EXHIBIT 10.1
INTEGRATED ELECTRICAL SERVICES, INC.
6.5% SENIOR CONVERTIBLE NOTES DUE 2014
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "AGREEMENT") is made as of November 22,
2004, by and among Integrated Electrical Services, Inc., a Delaware corporation
(the "COMPANY"), the purchasers set forth on Schedule I hereto (the
"PURCHASERS") and the Guarantors (as defined below) set forth on Schedule II
hereto.
RECITALS
WHEREAS, the Company has authorized the issuance and sale of up to
$30,000,000 aggregate principal amount of its Series A 6.5% Senior Convertible
Notes due 2014 (the "SERIES A NOTES") and up to $20,000,000 aggregate principal
amount of its Series B 6.5% Senior Convertible Notes due 2014 (the "SERIES B
NOTES" and together with the Series A Notes, the "NOTES"), and the Company
proposes, subject to the terms and conditions stated herein, to issue and sell
on the Closing Date (as defined below) $36,000,000 in aggregate principal amount
of the Notes to the Purchasers in the respective amounts and series set forth
opposite their names on Schedule I hereto (the "FIRM SECURITIES");
WHEREAS, the Company also proposes to issue and sell to the Purchasers up
to an additional $14,000,000 in aggregate principal amount of the Notes (the
"ADDITIONAL SECURITIES" and, together with the Firm Securities, the
"SECURITIES") in the respective principal amounts and series set forth opposite
their names on Schedule I hereto, if and to the extent that the Purchasers shall
have determined to exercise the right to purchase such Additional Securities
granted to the Purchasers in Section 1(b) below;
WHEREAS, the Notes will be issued pursuant to an indenture substantially
in the form attached as Exhibit A hereto (the "INDENTURE") to be dated as of the
Closing Date by and among the Company, the Guarantors and The Bank of New York,
a New York banking corporation, as Trustee (the "TRUSTEE"), and the Notes will
be convertible into shares (the "UNDERLYING SECURITIES") of common stock of the
Company, par value $0.01 per share (the "COMMON STOCK"), on the terms, and
subject to the conditions, set forth in the Indenture;
WHEREAS, the Company's obligations under the Notes, other than its
obligations in respect of conversion of the Notes and the issuance of the
Underlying Securities thereupon, will be guaranteed (the "SUBSIDIARY
GUARANTEES") by each of the Company's subsidiaries listed on Schedule II hereto
and by any future domestic subsidiaries that become party to the Indenture
(each, a "GUARANTOR" and, collectively, the "GUARANTORS");
WHEREAS, the offer and sale of the Securities, the Subsidiary Guarantees
and the Underlying Securities will not be registered under the Securities Act of
1933, as amended (together with the rules and regulations promulgated
thereunder, the "SECURITIES ACT"), in reliance on an exemption therefrom; and
WHEREAS, the Purchasers will be entitled to the benefits of a Registration
Rights Agreement substantially in the form attached as Exhibit B hereto covering
the Underlying Securities to be dated as of the Closing Date by and among the
Company, the Guarantors and the Purchasers (the "REGISTRATION RIGHTS AGREEMENT"
and, together with this Agreement, the Indenture, the Subsidiary Guarantees and
the Notes, the "TRANSACTION DOCUMENTS").
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants set forth herein and certain other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Agreement to Sell and Purchase.
(a) Firm Securities. On the basis of the representations and
warranties contained in this Agreement, and subject to the terms and
conditions of this Agreement, the Company agrees to issue and sell the
Firm Securities to the Purchasers in the respective principal amounts and
series set forth on Schedule I hereto and as hereinafter provided, and the
Purchasers, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, severally
agree to purchase from the Company the Firm Securities at a purchase price
of 100% of the principal amount thereof (the "PURCHASE PRICE").
(b) Additional Securities. On the basis of the representations and
warranties contained in this Agreement, and subject to the terms and
conditions of this Agreement, the Company agrees to sell to each
Purchaser, and each Purchaser shall have the right to purchase, the
Additional Securities in the respective principal amounts and series set
forth opposite such Purchaser's name on Schedule I hereto, in whole, but
not in part, with respect to each Purchaser (the "OPTION"). If purchased
by a Purchaser, the Additional Securities shall be sold at the Purchase
Price plus accrued interest, if any, from the Closing Date to the date of
payment and delivery. To exercise the Option, a Purchaser must so notify
the Company in writing (the "OPTION EXERCISE NOTICE") on or before the
date (the "OPTION EXPIRATION DATE") that is the later to occur of (i) the
90th day after the Closing Date and (ii) the fifth business day following
the Company's next annual meeting of stockholders held after the Closing
Date, which Option Exercise Notice shall specify the date on which the
Additional Securities are to be purchased. Such date may be the same as
the Closing Date but not earlier than the Closing Date nor later than five
business days after the date of such Option Exercise Notice.
2. Closing.
(a) Firm Securities. Payment for the Firm Securities shall be made
severally by the Purchasers to the Company to an account specified in
writing by the Company to the Purchasers in United States dollars in cash
or other funds immediately available in New York City against delivery to
each Purchaser of the Firm Securities purchased by such Purchaser at 10:00
a.m., New York City time, on November 24, 2004, or at such other time on
the same or such other date as shall be mutually agreed upon by the
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Company and the Purchasers purchasing more than 50% of the aggregate
principal amount of Firm Securities to be purchased hereunder. The time
and date of such payment and delivery are hereinafter referred to as the
"CLOSING DATE."
(b) Additional Securities. Payment for the Additional Securities to
be purchased pursuant to any exercise of the Option, shall be made by the
Purchaser(s) purchasing Additional Securities, to the Company by wire
transfer of United States dollars in cash or other funds immediately
available in New York City, to an account specified in writing by the
Company to such Purchaser(s), against delivery of such Additional
Securities in the form specified by the applicable Purchaser(s) in the
applicable Option Exercise Notice at 10:00 a.m., New York City time, on
the third business day following the date of the applicable Option
Exercise Notice, or at such other time on the same or on such other date,
as may be mutually agreed upon by the Company and such Purchaser(s). The
time and date of each such payment and delivery are hereinafter referred
to as an "OPTION CLOSING DATE."
3. Representations and Warranties. The Company and each Guarantor, jointly
and severally, represents and warrants to the Purchasers as of the Closing Date
and each Option Closing Date the following:
(a) The documents filed by the Company with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC thereunder
(collectively, the "EXCHANGE ACT") since September 30, 2003 (as amended or
supplemented from time to time prior to the date hereof, including the
exhibits thereto, the "EXCHANGE ACT DOCUMENTS"), when taken together, do
not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) Except as disclosed in the Exchange Act Documents, (i) the
financial statements included in the Exchange Act Documents present
fairly, in all material respects, the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates indicated
and the results of their operations and the changes in their consolidated
cash flows for the periods specified therein, (ii) said financial
statements have been prepared in conformity with generally accepted
accounting principles and practices ("GAAP") applied on a consistent
basis; (iii) the supporting schedules, if any, in the Exchange Act
Documents present fairly the information required to be stated therein,
(iv) the other financial and statistical information and any other
financial data set forth in the Exchange Act Documents present fairly, in
all material respects, the information purported to be shown thereby at
the respective dates or for the respective periods to which they apply and
(v) to the extent such information is set forth in or has been derived
from the financial statements and accounting books and records of the
Company, have been prepared on a basis consistent with such financial
statements and the books and records of the Company.
(c) Since the Company's Quarterly Report on Form 10-Q filed with the
SEC on April 30, 2004 (the "LATEST 10-Q"), there has not been any Material
Adverse Change
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affecting the Company and its consolidated subsidiaries considered as a
single enterprise that has not been publicly disclosed by the Company. As
used in this Agreement, "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE
EFFECT" means any change or effect that would be materially adverse to the
business, properties, financial condition or results of operations of the
Company and its consolidated subsidiaries considered as a single
enterprise, or to the ability of the Company or any Guarantor to
consummate the transactions contemplated hereby and by the other
Transaction Documents; provided that the withdrawal of the Company's
general credit rating and the rating of outstanding indebtedness of the
Company by Standard & Poor's Rating Services shall not be deemed to
constitute, and shall not be taken into account in determining whether
there has been, a Material Adverse Effect or Material Adverse Change.
(d) Since the Latest 10-Q, there has not been any (i) change in the
capital stock or long-term debt of the Company or any Guarantor or (ii)
issuance of any options or warrants for the purchase of capital stock of
the Company or any Guarantors, securities convertible into capital stock
of the Company or any Guarantor or rights to purchase capital stock of the
Company or any Guarantor, except for changes or issuances occurring in the
ordinary course of business, changes in outstanding Common Stock resulting
from transactions relating to employee benefit plans or dividend
reinvestment, stock option, stock award and stock purchase plans.
(e) Except as disclosed in the Exchange Act Documents, since the
Latest 10-Q, neither the Company nor any Guarantor has entered into any
transaction or agreement that has or would be reasonably likely to have a
Material Adverse Effect on the Company and its subsidiaries, taken as a
whole.
(f) Since the Latest 10-Q, the Company has not declared or paid any
dividends or made any distribution of any kind with respect to its capital
stock.
(g) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own or lease its properties and
conduct its business as described in the Exchange Act Documents, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties, or conducts its business in a
manner or to an extent that would require such qualification, other than
such failures to be so qualified or in good standing as, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.
(h) The Company has no subsidiaries that are Significant
Subsidiaries other than those subsidiaries of the Company set forth on
Schedule II hereto. The Guarantors constitute all of the Significant
Subsidiaries.
(i) Each of the Guarantors has been duly incorporated or formed and
is validly existing as a corporation, limited partnership or limited
liability company, as applicable, under the laws of its jurisdiction of
incorporation or formation, with corporate, limited partnership or limited
liability company power and authority to own or
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lease its properties and conduct its business as described in the Exchange
Act Documents, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties or conducts its
business in a manner or to an extent that would require such
qualification, other than such failures to be so qualified or in good
standing as, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect; and all the outstanding shares
of capital stock, limited liability company interests or limited
partnership interests of each Guarantor have been duly authorized and
validly issued, are fully paid and non assessable, and, except as set
forth in the Exchange Act Documents, are owned by the Company, directly or
indirectly, free and clear of all claims, liens, encumbrances, security
interests, restrictions upon voting or transfer and adverse interests and
no options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of, or ownership
interests in, any such Guarantor are outstanding.
(j) The Company and each Guarantor has full corporate, limited
partnership or limited liability company power and authority to enter into
the Transaction Documents to which it is a party and to perform and
discharge its obligations thereunder; each Transaction Document to which
it is a party has been duly authorized, executed and delivered by or on
behalf of the Company and each Guarantor and constitutes the legal, valid
and binding obligations of the Company and each Guarantor, enforceable
against each of them in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance or transfer, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and to general principles of equity, including principles of
materiality, commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(k) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Latest 10-Q except for changes in
outstanding Common Stock resulting from transactions relating to employee
benefit plans or dividend reinvestment, stock option, stock award and
stock purchase plans. Except for this Agreement and the Registration
Rights Agreement or stock purchase plans, there are no contracts,
commitments, agreements, arrangements, understandings or undertakings of
any kind to which the Company is a party, or by which it is bound,
granting to any person the right to require the Company to file a
registration statement under the Securities Act with respect to the Common
Stock or requiring the Company to include any Common Stock with the
Underlying Securities registered pursuant to any registration statement.
(l) The shares of Common Stock outstanding on the date hereof have
been duly authorized and are validly issued, fully paid and
non-assessable.
