'
certificate stating that such consolidation, merger, conveyance, transfer, sale
or lease and, if a supplemental agreement is required in connection with such
transaction, such supplemental agreement, comply with this Section and that all
conditions precedent herein provided for relating to such transaction have been
complied with; and
(4) counsel for the Company has delivered to the holder of this Security an
opinion of such counsel with respect to such consolidation, merger, conveyance,
transfer, sale or lease, and if a supplemental agreement is required in
connection with such transaction, such supplemental agreement, which opinion
shall be, in form and substance, reasonably acceptable to such holder and its
counsel.
(b) Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer, sale or lease of all or
substantially all of the properties and assets of the Company in accordance with
Section 5(a), the successor Person formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer, sale or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Security with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Security.
6. payment in Stock. (a) The Company may elect to pay some or all of the
Repurchase Price by delivery of shares of Common Stock or shares of common stock
in any Person succeeding the Company, if and only if, each of the following
conditions shall be satisfied (without limiting any other conditions contained
herein):
(1) Any such payment shall be made in five equal installments, on each of
the five consecutive Trading Days ending on and including the third Trading Day
immediately preceding
22
the date when any cash payment would otherwise be due, and the shares of Common
Stock or common stock of any Person succeeding the Company deliverable in
payment of each such installment shall have a fair market value as of the date
of such installment of not less than 20% of the amount of such payment due
hereunder which is payable in shares of stock. For purposes of this Section 6,
the fair market value of shares of Common Stock shall be equal to 95% of the
Closing Price for the immediately preceding Trading Day;
(2) In the event any shares of Common Stock or common stock of any Person
succeeding the Company to be issued in respect of any amount due hereunder
require registration under any Federal securities law before such shares may be
freely transferable without being subject to any transfer restrictions under the
Securities Act of 1933 upon issuance, such registration shall have been
completed and shall have become effective prior to the date of the first such
installment;
(3) In the event any shares of Common Stock or common stock of any Person
succeeding the Company to be issued in respect of any amount due hereunder
require registration with or approval of any governmental authority under any
State law or any other Federal law before such shares may be validly issued or
delivered upon issuance or transferred freely, such registration shall have been
completed or have become effective and such approval shall have been obtained,
in each case, prior to the date of the first such installment;
(4) The shares of Common Stock or common stock of any Person succeeding the
Company deliverable in payment of such amount due hereunder shall have been
approved for quotation in the Nasdaq National Market immediately prior to the
date of the first such installment or, if at the time its shares of Common Stock
or shares of common stock of any Person succeeding the Company are listed or
admitted for trading on any national securities exchange, the shares of Common
Stock or common stock in any Person succeeding the Company and deliverable shall
have been so listed or admitted for trading.
(5) All shares of Common Stock or common stock of any Person succeeding the
Company deliverable in payment of such amount due hereunder shall, upon issue,
be duly and validly issued and fully paid and non-assessable and free of any
preemptive rights;
(6) In respect of each such payment date, the Company shall have given the
holder of this Security not less than 10 nor more than 15 Trading Days' notice
of its election to effect payment in respect of such payment date by delivery of
shares of Common Stock; provided that any such notice shall accompany the
Company's notice of a Change of Control relating thereto; and
(7) The Company shall deliver, or cause to be delivered a certificate from
the Person succeeding the Company which states, that after giving effect to any
Change of Control that the holding by the Purchasers or any assignees thereof of
this Security, or the holding of any Common Stock or common stock of any Person
succeeding the Company after conversion of this Security would not constitute a
prohibited transaction which would violate the prohibition of
23
section 406 of ERISA or which would subject any "disqualified person" (as
defined in section 4975(e)(2) of the Code) to a tax pursuant to section 4975
(c)(1)(A)-(D) of the Code.
If all of the conditions set forth in this Section 6(a) are not satisfied
in accordance with the terms hereof, any such amount due hereunder shall be paid
by the Company only in cash.
(b) Any issuance of shares of Common Stock or shares of common stock of any
Person succeeding the Company in respect of any installment due hereunder
pursuant to this Section 6 shall be deemed to have been effected immediately
prior to the close of business on the date of delivery of such installment and
the person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such delivery shall be deemed to
have become on such date the holder or holders of record of the shares
represented thereby; provided, however, that in case any installment shall be
due on a date when the stock transfer books of the Company shall be closed, the
person or persons in whose name or names the certificate or certificates for
such shares are to be issued shall be deemed to have become the record holder or
holders thereof for all purposes at the opening of business on the next
succeeding day on which such stock transfer books are open. No payment or
adjustment shall be made for dividends or distributions on any Common Stock
issued pursuant to this Section 6 declared prior to the relevant delivery date;
and
(c) Any issuance and delivery of certificates for shares of common stock or
shares of common stock of any Person succeeding the Company pursuant to this
Section 6 shall be made without charge to the holder of this Security for such
certificates or for any tax or duty in respect of the issuance or delivery of
such certificates or the securities represented thereby.
7. Other. (a) No provision of this Security shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Security in cash at the
times, places and rate, and in the coin or currency, herein prescribed or to
convert this Security as herein provided.