(m) The Securities have been duly authorized by the Company, and
when duly executed, authenticated, issued and delivered as provided in the
Indenture (assuming due authentication of the Securities by the Trustee)
and paid for as provided herein will constitute legal, valid and binding
obligations of the Company, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance
or transfer, reorganization, moratorium and similar laws affecting
creditors'
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rights and remedies generally, and to general principles of equity,
including principles of materiality, commercial reasonableness, good faith
and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(n) The notations of Guarantee of each of the Guarantors to be
endorsed on the Securities have been duly authorized by all necessary
corporate, limited partnership or limited liability company action, as
applicable, by or on behalf of each of the Guarantors and, when executed
and delivered in accordance with the terms of the Indenture (assuming the
due execution, issuance and authentication of the Securities in accordance
with the terms of the Indenture and delivery and payment therefor by the
Purchaser in accordance with the terms of this Agreement), the Subsidiary
Guarantees will be the legally valid and binding obligations of each of
the Guarantors, enforceable against each of them in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance
or transfer, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and to general principles of
equity, including principles of materiality, commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).
(o) The Indenture has been duly authorized by the Company and each
Guarantor, and when executed and delivered by the Company and each
Guarantor (assuming the authorization, execution and delivery by the
Trustee) will be a legal, valid and binding agreement of the Company and
each Guarantor, enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance
or transfer, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and to general principles of
equity, including principles of materiality, commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).
(p) Upon issuance and delivery of the Securities in accordance with
this Agreement and the Indenture, the Securities will be convertible at
the option of the holder thereof into the Underlying Securities in
accordance the terms of the Indenture; the Underlying Securities issuable
upon conversion of the Securities have been duly authorized and reserved
for issuance and, when issued upon conversion of the Securities in
accordance with the terms of the Indenture, will be validly issued, fully
paid and non assessable, and the issuance of the Underlying Securities
will not be subject to any preemptive or similar rights.
(q) The Registration Rights Agreement has been duly authorized by
the Company and each Guarantor and when executed and delivered by the
Company and each Guarantor (assuming the due authorization, execution and
delivery thereof by the Purchasers) shall constitute a legal, valid and
binding agreement of the Company and each Guarantor, enforceable against
each of them in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance or transfer, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and to general principles of equity, including principles of
materiality, commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought
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in a proceeding at law or in equity) and except that rights to
indemnification and contribution thereunder may be limited by federal or
state securities laws or public policy relating thereto.
(r) Neither the Company nor any Guarantor is, or with the giving of
notice or lapse of time or both will be, in violation of or in default
under (i) its Certificate of Incorporation, Bylaws or other organizational
documents, (ii) except as disclosed in the Exchange Act Documents, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any Guarantor is a party or by which it
or any of them or any of their respective properties is bound, or (iii)
except as disclosed in the Exchange Act Documents, any statute, law, rule,
regulation, ordinance, judgment, order or decree of any court, regulatory
body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company, its subsidiaries or any of
their respective properties or assets, as applicable, except, with respect
to clauses (ii) and (iii), for violations and defaults which, individually
or in the aggregate, have not or would not reasonably be expected to
result in a Material Adverse Effect.
(s) None of the issue and sale of the Securities and the issuance by
the Company of the Underlying Securities upon conversion of the
Securities, the execution and delivery by the Company and the Guarantors
of the Transaction Documents to which they are a party and the performance
by the Company and the Guarantors of all their respective obligations and
the consummation of the transactions herein and therein contemplated, will
(i) result in a breach of any of the terms or provisions of, constitute a
default (with or without the giving of notice or the passage of time or
otherwise) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
Guarantor under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any Guarantor is a
party or by which the Company or any Guarantor is bound or to which any of
the property or assets of the Company or any Guarantor is subject, except,
in each case, for such conflicts, breaches, defaults, liens, charges or
encumbrances which would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, (ii) result in any
violation of the provisions of the Certificate of Incorporation or the
Bylaws of the Company or any Guarantor that is a corporation, the
certificate of limited partnership or partnership agreement of any
Guarantor that is a limited partnership or the certificate of formation or
limited liability agreement of any Guarantor that is a limited liability
company, (iii) result in any violation of any applicable law or statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, the Guarantors or any of their
respective properties; and no consent, approval, authorization, order,
license, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company and the Guarantors of the
transactions contemplated by any of the Transaction Documents, except such
consents, approvals, authorizations, orders, licenses, registrations or
qualifications as may be required under state securities or Blue Sky Laws
in connection with the purchase of and any distribution of the Securities,
Subsidiary Guarantees or Underlying Securities by
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the Purchasers or under the Securities Act with respect to the
registration of the Underlying Securities pursuant to the terms of the
Registration Rights Agreement.
(t) Except as disclosed in the Exchange Act Documents, there are no
legal or governmental investigations, actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Guarantor or any of their respective
properties or to which the Company or any Guarantor is or may be a party
or to which any property of the Company or any Guarantor is or may be the
subject that, if determined adversely to the Company or any such
Guarantor, would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(u) Neither the Company, nor any affiliate (as defined in Rule
501(b) of Regulation D) of the Company or any person acting on its or
their behalf, has directly, or through any agent, sold, offered for sale,
solicited offers to buy, or otherwise approached or negotiated with, any
Person in respect of, any security (as defined in the Securities Act) that
is or will be integrated with the sale of the Securities in a manner that
would require (i) the registration under the Securities Act of the
issuance of any of the Securities contemplated hereby or (ii) the approval
of the stockholders of the Company in accordance with the rules and
regulations of the New York Stock Exchange, Inc. (the "NYSE").
(v) None of the Company, any affiliate of the Company or any person
acting on its or their behalf has offered or sold any of the Securities by
means of any general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or
radio, or (ii) any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising in the United States.
(w) Assuming the accuracy of the representations of the Purchasers
contained in Section 4 hereof and the Purchasers' compliance with the
agreements set forth therein, it is not necessary in connection with the
offer, issuance, sale and delivery of the Securities in the manner
contemplated by this Agreement and the other Transaction Documents to
register the offer or sale of any of the Securities, Subsidiary Guarantees
or Underlying Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.
(x) Except for its engagement letter with X.X. Xxxxxx Securities
Inc. dated October 22, 2004, neither the Company nor its subsidiaries is a
party to any contract, agreement or understanding with any person that
would give rise to a valid claim against the Company or the Purchasers for
a brokerage commission, finder's fee or like payment in connection with
the offering and sale of the Securities.
(y) Neither the Company, nor any of its subsidiaries nor any of
their officers or directors or any of their affiliates has taken or will
take, directly or indirectly, any action designed or intended to stabilize
or manipulate the price of any security of the Company, or that caused or
resulted in, or that might in the future reasonably be expected
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to cause or result in, stabilization or manipulation of the price of any
security of the Company.
(z) The Common Stock is registered pursuant to Section 12(b) of the
Exchange Act and is listed on the NYSE, and the Company has not taken any
action designed to or reasonably likely to result in the termination of
the registration of the Common Stock under the Exchange Act or delisting
of the Common Stock from the NYSE.
(aa) The Notes are eligible for resale pursuant to Rule 144A and
will not be, on the Closing Date, of the same class as securities listed
on a national securities exchange registered under Section 6 of the 1934
Act, or quoted in a U.S. automated interdealer quotation system.
(bb) Ernst & Young LLP, who have certified the consolidated
financial statements of the Company as of September 30, 2003, are
independent public accountants within the meaning of the Securities Act.
(cc) During the periods covered by the Exchange Act Documents, other
than as disclosed in such Exchange Act Documents, the Company and the
Guarantors have filed all federal, state, local and foreign tax returns
which, to the Company's knowledge, the Company and the Guarantors have
been required to file and have paid all taxes shown on the returns filed
by them and all assessments received by them or any of them to the extent
that such taxes have become due and are not being contested in good faith
and for which adequate reserves have been provided, except where the
failure to do so would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect; and there is no tax
deficiency which has been or, to the Company's knowledge, might reasonably
be expected to be asserted or threatened against the Company or any
Guarantor that would reasonably be expected to have a Material Adverse
Effect.
(dd) Except as disclosed in the Exchange Act Documents, no labor
disputes exist with employees of the Company or of the Guarantors except
for such disputes as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect and the Company
is not aware that any key employee or significant group of employees of
the Company or the Guarantors plans to terminate employment with the
Company or the Guarantors.
(ee) Except as disclosed in the Exchange Act Documents, to the
Company's knowledge, each of the Company and the Guarantors is in
compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health or the
environment or imposing liability or standards of conduct concerning any
Hazardous Material (collectively, "ENVIRONMENTAL LAWS"), except where such
non-compliance with Environmental Laws would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
term "HAZARDOUS MATERIAL" means (1) any "HAZARDOUS SUBSTANCE" as defined
by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (2) any "HAZARDOUS WASTE" as defined by the
Resource Conservation and
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Recovery Act, as amended, (3) any petroleum or petroleum product, (4) any
polychlorinated biphenyl, and (5) any pollutant or contaminant or
hazardous, dangerous, or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law.
(ff) (i) The Company or its subsidiaries own or possess the right to
use the patents, patent licenses, trademarks, service marks, trade names,
copyrights and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) (collectively, the "INTELLECTUAL PROPERTY") reasonably
necessary to carry on the business conducted by the Company and its
subsidiaries, taken as a whole, as described in the Exchange Act
Documents, except to the extent that the failure to own or possess the
right to use such Intellectual Property would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (ii)
all of such patents, registered trademarks and registered copyrights owned
by the Company or its subsidiaries have been duly registered in, filed in
or issued by the United States Patent and Trademark Office, the United
States Registrar of Copyrights or the corresponding offices of other
jurisdictions, except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect, (iii) all material licenses or
other material agreements under which (1) the Company or any of its
subsidiaries is granted rights in Intellectual Property, other than
Intellectual Property generally available on commercial terms from other
sources, and (2) the Company or any of its subsidiaries has granted rights
to others in Intellectual Property owned or licensed by the Company, are
in full force and effect and, to the knowledge of the Company, there is no
material default by the Company or its subsidiaries or the other parties
thereto, except for such failures to be in full force and effect and such
defaults as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect (iv) neither the Company
nor any Guarantor has received any notice of infringement of or conflict
with asserted rights of others with respect to any Intellectual Property,
except for notices the content of which if accurate would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect and (v) the Company and its subsidiaries do not
have and, to the knowledge of the Company, none of its and their employees
have any agreements or arrangements with any persons other than the
Company or its subsidiaries related to confidential information or trade
secrets of such persons other than such agreements that would not restrict
the Company and its subsidiaries from conducting their business as
described in the Exchange Act Documents to an extent that would reasonably
be expected to result in a Material Adverse Effect.
(gg) The Company and each of its subsidiaries, taken together, have
(i) made all filings, applications and submissions required by, and
possesses all approvals, licenses, certificates, clearances, consents,
exemptions, orders, permits and other authorizations required to be issued
by, the appropriate federal, state or foreign regulatory authorities
(collectively, "PERMITS") in order for the Company and its subsidiaries to
conduct their business, except for such Permits that the failure to obtain
would not reasonably be expected to have a Material Adverse Effect, and
are in compliance in all material respects with the terms and conditions
of all such Permits; all such Permits held by the Company and its
subsidiaries are valid and in full force and effect; there is no pending
or, to the knowledge of the Company threatened, action, suit, claim or
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proceeding that may cause any such Permit to be limited, revoked,
cancelled, suspended, modified or not renewed and neither the Company nor
its subsidiaries has received any notice of proceedings relating to the
limitation, revocation, cancellation, suspension, modification or
non-renewal of any such Permit that, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding would reasonably be
expected to have a Material Adverse Effect and (ii) such licenses,
franchises, permits, authorizations, approvals and orders of and from
governmental and regulatory officials and bodies as are, to the Company's
knowledge, reasonably necessary to own or lease and operate the properties
and conduct the business of the Company and the Guarantors, taken as a
whole, on the date hereof.
(hh) (i) The Company and the Guarantors have good and indefeasible
title in fee simple to all real property and good and marketable title to
all personal property owned by them that is material to the business of
the Company and its subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as do not interfere with the
use made and proposed to be made of such property by the Company and its
subsidiaries or would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and (ii) any real property and
buildings held under lease by the Company and the Guarantors are held by
them under valid, subsisting and enforceable leases with such exceptions
as do not interfere with the use made and proposed to be made of such
property and buildings by the Company and the Guarantors or as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and each of the Company and its subsidiaries owns
or leases all such properties as are necessary to its business or
operations as now conducted.
(ii) (i) The Company is in compliance with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations
thereunder ("ERISA"), except where the failure to be in such compliance
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; (ii) no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company is required to provide notice under Section
4043 of ERISA and would have any liability, except where such liability
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; (iii) except for matters that would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (a) with respect to any "pension plan" (other
than a "multiemployer plan" (as defined in ERISA)), the Company has not
incurred and does not expect to incur liability under Title IV of ERISA
with respect to termination of, or withdrawal from, such "pension plan,"
or under Section 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations
thereunder ("CODE"), and (b) with respect to any "pension plan" that is a
"multiemployer plan," the Company has not received notice that the Company
has incurred liability under Title IV of ERISA with respect to termination
of, or withdrawal from, such "pension plan," or under Section 412 or 4971
of the Code; (iv) except where the failure to be in such compliance would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, each "pension plan" (other than a "multiemployer
plan") for which the Company and each of the Guarantors would have any
liability that is intended to be qualified under
11
Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would
reasonably be expected cause the loss of such qualification; and (v)
except where the failure to be in such compliance would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect, no non-exempt "prohibited transaction" (as defined in Section 406
of ERISA or Section 4975 of the Code) or "accumulated funding deficiency"
(as defined in section 302 of ERISA) has occurred with respect to any
"pension plan" (other than a "multiemployer plan") for which the Company
and each of the Guarantors would have any liability.
(jj) Except as disclosed in the Exchange Act Documents, (i) the
Company maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain accountability for assets; (C) access to assets is permitted
only in accordance with management's general or specific authorization;
and (D) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences, and (ii) the Company maintains a system of
"disclosure controls and procedures" (as such term is defined in Rule
13a-15(e) under the Exchange Act).
(kk) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable
value of the assets of the Company will exceed the sum of its stated
liabilities and identified contingent liabilities; the Company is not, nor
will the Company be, after giving effect to the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, (a) left with unreasonably small capital with which
to carry on its business as it is proposed to be conducted, or (b) unable
to pay its debts (contingent or otherwise) as they mature or (c) otherwise
insolvent.
(ll) Except as disclosed in the Exchange Act Documents, the Company
is in substantial compliance with the applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002 that are effective.
(mm) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof, will
not be required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(nn) Neither the Company nor any of its affiliates has offered or
sold the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D,
including (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or (ii) any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising in the
United States.
12
(oo) Other than as disclosed in the Exchange Act Documents, to the
Company's knowledge, each of the Company and the Guarantors is in
compliance with any and all applicable Occupational Safety and Health
Administration standards and requirements (the "OSHA LAWS"), except where
such non-compliance with OSHA Laws would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(pp) Other than the Registration Rights Agreement, the Company has
not granted or agreed to grant to any Person any rights (including "piggy
back" registration rights) to have any securities of the Company
registered with the SEC or any other governmental authority that have not
been satisfied.
(qq) The Company does not own, and has no present intention to
acquire, and the proceeds of the sale of the Securities will not be used
to buy or carry, any margin stock (as defined in Regulation U of the Board
of Governors of the Federal Reserve System (12 CFR 207).
(rr) On the Closing Date, (i) the Exchange Cap will equal at least
7,515,754 shares of Common Stock, (ii) the Available Treasury Shares will
equal at least 1,931,927 shares of Common Stock, (iii) the Aggregate Cap
will equal at least 9,447,681 shares of Common Stock and (iv) pursuant to
the terms of the Indenture, at least $30,700,000 aggregate principal
amount of Securities will be convertible into shares of Common Stock, at
the initial Conversion Price of $3.25 per share specified in the
Indenture. Capitalized terms used in this paragraph and not otherwise
defined in this Agreement have the meanings given to such terms in the
Indenture.
Each Purchaser acknowledges and agrees that the Company has not made and does
not make any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.
4. Representations and Warranties of the Purchasers. Each Purchaser
severally represents and warrants to the Company the following:
(a) Such Purchaser is knowledgeable, sophisticated and experienced
in business and financial matters and qualifies as an "accredited
investor" as defined in Rule 501(a) of Regulation D.
(b) Such Purchaser has been afforded access to information about the
Company and the Guarantors and the financial condition, results of
operations, business, property, management and prospects of the Company
and the Guarantors sufficient to enable it to evaluate its investment in
the Securities; such Purchaser and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and the
Guarantors; such Purchaser has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.
(c) Such Purchaser understands that its investment in the Securities
involves a high degree of risk. Such Purchaser is able to bear the
economic risk of its investment in
13
the Securities for an indefinite period of time, and is presently able to
afford the complete loss of such investment.
(d) Such Purchaser is acquiring the Securities in the ordinary
course of business solely for its own account and not as a nominee or
agent for any other person and not with a view to any distribution thereof
that violates the Securities Act or the securities laws of any State of
the United States or any applicable jurisdiction; provided, however, that
by making the representations herein, such Purchaser does not agree to
hold any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under the
Securities Act; such Purchaser does not presently have any intention, or
any agreement or understanding, directly or indirectly, with any person,
to distribute any of the Securities.
(e) Such Purchaser was duly organized or formed and is a validly
existing organization in good standing under the laws of its jurisdiction
of organization, with power and authority to execute and deliver this
Agreement and the Registration Rights Agreement and perform its
obligations hereunder and thereunder; and this Agreement and the
Registration Rights Agreement and the transactions contemplated hereby and
thereby have been duly authorized by such Purchaser; assuming due
authorization, execution and delivery by the Company, each of this
Agreement and the Registration Rights Agreement constitutes a legally
valid and binding agreement of such Purchaser, enforceable against the
Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance or transfer, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally, and
to general principles of equity, including principles of materiality,
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
(f) Such Purchaser is a resident of that jurisdiction specified in
its address for notices set forth below the signature of the Purchaser
where it appears on the signature page of this Agreement.
(g) Such Purchaser is not acquiring the Securities with assets of
any "employee benefit plan" (within the meaning of Section 3(3) of ERISA)
that is subject to Title I of ERISA or Section 4975 of the Code.
(h) Assuming the capitalization of the Company set forth in its most
recent Exchange Act Document, such Purchaser, together with its
"affiliates" (as defined in Rule 13d-3 promulgated under the Securities
Act), is the beneficial owner (as defined in Rule 13d-3 promulgated under
the Exchange Act) of not more than 4.9% of the outstanding shares of
Common Stock immediately after the purchase of the Securities hereunder.
(i) (i) Such Purchaser is not a registered broker-dealer under
Section 15 of the Exchange Act.
14
(j) Such Purchaser has independently evaluated the merits of its
decision to purchase the Securities pursuant to the Transaction Documents,
and the Purchaser confirms that it has not relied on the advice of any
other Purchaser's business and/or legal counsel in making such decision.
(k) The Company has furnished or otherwise made available to the
Purchaser the Current Reports filed by the Company with the SEC since the
date of the Latest 10-Q, which Current Reports include disclosure, without
limiting the generality of the foregoing, that (i) the Company has failed
to timely file with the SEC its Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2004; (ii) the Company is currently
conducting an investigation into its internal controls and procedures,
which investigation is not complete and the Company cannot make any
assurance regarding the outcome of such investigation; (iii) a verdict has
been returned against the Company in a case pending in the 000xx Xxxxxxxx
Xxxxx of Xxxxxx County, Texas in which the amount of judgment may be up to
$30,000,000, the Company is pursuing settlement discussions regarding such
case and intends to seek to have any judgment set aside and to appeal any
final judgment against the Company and the Company cannot make any
assurance that the Company's liability will be less than $30,000,000; and
(iv) current conditions in the surety bonding industry are adversely
affecting the Company's ability to obtain surety bonding consistent with
historical terms.
The Company acknowledges and agrees that the Purchasers have not made, and
do not make, any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 4.
5. Covenants of the Company. The Company covenants and agrees with the
Purchasers as follows:
(a) following the effectiveness of a registration statement relating
to the Underlying Securities, to file a supplemental listing application
and use its best efforts to have the Underlying Securities approved for
listing by the NYSE in accordance with its rules and regulations;
(b) to qualify the Securities for offering and sale under the
applicable securities laws of such states as any Purchaser may designate
and will continue such qualifications in effect so long as required for
the resale of the Securities; provided that the Company will not be
required to qualify as a foreign corporation or file a general consent to
service of process in any such state;
(c) whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be
paid all fees, costs and expenses incident to the performance of its
obligations hereunder, including without limiting the generality of the
foregoing, all fees, costs and expenses (i) incident to the preparation,
issuance, execution, authentication and delivery of the Securities,
including any expenses of the Trustee, (ii) payable to rating agencies in
connection with any rating of the Securities, (iii) incurred in connection
with the qualification of the Securities for sale under state securities
laws, (iv) in connection with the approval of the Underlying
15
Securities for listing on the NYSE and (v) in connection with the
admission for trading of the Securities in the Private Offerings, Resales
and Trading through Automatic Linkages ("PORTAL") system of the National
Association of Securities Dealers ("NASD"). In addition to the foregoing
(and without duplication), the Company agrees to pay the Purchasers their
actual out-of-pocket expenses incurred in connection with the negotiation,
due diligence and documentation of the Transaction Documents and the
transactions contemplated thereby ("TRANSACTION EXPENSES"); provided, that
the maximum amount of Transaction Expenses that the Company shall be
obligated to pay to the Purchasers shall not exceed $100,000 in the
aggregate (the "TRANSACTION EXPENSE CAP"), which Transaction Expense Cap
shall be allocated pro rata among the Purchasers based upon the principal
amount of the Securities purchased by each Purchaser relative to the
principal amount of all Securities purchased by the Purchasers in the
aggregate (the "PURCHASER'S PRO RATA AMOUNT"); provided further, that if
the aggregate Transaction Expenses incurred by the Purchasers exceeds the
Transaction Expense Cap, the Company shall be obligated to pay each
Purchaser such Purchaser's Pro Rata Amount of the Transaction Expense Cap.