(b) The Company will give prompt written notice to the holder of Security
of any change in the location of the Designated Office.
(c) The transfer of this Security is registrable on the Security Register
of the Company upon surrender of this Security for registration of transfer at
the Designated Office, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company duly executed by, the holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Securities, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees. Such
Securities are issuable only in registered form without coupons in denominations
of $1,000 and any integral multiple thereof. No service Charge shall be made for
any such registration of transfer, but the Company may require payment of a sum
sufficient to recover any tax or other governmental charge payable in connection
therewith. Prior to due presentation of this Security for registration of
transfer, the Company and any agent of the Company may treat the Person in whose
name this
24
Security is registered as the owner thereof for all purposes, whether or not
this Security be overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.
(d) The Company shall keep at the Designated Office a register for the
registration and registration of transfers of Convertible Notes. The name and
address of each holder of one or more Convertible Notes, each transfer thereof
and the name and address of each transferee of one or more Convertible Notes
shall be registered in such register. Prior to due presentment for registration
of transfer, the Person in whose name any Convertible Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company Shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Convertible Note promptly
upon request therefor, a complete and correct copy of the names and addresses of
all registered holders of Convertible Notes.
(e) Upon surrender of any Convertible Note at the Designated Office for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Convertible Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Convertible Note or part thereof), the
Company shall execute and deliver, at the Company's expense (except as provided
below), one or more new Convertible Notes (as requested by the holder thereof)
in exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Convertible Note. Each such new Convertible
Note shall be payable to such Person as such holder may request and shall be
substantially in the form of this Security. Each such new Convertible Note shall
be dated and bear interest from the date to which interest shall have been paid
on the surrendered Convertible Note or dated the date of the surrendered
Convertible Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of this Security. Convertible
Notes shall not be transferred in denominations of less than $100,000, provided
that if necessary to enable the registration of transfer by a holder of its
entire holding of Convertible Notes, one Convertible Note may be in a
denomination of less than $100,000. Any transferee, by its acceptance of a
Convertible Note registered in its name (or the name of its nominee), shall be
deemed to have made the representation set forth in Section 3 of the Note
Purchase Agreement.
(f) Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of this
Security (which evidence shall be notice from such holder of such ownership and
such loss, theft, destruction or mutilation), and
(i) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of this Security is, or is a
nominee for, an original holder or another institutional investor holder of this
Security, such Person's own unsecured agreement of indemnity shall be deemed to
be satisfactory), or
(ii) in the case of mutilation, upon surrender and cancellation thereof,
25
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Convertible Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Convertible
Note or dated the date of such lost, stolen, destroyed or mutilated Convertible
Note if no interest shall have been paid thereon.
(G) THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
(h) So long as you or your nominee shall be holder of this Security and
notwithstanding anything in this Security to the contrary, the Company will pay
all sums becoming due hereunder for principal, Make-Whole Amount, if any, and
interest by the method and at the address specified for such purpose below your
name in Schedule I of the Note Purchase Agreement, or by such other method
provided in the Preamble or at such other address as you shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of this Security, or the making of any notation
hereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment in full of this Security, you shall
surrender this Security for cancellation, reasonably promptly after any such
request to the Company at its principal executive office or at the place of
payment most recently designated by the Company. Prior to any sale or other
disposition of this Security you will, at your election, either endorse thereon
the amount of principal paid thereon and the last date to which interest has
been paid thereon or surrender this Security to the Company in exchange for a
new Convertible Note pursuant to the terms hereof. The Company will afford the
benefits of this Section to any institutional investor that is the direct or
indirect transferee of this Security.
[END OF PAGE - SIGNATURE PAGE FOLLOWS]
26
IN WITNESS WHEREOF. the Company has caused this Security to be duly
executed under its corporate seal.
Dated: July 6, ,1999
---------------------
CELGENE CORPORATION
By:
--------------------------
Name: Xxxxxx X. Hugin
Title: Senior Vice President CFO
Attest
------------------------------
Name: Xxxxxxx Xxxxxx
Title: Treasurer; CIO
27
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 3(a) of this Security, the undersigned hereby elects
to have all or a portion of this Security repurchased by the Company.
2. The undersigned hereby directs the Company to pay [choose one] (a) it or
(b) Name: ; address: ; Social Security or Other Taxpayer Identification Number,
if any: , an amount in cash or equal to 100% of the principal amount to be
repurchased (as set forth below), plus interest accrued to the Repurchase Date,
as provided herein.
CONVERSION NOTICE
The undersigned holder of this Security hereby irrevocably exercises the
option to convert this Security, or any portion of the principal amount hereof
(which is an integral multiple of $1,000) below designated, into shares of
Common Stock (subject to the limitation set forth in the second paragraph of
Section 2(a) of the Security) in accordance with the terms of this Security, and
directs that such shares, together with a check in payment for any fractional
share and any Security representing any unconverted principal amount hereof, be
delivered to and be registered in the name of the undersigned unless a different
name has been indicated below. If shares of Common Stock or Securities are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto. Any amount required to
be paid by the undersigned on account of interest accompanies this Security.
Dated:
--------------------------- -------------------------
Signature