Except as expressly set forth in this Section 5(c) and in Sections 8 and
11, the Company shall have no obligation to pay any costs and expenses of
the Purchasers (except as set forth in the Registration Rights Agreement);
(d) for so long as the Securities remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, the Company will, during any period in which it is not
subject to Section 13 or 15(d) under the Exchange Act, make available to
the Purchasers and any holder of Securities in connection with any sale
thereof and any prospective purchaser of Securities and securities
analysts, in each case upon request, the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Securities Act (or
any successor thereto);
(e) the Company will not take any action prohibited by Regulation M
under the Exchange Act, in connection with the issuance of the Securities
contemplated hereby;
(f) none of the Company, any of its affiliates (as defined in Rule
501(b) under the Securities Act) or any person acting on behalf of the
Company or such affiliate will solicit any offer to buy or offer or sell
the Securities by means of any form of general solicitation or general
advertising within the meaning of Regulation D, including: (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or
radio; and (ii) any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising;
(g) none of the Company, any of its affiliates (as defined in Rule
501(b) under the Securities Act) or any person acting on behalf of the
Company or such affiliate will sell, offer for sale or solicit offers to
buy, or otherwise approach or negotiate with, any Person in respect of any
security (as defined in the Securities Act) which will be integrated with
the sale of the Securities or the Underlying Securities in a manner which
would require the registration under the Securities Act of the Securities
or require stockholder approval under the rules and regulations of the
NYSE and the Company will take all action that is appropriate or necessary
to assure that its offerings of other
16
securities will not be integrated for purposes of the Securities Act or
the rules and regulations of the NYSE with the issuance of Securities
contemplated hereby;
(h) to use its best efforts to cause the Securities to be accepted
for clearance and settlement through the facilities of The Depository
Trust Company and eligible for trading on PORTAL;
(i) to reserve and keep available at all times, free of pre-emptive
rights, a sufficient number of shares of Common Stock for the purpose of
enabling the Company to satisfy all obligations to issue the Underlying
Securities upon conversion of the Securities;
(j) the Company will use the proceeds from the sale of the
Securities for the amortization of its senior credit facilities over the
next four calendar quarters and for working capital purposes, including
the repayment of any outstanding indebtedness of the Company or any of its
Subsidiaries; no part of the proceeds from the sale of the Securities
hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 CFR 207), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of
said Board (12 CFR 224) or to involve any broker or dealer in a violation
of Regulation T of said Board (12 CFR 220); as used in this Section, the
terms "margin stock" and "purpose of buying or carrying" shall have the
meanings assigned to them in said Regulation U;
(k) the Company shall have made the following filing (the "8-K
FILING") on or before 8:30 a.m., New York City time on November 22, 2004:
a Current Report on Form 8-K, in the form required by the Exchange Act,
relating to the transactions contemplated by the Transaction Documents and
attaching the material Transaction Documents, or forms thereof, as
exhibits to such filing;
(l) other than as set forth in the 8-K Filing, the Company covenants
and agrees that neither it nor any other person or entity acting on its
behalf has provided or will provide the Purchaser or its agents or counsel
with any information that the Company believes constitutes material
non-public information, unless prior thereto the Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that the Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company;
(m) the Company agrees, (i) if the Company applies to have the
Common Stock traded on any other national or regional securities exchange
or, if the Common Stock is not listed on a national or regional securities
exchange, on the National Association of Securities Dealers Automated
Quotation System or, if the Common Stock is not quoted on the National
Association of Securities Dealers Automated Quotation System, on the
principal other market on which the Common Stock is then traded (a
"TRADING MARKET"), it will include in such application the Underlying
Securities, and will
17
take such other action as is necessary or desirable to cause the
Underlying Securities to be listed on such other Trading Market as
promptly as possible, and (ii) it will take all action reasonably
necessary to continue the listing and trading of its Common Stock on a
Trading Market and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
Trading Market;
(n) in connection with the Company's first annual meeting or special
meeting of stockholders next succeeding the Closing Date, the Company
shall (i) provide each stockholder entitled to vote at such special or
annual meeting of stockholders, a proxy statement soliciting each such
stockholder's affirmative vote for approval in accordance with the
Company's certificate of incorporation and (if the Common Stock is then
listed and admitted to trading on the New York Stock Exchange) the rules
of the New York Stock Exchange (such affirmative approval being referred
to as the "STOCKHOLDER APPROVAL") of resolutions providing for the
issuance and delivery of all shares of Common Stock (including, without
limitation, shares in excess of the Exchange Cap (as defined in the
Indenture)) issuable upon conversion, redemption or repurchase of the
aggregate principal amount of the Securities issued or issuable under the
Indenture or upon any election in accordance with the terms of the
Indenture to pay any amounts due under the Indenture or under the
Securities in shares of Common Stock and (ii) otherwise use its best
efforts to obtain the Stockholder Approval by February 24, 2005; and
(o) the Company will use its best efforts to obtain an amendment to
the Credit Agreement (as defined below in Section 6(m) hereof that
eliminates any provisions causing the existence of the right of any holder
of Securities to compel the Company to settle a Conversion Obligation in
cash on any date on or before the Revolving Loan Maturity Date (as defined
in the Credit Agreement), to constitute an Event of Default (as defined in
the Credit Agreement) thereunder; provided, however, that the Company
shall not be required to comply with this Section 5(o) if the Stockholder
Approval shall have been obtained.
6. Conditions to the Purchasers' Obligations. The obligation of each
Purchaser hereunder to purchase the Firm Securities on the Closing Date is
subject to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) the representations and warranties of the Company set forth in
Section 3 above are true and correct in all material respects (except for
those representations and warranties already qualified by materiality,
which such representations and warranties shall be true and correct in all
respects) on and as of the Closing Date as if made on and as of the
Closing Date and the Company shall have complied in all material respects
with all agreements and all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(b) the Purchasers shall have received on and as of the Closing Date
a certificate of an executive officer of the Company and each of the
Guarantors, with specific knowledge about the Company's financial matters,
satisfactory to the Purchasers, to the effect set forth in Section 6(a)
and to the further effect that except as disclosed in
18
the Exchange Act Documents filed as of the date hereof, there has not
occurred any Material Adverse Change since the date of the Latest 10-Q;
(c) Xxxxxxx Xxxxx LLP, special counsel for the Company and the
Guarantors, shall have furnished to the Purchasers their written opinion,
dated the Closing Date, in substantially the form attached hereto as
Exhibit C;
(d) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading,
nor shall any public notice have been given of (i) any intended
downgrading or (ii) any review or possible change that does not indicate
an improvement in the rating accorded any securities of or guaranteed by
the Company by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(e) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall have been no suspension or material
limitation of trading in the Common Stock on the NYSE;
(f) the Securities shall have been approved for trading on PORTAL,
subject only to notice of issuance at or prior to the time of purchase;
(g) the Company shall have duly executed each of the other
Transaction Documents;
(h) each other Purchaser shall have purchased from the Company the
Firm Securities in the aggregate principal amounts set forth in Schedule I
hereto;
(i) the Purchasers shall have received on and as of the Closing Date
a certificate of the secretary of the Company and each of the Guarantors
in order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company or
the Guarantors in connection with the issuance and sale of the Notes as
herein contemplated shall be satisfactory in form and substance to the
Purchasers;
(j) the Company and each Guarantor shall have delivered to the
Purchasers a certificate evidencing the incorporation and good standing of
the Company and each such Guarantor in its state of incorporation or
formation issued by the Secretary of State of such state of incorporation
or formation as of a date within 20 days of the Closing Date;
(k) the Company and each Guarantor shall have delivered to the
Purchasers a certificate evidencing the Company's and each Guarantor's
qualification as a foreign corporation and good standing issued by the
states indicated for such party on Schedule II hereto as of a date within
20 days of the Closing Date.
(l) the Company and each Guarantor shall have delivered to the
Purchaser a certified copy of the Certificate of Incorporation,
certificate of formation or comparable
19
organizational document as certified by the Secretary of State of its
state of incorporation or formation as of a date within 20 days of the
Closing Date;
(m) the Company shall have obtained all governmental, regulatory or
third-party consents and approvals, if any, necessary to be obtained prior
to the Closing Date for the sale of the Securities. Without limiting the
generality of the foregoing, the Company shall also have obtained the
consent and/or waiver of the Banks (as defined in that certain Credit
Agreement dated as of February 27, 2004, as amended (the "CREDIT
AGREEMENT")) under the Credit Agreement with respect to the issuance of
the Securities and the granting of the Subsidiary Guarantees by the
Guarantors; and
(n) the Company shall have delivered to the Purchaser such other
documents relating to the transactions contemplated by this Agreement as
the Purchaser or its counsel may reasonably request.
If it elects to exercise the Option, the obligation of a Purchaser to purchase
Additional Securities hereunder on an Option Closing Date is subject to the same
conditions as are set forth above in clauses (a)-(m) with respect to the Firm
Securities, provided that each reference to the Closing Date in this Section 6
shall, with respect to the closing of the sale of any Additional Securities, be
deemed to be a reference to the applicable Option Closing Date.
7. Conditions to the Company's Obligations. The obligations of the Company
hereunder to issue and sell the Firm Securities to each Purchaser on the Closing
Date, or Additional Securities to any Purchaser on its Option Closing Date, as
applicable, are subject to the performance by the Purchasers of all of their
obligations hereunder, the accuracy in all material respects of the
representations and warranties of the Purchasers contained herein on and as of
the Closing Date, or such Option Closing Date, as applicable, as if made on and
as of the Closing Date, or the Option Closing Date, as applicable and the due
execution by the Purchasers of all other Transaction Documents to which the
Purchasers are parties.
8. Indemnity and Contribution. The Company and each of the Guarantors
agree to indemnify and hold harmless each Purchaser and each of their respective
directors, officers, employees, members, representatives and agents and each
person, if any, who controls each Purchaser within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages and liabilities, including without limitation
the reasonable legal fees and other reasonable expenses incurred in connection
with any suit, action or proceeding or any claim, as incurred, arising from any
breach of any representation, warranty, covenant or agreement made by it in this
Agreement (collectively, "LIABILITIES").
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to the preceding paragraph,
such person (the "INDEMNIFIED PERSON") shall promptly notify the person against
whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing, and
the Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may designate in such
20
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding; provided, however, that failure to so notify the Indemnifying Person
shall not relieve such Indemnifying Person from any liability hereunder except
to the extent the Indemnifying Person is prejudiced as a result thereof. In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnified Party is a Holder of Notes
representing not less than 33% of the aggregate principal amount of the
then-outstanding Notes, (ii) Indemnifying Person and the Indemnified Person
shall have mutually agreed to the contrary, (iii) the Indemnifying Person has
failed within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person or (iv) the named parties in any such proceeding (including
any impleaded parties) include both the Indemnifying Person and the Indemnified
Person, the Indemnifying Person proposes to have the same counsel represent it
and the Indemnified Person, and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Person may, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons in accordance with the foregoing
sentence, and that all such fees and expenses actually incurred shall be
promptly reimbursed upon delivery to the Indemnifying Person of reasonable
documentation therefor setting forth such expenses in reasonable detail. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any Liabilities by reason of
such settlement or judgment. Notwithstanding the foregoing sentence, if at any
time an Indemnified Party shall have requested the Indemnifying Party to
reimburse the Indemnified Party as contemplated by this paragraph, the
Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its consent if (i) such settlement is entered into
more than 60 business days after receipt by the Indemnifying Party of the
aforesaid request, (ii) such Indemnifying Party shall not have reimbursed the
Indemnified Party in accordance with such request prior to the date of such
settlement and (iii) such Indemnified Party shall have given such Indemnifying
Party at least 30 days' prior notice of its intention to settle. No Indemnifying
Person shall, without the prior written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Person is a party, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding and no admission of fault on the
part of the Indemnified Party.
The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies that may otherwise be available to any
Indemnified Person at law or in equity.
In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 8 is unavailable to, or insufficient to
hold harmless, an Indemnified Party in respect of any Liabilities, each
Indemnifying Party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Liabilities, including legal or other expenses incurred, as
incurred, in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Party on the one hand and the Indemnified
Party on the other from the offering of the Securities or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, not
only
21
such relative benefits but also the relative fault of the Indemnifying Party on
the one hand and the Indemnified Party on the other in connection with the
breach that resulted in such losses, claims, damages or liabilities (or actions
in respect thereof). The relative fault of the parties shall be determined by
reference to, among other things, any equitable considerations appropriate in
the circumstances. The Company and the Purchasers agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the first sentence of this
paragraph. For purposes of this paragraph, each person, if any, who controls any
of the Purchasers within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act shall have the same rights to contribution as such Purchaser.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
The indemnity agreements and contribution provisions contained in this
Section 8 and the representations and warranties of the Company, the Guarantors
and the Purchasers set forth in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Purchaser or any person
controlling any Purchaser or by or on behalf of the Company, its officers or
directors or any other person controlling the Company and (iii) acceptance of
and payment for any of the Securities.
9. Purchaser Participation Right.
(a) Right. In the event that, within one year from the date of this
Agreement, the Company proposes to issue equity securities or other
securities exercisable for or convertible into equity securities (other
than Excluded Issuances set forth in Section 9(c) below), the Company
shall offer each Purchaser the opportunity to purchase, on the same terms
and conditions as those offered to all other purchasers and pursuant to
documentation reasonably satisfactory to the Company and the Purchasers, a
percentage of such securities that is equal to the percentage of the
Company's Common Stock owned by each Purchaser immediately prior to such
transaction, counting as Common Stock (on an as-converted-to-Common Stock
basis) for the purposes of determining such percentage all issued and
outstanding securities of the Company that are exchangeable or exercisable
for, or convertible into, Common Stock ("PRO RATA PORTION").
(b) Procedure for Exercise.
(i) The Company shall deliver to each Purchaser a written notice
(the "OFFER NOTICE") of any proposed or intended issuance or sale or
exchange (the "OFFER") of the securities being offered (the "OFFERED
SECURITIES") pursuant to Section 9(a) above, which Offer Notice shall (x)
identify and describe the Offered Securities, (y) describe the price and
other terms upon which they are to be issued, sold or exchanged, and the
number or amount of the Offered Securities to be issued, sold or exchanged
and (z) offer to issue and sell to or exchange with such Purchasers a Pro
Rata Portion of the Offered Securities allocated among such Purchasers (a)
based on such Purchaser's pro rata portion of the aggregate principal
amount of Securities purchased hereunder (the "BASIC AMOUNT"), and (b)
with respect to each Purchaser that elects to purchase its Basic Amount,
any
22
additional portion of the Offered Securities attributable to the Basic
Amounts of other Purchasers as such Purchaser shall indicate it will
purchase or acquire should the other Purchasers subscribe for less than
their Basic Amounts (the "UNDERSUBSCRIPTION AMOUNT").
(ii) To accept an Offer, in whole or in part, such Purchaser must
deliver a written notice to the Company prior to the end of the tenth
Business Day after such Purchaser's receipt of the Offer Notice (the
"OFFER PERIOD"), setting forth the portion of such Purchaser's Basic
Amount, if any, that such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Purchaser elects to purchase
(in either case, the "NOTICE OF ACCEPTANCE"). If the Basic Amounts
subscribed for by all Purchasers are less than the total of all of the
Basic Amounts, then each Purchaser who has set forth an Undersubscription
Amount in its Notice of Acceptance shall be entitled to purchase, in
addition to the Basic Amounts subscribed for, the Undersubscription Amount
it has subscribed for; provided, however, that if the Undersubscription
Amounts subscribed for exceed the difference between the total of all the
Basic Amounts and the Basic Amounts subscribed for (the "AVAILABLE
UNDERSUBSCRIPTION AMOUNT"), each Purchaser who has subscribed for any
Undersubscription Amount shall be entitled to purchase only such portion
of the Available Undersubscription Amount as the Basic Amount of such
Purchaser bears to the total Basic Amounts of all Purchasers that have
subscribed for Undersubscription Amounts, subject to rounding by the
Company to the nearest whole $1,000 to the extent its deems reasonably
necessary.
(iii) The Company shall have ten Business Days from the expiration
of the Offer Period above to offer, issue, sell or exchange all or any
part of such Offered Securities as to which a Notice of Acceptance has not
been given by the Purchasers (the "REFUSED SECURITIES"), only upon terms
and conditions (including, without limitation, unit prices and interest
rates) that are not more favorable to the acquiring person or persons or
less favorable to the Company than those set forth in the Offer Notice.
(iv) In the event the Company shall propose to sell less than all
the Refused Securities (any such sale to be in the manner and on the terms
specified in Section 9(b)(iii) above), then each Purchaser may, at its
sole option and in its sole discretion, reduce the number or amount of the
Offered Securities specified in its Notice of Acceptance to an amount that
shall be not less than the number or amount of the Offered Securities that
such Purchaser elected to purchase pursuant to Section 9(b)(ii) above
multiplied by a fraction, (i) the numerator of which shall be the number
or amount of Offered Securities the Company actually proposes to issue,
sell or exchange (including Offered Securities to be issued or sold to
Purchasers pursuant to Section 9(b)(iii) above prior to such reduction)
and (ii) the denominator of which shall be the original amount of the
Offered Securities. In the event that any Purchaser so elects to reduce
the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the
reduced number or amount of the Offered Securities unless and until such
securities have again been offered to the Purchasers in accordance with
Section 9(b)(i) above.
23
(v) Upon the closing of the issuance, sale or exchange of all or
less than all of the Refused Securities, the Purchasers shall acquire from
the Company, and the Company shall issue to the Purchasers, the number or
amount of Offered Securities specified in the Notices of Acceptance, as
reduced pursuant to Section 9(b)(iii) above if the Purchasers have so
elected, upon the terms and conditions specified in the Offer. The
purchase by the Purchasers of any Offered Securities is subject in all
cases to the preparation, execution and delivery by the Company and the
Purchasers of a purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to the Purchasers and their
respective counsel.
(vi) Any Offered Securities not acquired by the Purchasers or other
persons in accordance with Section 9(b)(iii) above may not be issued, sold
or exchanged until they are again offered to the Purchasers under the
procedures specified in this Agreement.
(c) Excluded Issuances. The participation rights set forth in this
Section 9 shall not apply to the following issuances (the "EXCLUDED
ISSUANCES"): (i) the sale of the Securities under this Agreement or the
issuance of the Underlying Securities, (ii) the grant by the Company of
employee, director or consultant stock options, (iii) the grant or
issuance by the Company of Common Stock options or warrants to as full or
partial payment of a customary advisory fee payable to a nationally
recognized bank or investment bank in connection with a strategic
transaction or financing, (iv) the grant of warrants exercisable solely
for cash at a premium to the then current market price of the Common
Stock, which warrants are not a principal component of an asset based
financing with a national recognized commercial banking institution making
asset based loans in the ordinary course of its business, (v) the issuance
by the Company of any shares of Common Stock upon the exercise of an
option or warrant or the conversion of a security outstanding on the date
hereof (provided that the terms of such options or warrants are not
amended or modified in any manner after the date hereof) or an option or
warrant issued or granted in compliance with this paragraph and (vi)
pursuant to a bona fide firm commitment underwritten public offering with
a nationally recognized underwriter that results in gross proceeds to the
Company in excess of $50,000,000 (other than "at-the-market offerings" as
defined in Rule 415(a)(4) under the Securities Act and "equity lines" as
defined in SEC Quarterly Update March 2001).
10. Lock-Up. The Company hereby agrees that, without the prior written
consent of the Holders of more than 50% of the aggregate principal amount of the
Securities at the time outstanding (the "MAJORITY HOLDERS"), it will not, (x)
during the period ending 90 days after the date of this Agreement, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, and (y) during the period ending on the later
of 90 days after the date of this Agreement and the date the registration
statement required under the Registration Rights Agreement is declared
effective, file with the SEC a registration statement under the Securities Act
relating to any additional shares of its Common Stock or securities convertible
into, or exchangeable for, any shares of its Common Stock, whether any
24
such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to Excluded Issuances.
In addition, the Company agrees to use its best efforts to prevent its executive
officers and directors, in the aggregate, from taking any of the actions set
forth in clauses (i) and (ii) in the immediately preceding paragraph with
respect to in excess of 250,000 shares of Common Stock without the prior written
consent of the Majority Holders.
11. Termination. The Purchasers may terminate this Agreement by notice
given to the Company executed by the Purchasers purchasing more than 50% of the
aggregate principal amount of the Securities hereunder as set forth on Schedule
I hereto, (except in the case of clauses (i) and (v), which termination right
may be exercised by each Purchaser as to itself but not the other Purchasers),
if prior to the Closing Date (i) in the sole judgment of a Purchaser a Material
Adverse Effect shall have occurred between the date hereof and the Closing Date,
(ii) trading in any securities of or guaranteed by the Company or securities
generally on the NYSE, American Stock Exchange or the Nasdaq National Market
shall have been suspended or materially limited, (iii) a material disruption in
securities settlement, payment or clearance services in the United States shall
have occurred, (iv) any moratorium on commercial banking activities shall have
been declared by United States or New York State authorities, (v) there shall
have been (A) an outbreak or escalation of hostilities between the United States
and any foreign power, or (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States or any other national
or international calamity or emergency, or (C) any material change in the
financial markets of the United States which, in the case of (A), (B) or (C)
above and in the judgment of a Purchaser, makes it impracticable or inadvisable
to proceed with the transactions contemplated by this Agreement or (vi) the
failure of the Company to satisfy the conditions set forth in Section 6 of this
Agreement.
12. Effectiveness. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
13. Reimbursement. If this Agreement shall be terminated by the Purchasers
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Purchasers' obligations cannot be fulfilled,
the Company agrees to reimburse the Purchaser for all out of pocket expenses
(including the reasonable fees and expenses of its counsel) incurred by the
Purchasers in connection with this Agreement or the issuance of Securities
contemplated hereunder.
14. Parties. This Agreement shall inure to the benefit of and be binding
upon the Company, the Guarantors and the Purchasers, any controlling persons
referred to herein and their respective successors and, with respect to the
Purchasers, their Permitted Assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Securities
from the Purchasers shall be deemed to be a successor by reason merely of such
purchase, and rights under this Agreement may be assigned by the Purchasers only
to Permitted Assigns; provided,
25
however that any Holder of any Security (including without limitation the
Purchasers) may assign the benefits of and the right to enforce the provisions
of Section 5(o) hereof to any purchaser of Securities. For purposes of this
Section 14, "PERMITTED ASSIGNS" shall mean: (i) an "affiliate" (as defined in
Rule 501(b) of Regulation D) of the Purchaser to whom Securities are assigned
and (ii) a pledgee (or a transferee of such pledgee) that succeeds to the
Securities in connection with a bona fide margin account or other loan or
financing arrangement secured by the Securities.
15. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed by registered or
certified mail, postage prepaid, return receipt requested, or otherwise
delivered by hand or by messenger. Notices to the Purchasers shall be given at
the address as set forth on Schedule I hereto:
With a copy to (solely for informational purposes):
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
and
Sidley Xxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000.0000
Facsimile: (000) 000.0000
Attention: Xxxxxx Xxxxxxx, Esq.
Notices to the Company or the Guarantors shall be given to the Company at 0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000; Attention: Xxxxxxx X. Xxxxx,
Chief Executive Office (facsimile: (000) 000-0000).
With a copy to (solely for informational purposes): Xxxxxxx Xxxxx LLP, 000
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000; Attention: G. Xxxxxxx X'Xxxxx.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. To the fullest extent
permitted by applicable law, the Company and the Guarantors hereby irrevocably
submit to the non-exclusive jurisdiction of any New York State court or Federal
court sitting in the County of New York in respect of any suit, action or
proceeding arising out of or relating to the provisions of this Agreement and
irrevocably agree that all claims in respect of any such suit, action or
proceeding may be heard and determined in any such court. The parties hereto
hereby waive, to the fullest extent permitted by applicable law, any objection
that they may now or hereafter have to the laying of venue of any such suit,
action or proceeding brought
26
in any such court, and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
17. Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original and all of which together shall constitute one and
the same instrument.
18. Severability. If any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable, or
void, portions of such provision, or such provision in its entirety, to the
extent necessary, shall be severed from this Agreement and the balance of this
Agreement shall be enforceable in accordance with its terms.
19. Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
20. Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the holders of more than 50% of the
then-outstanding aggregate principal amount of the Securities.
21. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement among the parties with regard to the subjects
hereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge, or
termination is sought.
22. Survival. The respective representations, warranties, covenants and
agreements of the Company and the Purchasers set forth in or made pursuant to
this Agreement will remain in full force and effect and will survive delivery of
and payment for the Securities sold hereunder and any termination of this
Agreement.
23. Independence of Purchasers. The obligations of each Purchaser under
any Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under any Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by the Purchasers pursuant hereto or thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Purchasers confirm
that they have or legal counsel has on their behalf independently participated
in the negotiation of the transaction contemplated hereby. Each Purchaser shall
be entitled to independently protect and enforce its rights, including, without
27
limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any Purchaser to be
joined as an additional party in any proceeding for such purpose.
(SIGNATURE PAGES FOLLOW)
28
If the foregoing is in accordance with your understanding, please sign and
return four counterparts hereof.
Very truly yours,
COMPANY:
INTEGRATED ELECTRICAL SERVICES,
INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
GUARANTORS:
EACH OF THE GUARANTORS NAMED ON
SCHEDULE II HERETO
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Acting in his capacity as (i) the
Chief Executive Officer of the
Guarantors listed in Part I of
Schedule II and (ii) Sole Manager
and Chief Executive Officer of the
general partner of each of the
Guarantors listed in Part II of
Schedule II (such general partners
acting on behalf of such
Guarantors).
By: /s/ Xxxxxx Xxxx
----------------------------
Name: Xxxxxx Xxxx
Acting in his capacity as the
President of the Guarantors listed
in Part III of Schedule II.
By: /s/ Xxxx Xxxx
----------------------------
Name: Xxxx Xxxx
Acting in his capacity as the
Manager of the Guarantors listed in
Part IV of Schedule II.
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
PURCHASERS:
AMULET LIMITED
By: Amaranth Advisors, L.L.C.,
its Trading Advisor
By: Xxxx Xxxxxxx SVC
-----------------------------
Name: Xxxx X. Xxxxxxx
Title: Authorized Signatory
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
PURCHASERS:
MARATHON GLOBAL CONVERTIBLE
MASTER FUND, LTD.
By: /s/ X. Xxxxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
SCHEDULE I
SCHEDULE OF PURCHASERS
FIRM SECURITIES ADDITIONAL SECURITIES
------------------------------------ ------------------------------------
Name and Principal Amount Principal Amount Principal Amount Principal Amount
Address of Purchaser of Series A Notes of Series B Notes of Series A Notes of Series B Notes
---------------------------- ----------------- ----------------- ----------------- -----------------
Amulet Limited $15,000,000 $3,000,000 $7,000,000
c/o Amaranth Advisors L.L.C.
Xxx Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
(000) 000-0000 (phone)
(000) 000-0000 (fax)
Attention: General Counsel
Marathon Global Convertible $15,000,000 $3,000,000 $7,000,000
Master Fund, Ltd.
c/o Marathon Asset
Management, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
000-000-0000 (phone)
000-000-0000 (fax)
Attention: Xxxxxx X.
Xxxxxxxxxx, Esq., CPA
SCHEDULE II
EXISTING GUARANTORS
PART I:
NAME STATE OF INCORPORATION FOREIGN QUALIFICATIONS
----------------------------- ---------------------- ----------------------
Pan American Electric, Inc. Tennessee Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Florida
Georgia
Idaho
Illinois
Indiana
Kansas
Kentucky
Louisiana
Maine
Massachusetts
Michigan
Mississippi
Missouri
Nevada
New Hampshire
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
Texas
Utah
Xxxxxxxx
Xxxxxxxxxx
Wisconsin
Wyoming
Xxxxxxx-Xxxxxxxx Electric Delaware None
Holdings III, Inc.
NAME STATE OF INCORPORATION FOREIGN QUALIFICATIONS
----------------------------- ---------------------- ----------------------
Xxxxx Electrical Contractors, Delaware None
Inc.
PART II:
STATE OF FOREIGN
NAME ORGANIZATION GENERAL PARTNER QUALIFICATIONS
---------------------- ------------ ------------------ ----------------
Houston-Stafford Texas Xxxxxxx-Xxxxxxxx Alabama
Electrical Contractors Management LLC, an Arizona
LP Arizona limited Arkansas
liability company California
Colorado
Connecticut
Delaware
Washington, D.C.
Florida
Georgia
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Mississippi
Missouri
Nevada
New Jersey
North Carolina
Ohio
Oklahoma
Pennsylvania
Rhode Island
South Carolina
Tennessee
Xxxxxxxx
Xxxxxxxxxx
West Virginia
STATE OF FOREIGN
NAME ORGANIZATION GENERAL PARTNER QUALIFICATIONS
---------------------- ------------ ------------------ ----------------
Xxxxx Electric LP Texas Xxxxx Management Alabama
LLC, an Arizona Arizona
limited liability Arkansas
company California
Colorado
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Jersey
New York
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Utah
Xxxxxxxx
Xxxxxxxxxx
West Virginia
Wisconsin
Wyoming
PART III:
NAME STATE OF ORGANIZATION FOREIGN QUALIFICATIONS
----------------------------- --------------------- ----------------------
Xxxxxxx-Xxxxxxxx Holdings Arizona Illinois
LLC
Xxxxx Electrical Holdings LLC Arizona None
PART IV:
NAME STATE OF ORGANIZATION FOREIGN QUALIFICATIONS
----------------------------- --------------------- ----------------------
Xxxxxxx-Xxxxxxxx Holdings II Delaware None
LLC
Xxxxx Electrical Holdings II Delaware None
LLC
EXHIBIT A TO PURCHASE AGREEMENT - FORM OF INDENTURE
------------------------------------
INTEGRATED ELECTRICAL SERVICES, INC.
AND EACH OF THE GUARANTORS PARTY HERETO
------------------
THE BANK OF NEW YORK
TRUSTEE
------------------
INDENTURE
DATED AS OF NOVEMBER 24, 2004
-------------------
SERIES A 6.5% SENIOR CONVERTIBLE NOTES DUE 2014
SERIES B 6.5% SENIOR CONVERTIBLE NOTES DUE 2014
---------------------------------------
TABLE OF CONTENTS
Page
----
Article I Definitions and Incorporation by Reference............................................................. 1
Section 1.1 Definitions............................................................................. 1
Section 1.2 Other Definitions....................................................................... 8
Section 1.3 Incorporation by Reference of Trust Indenture Act....................................... 9
Section 1.4 Rules of Construction................................................................... 10
Section 1.5 Acts of Holders......................................................................... 10
Article II The Securities........................................................................................ 11
Section 2.1 Form and Dating......................................................................... 11
Section 2.2 Execution and Authentication............................................................ 12
Section 2.3 Registrar, Paying Agent and Conversion Agent............................................ 13
Section 2.4 Paying Agent to Hold Money and Securities in Trust...................................... 13
Section 2.5 Securityholder Lists.................................................................... 13
Section 2.6 Transfer and Exchange................................................................... 14
Section 2.7 Replacement Securities.................................................................. 15
Section 2.8 Outstanding Securities; Determination of Holder's Action................................ 16
Section 2.9 Temporary Securities.................................................................... 17
Section 2.10 Cancellation............................................................................ 17
Section 2.11 Persons Deemed Owners................................................................... 17
Section 2.12 Special Transfer Provisions............................................................. 18
Section 2.13 CUSIP Numbers........................................................................... 22
Section 2.14 Re-Issuance as Same Series.............................................................. 22
Section 2.15 Issuance of Additional Securities....................................................... 23
Article III Repurchase of Securities............................................................................. 23
Section 3.1 Purchase of Securities at Option of the Holder.......................................... 23
Section 3.2 Purchase of Securities at Option of the Holder upon a Fundamental Change................ 23
Section 3.3 Conditions to the Company's Election to Pay the Repurchase Price or the
Fundamental Change Repurchase Price in Common Stock..................................... 24
Section 3.4 Notices; Method of Exercising Repurchase Right, Etc..................................... 26
Section 3.5 Deposit of Repurchase Price or Fundamental Change Repurchase Price...................... 31
Section 3.6 Covenant to Comply With Securities Laws Upon Purchase of Securities..................... 31
Article IV Redemption of Securities.............................................................................. 31
Section 4.1 Optional Redemption..................................................................... 31
Section 4.2 Election to Redeem; Notice to Trustee................................................... 32
Section 4.3 Selection by Trustee of Securities to Be Redeemed....................................... 32
i
Section 4.4 Notice of Redemption.................................................................... 32
Section 4.5 Deposit of Redemption Price............................................................. 33
Section 4.6 Securities Payable on Redemption Date................................................... 34
Section 4.7 Conversion Arrangement on Call for Redemption........................................... 34
Article V Covenants.............................................................................................. 35
Section 5.1 Payment of Securities................................................................... 35
Section 5.2 SEC and Other Reports................................................................... 35
Section 5.3 Compliance Certificate.................................................................. 36
Section 5.4 Further Instruments and Acts............................................................ 36
Section 5.5 Maintenance of Office or Agency......................................................... 36
Section 5.6 Delivery of Certain Information......................................................... 37
Section 5.7 Existence............................................................................... 37
Section 5.8 Resale of Certain Securities............................................................ 37
Section 5.9 Liquidated Damages Under the Registration Rights Agreement.............................. 37
Section 5.10 Information for IRS Filings............................................................. 37
Section 5.11 Additional Subsidiary Guarantees........................................................ 37
Section 5.12 Book-Entry System....................................................................... 38
Article VI Make-Whole Premium and Redemption Premium............................................................. 38
Section 6.1 Entitlement to Make-Whole Premium and Redemption Premium................................ 38
Section 6.2 Payment of Make-Whole Premium and Redemption Premium.................................... 43
Section 6.3 Adjustment to the Make-Whole Premium.................................................... 43
Article VII Successor Corporation................................................................................ 44
Section 7.1 When Company May Merge or Transfer Assets............................................... 44
Article VIII Defaults and Remedies............................................................................... 45
Section 8.1 Events of Default....................................................................... 45
Section 8.2 Acceleration............................................................................ 47
Section 8.3 Other Remedies.......................................................................... 47
Section 8.4 Waiver of Past Defaults................................................................. 47
Section 8.5 Control by Majority..................................................................... 47
Section 8.6 Limitation on Suits..................................................................... 48
Section 8.7 Rights of Holders to Receive Payment.................................................... 48
Section 8.8 Collection Suit by Trustee.............................................................. 48
Section 8.9 Trustee May File Proofs of Claim........................................................ 48
Section 8.10 Priorities.............................................................................. 49
Section 8.11 Undertaking for Costs................................................................... 49
Section 8.12 Waiver of Stay, Extension or Usury Laws................................................. 50
Section 8.13 Restoration of Rights and Remedies...................................................... 50
Section 8.14 Rights and Remedies Cumulative.......................................................... 50
Section 8.15 Delay or Omission Not Waiver............................................................ 50
ii
Article IX Trustee............................................................................................... 51
Section 9.1 Duties of Trustee....................................................................... 51
Section 9.2 Rights of Trustee....................................................................... 52
Section 9.3 Individual Rights of Trustee............................................................ 53
Section 9.4 Trustee's Disclaimer.................................................................... 53
Section 9.5 Notice of Defaults...................................................................... 53
Section 9.6 Reports by Trustee to Holders........................................................... 54
Section 9.7 Compensation and Indemnity.............................................................. 54
Section 9.8 Replacement of Trustee.................................................................. 55
Section 9.9 Successor Trustee by Merger............................................................. 56
Section 9.10 Eligibility; Disqualification........................................................... 56
Section 9.11 Preferential Collection of Claims Against Company....................................... 56
Article X Discharge of Indenture................................................................................. 56
Section 10.1 Discharge of Liability on Securities.................................................... 56
Section 10.2 Repayment to the Company................................................................ 56
Article XI Amendments............................................................................................ 57
Section 11.1 Without Consent of Holders.............................................................. 57
Section 11.2 With Consent of Holders................................................................. 57
Section 11.3 Compliance with Trust Indenture Act..................................................... 59
Section 11.4 Revocation and Effect of Consents, Waivers and Actions.................................. 59
Section 11.5 Notation on or Exchange of Securities................................................... 59
Section 11.6 Trustee to Sign Supplemental Indentures................................................. 59
Section 11.7 Effect of Supplemental Indentures....................................................... 59
Article XII Subsidiary Guarantees................................................................................ 59
Section 12.1 Guarantee............................................................................... 59
Section 12.2 Limitation on Guarantor Liability....................................................... 61
Section 12.3 Execution and Delivery of Subsidiary Guarantee.......................................... 61
Section 12.4 Guarantors May Consolidate, Etc. on Certain Terms...................................... 62
Section 12.5 Releases................................................................................ 62
Article XIII Conversions......................................................................................... 63
Section 13.1 Conversion Privilege; Limitations on Conversion......................................... 63
Section 13.2 Conversion Procedure; Fractional Shares; Cash Settlement................................ 67
Section 13.3 Adjustment of Conversion Price.......................................................... 69
Section 13.4 Consolidation or Merger of the Company.................................................. 76
Section 13.5 Notice of Adjustment.................................................................... 78
Section 13.6 Notice in Certain Events................................................................ 78
Section 13.7 Company To Reserve Stock................................................................ 79
Section 13.8 Taxes on Conversion..................................................................... 79
Section 13.9 Conversion After Record Date............................................................ 79
iii
Section 13.10 Responsibility of Trustee for Conversion Provisions..................................... 80
Section 13.11 Unconditional Right of Holders to Convert............................................... 80
Section 13.12 Common Stock Restricted Securities Legends.............................................. 80
Article XIV Miscellaneous........................................................................................ 81
Section 14.1 Trust Indenture Act Controls............................................................ 81
Section 14.2 Notices................................................................................. 81
Section 14.3 Communication by Holders with Other Holders............................................. 82
Section 14.4 Certificate and Opinion as to Conditions Precedent...................................... 82
Section 14.5 Statements Required in Certificate or Opinion........................................... 82
Section 14.6 Separability Clause..................................................................... 83
Section 14.7 Rules by Trustee, Paying Agent, Conversion Agent and Registrar.......................... 83
Section 14.8 Governing Law........................................................................... 83
Section 14.9 No Recourse Against Others.............................................................. 83
Section 14.10 Successors.............................................................................. 83
Section 14.11 Multiple Originals...................................................................... 83
Section 14.12 Designated Senior Indebtedness.......................................................... 83
SCHEDULE I Existing Guarantors
EXHIBIT A Form of Global Security
EXHIBIT B Form of Certificated Security
EXHIBIT C Transfer Certificate
EXHIBIT D Institutional Accredited Investor Letter
EXHIBIT E Exchange Certificate
EXHIBIT F Common Stock Restricted Securities Legend
EXHIBIT G Form of Notation of Subsidiary Guarantee
EXHIBIT H Form of Supplemental Indenture
iv
INDENTURE, dated as of November 24, 2004, among INTEGRATED ELECTRICAL
SERVICES, INC., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal office at 0000 Xxxx Xxxx Xxxxx, Xxxxx
000, Xxxxxxx, Xxxxx 00000 (the "Company"), the Guarantors (as defined) and THE
BANK OF NEW YORK, a New York banking corporation, as Trustee hereunder (the
"Trustee").
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of the Company's Series A 6.5%
Senior Convertible Notes due 2014 (the "Series A Securities") and the Company's
Series B 6.5% Senior Convertible Notes due 2014 (the "Series B Securities" and
together with the Series A Securities, the "Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"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 or cause the direction of 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.
"AMEX" means American Stock Exchange LLC.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depositary for such Security, in each case to the extent
applicable to such transaction and as in effect from time to time.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now or hereafter in effect, or any successor thereto.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of such board.
"Board Resolution" means a resolution of the Board of Directors.
"Business Day" means a day other than a Saturday or Sunday or any day on
which banking institutions in the City of New York or Houston, Texas are
authorized or obligated by law or regulation to close.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, membership interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated) the
equity of such Person, whether now outstanding or issued after the date hereof,
including without limitation, all common stock and preferred stock.
"Certificated Securities" means Securities that are issued in
certificated, fully registered form, in the form of the Securities attached
hereto as Exhibit B.
"Change of Control" means the occurrence of one or more of the following
events:
(1) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of the
Company's assets to any Person or group of related Persons (other than to
any of the Company's wholly owned Subsidiaries) as defined in Section
13(d) of the Exchange Act;
(2) the approval by the holders of the Company's Capital Stock of
any plan or proposal for liquidation or dissolution;
(3) if any Person or group shall become the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of shares representing more
than 50% of the aggregate ordinary voting power represented by issued and
outstanding Voting Stock of the Company; or
(4) any consolidation or merger by the Company where Persons who are
beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of the
Company's shares of Voting Stock immediately prior to such transaction no
longer own at least a majority of the total voting power of the continuing
or surviving corporation or entity.
Notwithstanding anything in this Indenture to the contrary, a "Change of
Control" will not be deemed to have occurred in respect of any of the foregoing
if at least 90% of the consideration, excluding cash payments for fractional
shares, in the subject transaction or event consists of shares of Capital Stock
or American Depositary Shares that are (A) listed on, or immediately after the
transaction or event will be listed on the NYSE or another United States
national securities exchange, or (B) approved, or immediately after the
transaction or event will be approved, for quotation on the NASDAQ National
Market or any similar United States system of automated dissemination of
quotations of securities prices.
"Closing Date" means the date of this Indenture.
"Closing Price" means, for any security as of any date, the last closing
trade price for such security on the principal United States securities market
on which such security is traded (which is currently the NYSE with respect to
the Common Stock) as reported by Bloomberg Financial Markets (or any successor
thereto, "Bloomberg"), or, if such exchange begins to operate on an extended
hours basis and does not designate the closing trade price, then the last trade
price of such security prior to 4:00:00 p.m. (New York City time) as reported by
Bloomberg, or, if such exchange is not the principal securities exchange or
trading market for such security, the last trade price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing do
2
not apply, the last trade price of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by Bloomberg, or,
if no last trade price is reported for such security by Bloomberg, the average
of the highest bid prices and the lowest ask prices of any market makers for
such security as reported in the "pink sheets" by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). If the Closing Price cannot be calculated for
a security on a particular date on any of the foregoing bases, the Closing Price
of such security on such date shall be the fair market value as mutually
determined by the Company and the Majority Holders.
"Closing Price Per Share" means, with respect to the Common Stock, for any
day, the Closing Price per share of Common Stock.
"Common Stock" means the Common Stock, par value $0.01 per share, of the
Company existing on the date of this Indenture or any other shares of Capital
Stock of the Company into which such Common Stock shall be reclassified or
changed.
"Company" means the party named as the "Company" in the first introductory
paragraph of this Indenture, until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any two Officers.
"Conversion Date" means, with respect to any Holder, the date on which
such Holder has satisfied all the requirements to convert its Securities
pursuant to Section 13.2.
"Corporate Trust Office" means the principal office of the Trustee at
which at any time its corporate trust business shall be administered, which
office at the date hereof is located at 000 Xxxxxxx Xx., 0xx Xxxxx Xxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust Services, or such other address
as the Trustee may designate from time to time by notice to the Holders and the
Company, or the principal corporate trust office of any successor Trustee (or
such other address as a successor Trustee may designate from time to time by
notice to the Holders and the Company).
"Default" means an event which is, or after notice or lapse of time or
both would be, an Event of Default.
"Domestic Subsidiary" means any Subsidiary of the Company formed under the
laws of the United States or any state of the United States or the District of
Columbia or that guarantees or otherwise provides direct credit support for any
Indebtedness of the Company.
"DTC" means The Depository Trust Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fundamental Change" means any Change of Control or Termination of
Trading.
3
"Fundamental Change Conversion Period" means the period from and including
the fifteenth (15th) Trading Day before the Effective Date of a Fundamental
Change to and including the fifteenth (15th) Trading Day after the Effective
Date of the Fundamental Change.
"GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time.
"Global Security" means a Security that is registered in the register of
Securities in the name of a Depositary or a nominee thereof, which Security will
be in the form attached hereto as Exhibit A.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take or pay or to maintain financial statement
conditions or otherwise).
"Guarantors" means each Subsidiary of the Company that is bound by a
Subsidiary Guarantee in accordance with the provisions of this Indenture, and
their respective successors and assigns, in each case, until the Subsidiary
Guarantee of such Person has been released in accordance with the provisions of
this Indenture.
"Hedging Obligations" means, with respect to any Person, the net payment
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other similar
agreements or arrangements in each case entered into in the ordinary course of
business and pursuant to past practices designed to protect such Person against
fluctuations in commodity prices, interest rates or currency exchange rates.
"Holder" or "Securityholder" means a Person in whose name a Security is
registered on the Registrar's books.
"Indebtedness" of any Person means (a) any indebtedness, whether or not
contingent, (i) in respect of borrowed money, (ii) evidenced by bonds, notes,
debentures or similar instruments, (iii) letters of credit (or reimbursement
agreements in respect thereof), (iv) banker's acceptances, (v) representing
Capital Lease Obligations, (vi) the unpaid balance of the deferred purchase
price of any property, except to the extent that any such balance that
constitutes an accrued expense or trade payable in accordance with GAAP, (vii)
representing any Hedging Obligation, in each case, if and to the extent any of
the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet prepared in
accordance with GAAP, as well as all Indebtedness of others secured by a lien on
any asset of such Person (whether or not such Indebtedness is assumed by such
Person) and, (b) to the extent not otherwise included in clause (a) hereof, the
Guarantee by such Person of any Indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
4
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"Interest Payment Dates" shall mean each May 1 and November 1,
commencing on May 1, 2005.
"Interest Rate" means 6.5%.
"Issue Date" of any Security means the date on which the Security was
originally issued or deemed issued as set forth on the face of the Security.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other similar
encumbrance (including any conditional sale or other title retention agreement
and any capital lease having substantially the same economic effect as any of
the foregoing).
"Liquidated Damages" shall mean all liquidated damages then owing pursuant
to the Registration Rights Agreement and all Conversion Block Liquidated Damages
then owning pursuant to the provisions of Section 13.1(c).
"Majority Holders" shall mean the Holders of more than 50% of the
aggregate principal amount of the Securities at the time outstanding.
"NYSE" means The New York Stock Exchange, Inc.
"Officer" means the Chairman of the Board, the Vice Chairman, the Chief
Executive Officer, the President, the Chief Financial Officer, the Chief
Accounting Officer, any Vice President, the Treasurer, the Controller, or the
Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Section 14.4 and Section 14.5, signed in the name of
the Company by any two Officers, and delivered to the Trustee. An Officers'
Certificate given pursuant to Section 5.3 shall be signed by the Chief Executive
Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer or
Controller of the Company but need not contain the information specified in
Section 14.4 and Section 14.5. Upon request of the Trustee from time to time,
the Company shall deliver incumbency certificates of the Officers who are
authorized to deal with the Trustee on behalf of the Company, and such
certificates shall contain specimen or facsimile signatures of such Officers.
"Opinion of Counsel" means a written opinion containing the information
specified in Section 14.4 and Section 14.5, from legal counsel who is reasonably
acceptable to the Trustee. The counsel may be an employee of, or counsel to, the
Company or the Trustee.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
5
"Purchase Agreement" means that certain Purchase Agreement dated as of
November 22, 2004 among the Company, the Guarantors (on the Closing Date) and
the Initial Purchasers.
"QIB" means a Qualified Institutional Buyer as defined in Rule 144A of the
Securities Act.
"Redemption Conversion Period" means, with respect to any redemption
pursuant to Article IV and a related conversion of Securities pursuant to
Article XIII, the period from and including the date of the applicable
Redemption Notice to and including the last Trading Day prior to the Redemption
Date specified in such Redemption Notice. Notwithstanding the foregoing or any
other provision of this Indenture, a Redemption Conversion Period shall be
deemed not to include any day that occurs within a Fundamental Change Conversion
Period, and the Company shall not be obligated to pay any Redemption Premium in
respect of, or otherwise by reason of, any conversion of Securities that gives
rise to an obligation to pay Make-Whole Premium.
"Redemption Premium" means, with respect to Securities to be redeemed
pursuant to Article IV and with respect to Securities to be converted pursuant
to Article XIII during a Redemption Conversion Period, the aggregate net present
value of the remaining scheduled payments of interest that, but for the
redemption or conversion of such Securities hereunder, would have accrued on
such Securities during the period from the Redemption Date (in the case of a
redemption) or the Conversion Date (in the case of a conversion) through the
Stated Maturity, calculated using a discount rate equal to the Treasury Yield at
5:00 p.m. on the third Business Day preceding such Redemption Date or Conversion
Date, as the case may be.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date hereof, among the Company and the Initial Purchasers.
"Responsible Officer" means any officer within the corporate trust
department of the Trustee, including any vice president, assistant vice
president, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such Person's knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture.
"Restricted Security" means a Security required to bear the restrictive
legend set forth in the form of Security set forth in Exhibits A or B of this
Indenture, as applicable.
"Rule 144" means Rule 144 under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning assigned to it in the preamble to this
Indenture and shall include the Securities issued pursuant to Section 2.2
hereof.
6
"Securities Act" means the Securities Act of 1933, as amended.
"Securityholder" or "Holder" means a Person in whose name a Security is
registered on the Registrar's books.
"Series A Securities" has the meaning assigned to it in the preamble to
this Indenture.
"Series B Securities" has the meaning assigned to it in the preamble to
this Indenture.
"Significant Subsidiary" shall have the meaning ascribed to such term in
Rule 405 of the Securities Act.
"Stated Maturity" when used with respect to any Security, means November
1, 2014.
"Subsidiary" means any Person of which at least a majority of the
outstanding Voting Stock shall at the time directly or indirectly be owned or
controlled by the Company or by one or more Subsidiaries or by the Company and
one or more Subsidiaries.
"Subsidiary Guarantee" means the Guarantee by each Guarantor of the
Company's obligations under this Indenture and the Securities pursuant to the
terms of this Indenture.
"Termination of Trading" shall be deemed to have occurred if the Common
Stock or other Capital Stock into which the Securities are convertible is
neither listed for trading on the NYSE, the AMEX nor approved for listing on the
NASDAQ National Market or the NASDAQ SmallCap Market, and no American Depositary
Shares or similar instruments for such common stock are so listed or approved
for listing in the United States.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date of
this Indenture, provided, however, that in the event the TIA is amended after
such date, TIA means, to the extent required by any such amendment, the TIA as
so amended.
"Trading Day" means (x) if the applicable security is quoted on the Nasdaq
National Market System, a day on which trades may be made thereon or (y) if the
applicable security is listed or admitted for trading on the NYSE, the AMEX or
another national securities exchange, a day on which the NYSE, the AMEX or such
other national securities exchange is open for business or (z) if the applicable
security is not so listed, admitted for trading or quoted, any day other than a
Saturday or Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
"Treasury Yield" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519) that
has become publicly available on the third Business Day prior to the Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source for similar market data)) most nearly equal to the then
remaining term of the Securities to the Stated Maturity; provided, however, that
if the then remaining term of the Securities to the Stated Maturity is not equal
to the constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Yield shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average
7
yields of United States Treasury securities for which such yields are given,
except that if the then remaining term of the Securities to the Stated Maturity
is less than one year, the Treasury Yield will be the weekly average yield on
actually traded United States Treasury securities adjusted to a constant
maturity of one year.
"Trustee" means the party named as the "Trustee" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.
"Voting Stock" of a Person means Capital Stock of such Person of the class
or classes pursuant to which the holders thereof have the general voting power
to elect, or the general power to appoint, at least a majority of the board of
directors, managers or trustees of such Person (other than by reason of the
happening of any contingency).
"Weighted Average Price" means, for any security as of any date, the
dollar volume-weighted average price for such security on the principal United
States securities market on which such security is traded (which is currently
the NYSE with respect to the Common Stock) as reported by Bloomberg through its
"Volume at Price" functions during the period beginning at 9:30:01 a.m. (New
York City time) (or such other time as such market publicly announces is the
official open of trading), and ending at 4:00:00 p.m. (New York City time) (or
such other time as such market publicly announces is the official close of
trading), or, if such exchange is not the principal securities exchange or
trading market for such security, the dollar volume-weighted average price of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if the dollar volume-weighted average price of such
security is not reported for such security by Bloomberg, the average of the
highest bid prices and the lowest ask prices of any market makers for such
security as reported in the "pink sheets" by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). If the Weighted Average Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Weighted Average Price of such security on such date shall be the fair
market value as mutually determined by the Company and the Majority Holders.
Section 1.2 Other Definitions.
Term: Defined in:
---- ----------
"Agent Members"................................................... Section 2.12(e)(v)
"Aggregate Cap"................................................... Section 13.1(c)
"Aggregate Cap Allocation"........................................ Section 13.1(c)
"Available Treasury Shares" ...................................... Section 13.1(c)
"Bankruptcy Law".................................................. Section 12.2
"beneficial owner"................................................ Section 3.4(j)
"Calculation Agent"............................................... Section 6.1(b)
"Cash Settlement Amount".......................................... Section 13.2
"Cash Settlement Notice Period"................................... Section 13.2
8
Term: Defined in:
---- ----------
"Common Stock Restricted Securities Legend"....................... Section 13.12
"Company Notice".................................................. Section 3.4(a)
"Conversion Agent"................................................ Section 2.3
"Conversion Block Liquidated Damages"............................. Section 13.1(c)
"Conversion Obligation"........................................... Section 13.2
"Conversion Price"................................................ Section 13.1(a)
"Conversion Retraction Period".................................... Section 13.2
"Depositary"...................................................... Section 2.1
"Effective Date".................................................. Section 6.1(a)(i)
"Election of Holder to Require Repurchase"........................ Section 2.1
"Event of Default"................................................ Section 8.1
"Exchange Cap".................................................... Section 13.1(c)
"Expiration Time"................................................. Section 13.3(f)
"Fundamental Change Repurchase Date".............................. Section 3.2
"Fundamental Change Repurchase Notice"............................ Section 3.4(a)(iv)
"Fundamental Change Repurchase Price"............................. Section 3.2
"Holder's Conversion Notice"...................................... Section 13.2
"Initial Purchasers".............................................. Section 2.15
"Legend".......................................................... Section 2.6(f)
"Make-Whole Premium".............................................. Section 6.1(a)(iii)
"Make-Whole Premium Table"........................................ Section 6.1(a)(iii)(C)
"Non-Converted Principal Amount".................................. Section 13.2
"Non-Electing Share" ............................................. Section 13.4
"Notice of Default"............................................... Section 8.1
"Optional Redemption Price"....................................... Section 4.1
"Paying Agent".................................................... Section 2.3
"Purchasers"...................................................... Section 4.7
"Purchased Shares" ............................................... Section 13.3(f)
"Redemption Date"................................................. Section 4.4(a)
"Redemption Notice"............................................... Section 4.4(a)
"Registrar"....................................................... Section 2.3
"Repurchase Date"................................................. Section 3.1
"Repurchase Notice"............................................... Section 3.4(b)
"Repurchase Price"................................................ Section 3.1
"Rule 144A Information"........................................... Section 5.6
"Share Limitation"................................................ Section 13.1(b)
"Stockholder Approval"............................................ Section 13.1(c)
"Stock Price"..................................................... Section 6.1(a)(ii)
"Stock Price Cap" ................................................ Section 6.1(a)(iii)(B)
"Stock Price Threshold" .......................................... Section 6.1(a)(iii)(A)
"transfer" ....................................................... Section 2.6(g)
"Trigger Event" .................................................. Section 13.3(d)
Section 1.3 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made
9
a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the Securities and the Subsidiary Guarantees means the
Company and the Guarantors, respectively, and any successor obligor upon
the Securities and the Subsidiary Guarantees, respectively.
All other TIA terms used in this Indenture that are not defined herein and
that are defined by the TIA, defined by TIA reference to another statute or
defined by SEC rule have the meanings assigned to them by such definitions.
Section 1.4 Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including, without limitation; and
(e) words in the singular include the plural, and words in the
plural include the singular.
Section 1.5 Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an
agent 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 Trustee and, where it is hereby expressly
required, to the Company and/or the Guarantors, as described in Section
14.2. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of
Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall
10
be sufficient for any purpose of this Indenture and conclusive in favor of
the Trustee, the Company and the Guarantors, if made in the manner
provided in Section 1.5(b).
(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 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 proof of such signer's
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 Trustee deems sufficient.
(c) The principal amount and serial number of any Security and the
ownership of Securities shall be proved by the Registrar.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Security.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a Board Resolution, fix
in advance a record date for the determination of Holders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so. If such a
record date is fixed, such request, demand, authorization, direction,
notice, consent, waiver or other Act may be given before or after such
record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for
that purpose the outstanding Securities shall be computed as of such
record date; provided, however, that no such authorization, agreement or
consent by the Holders on such record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating. The Securities (including the form of
election to require repurchase (the "Election of Holder to Require Repurchase")
and the Trustee's certificate of authentication) shall be substantially in the
form of Exhibits A and B, which are a part of this Indenture. The Securities may
have such other notations, legends or endorsements required by
11
law, stock exchange rule or usage (provided, however, that any such notation,
legend or endorsement required by usage is in a form reasonably acceptable to
the Company). The Company shall provide any such other notations, legends or
endorsements to the Trustee in writing. Each Security shall be dated the date of
its authentication.
The Securities shall initially be issued in the form of a Global Security,
which shall be (a) substantially in the form of Exhibit A attached hereto, (b)
registered in the name of DTC or the nominee thereof (DTC, or any successor
thereto, and any such nominee being hereinafter referred to as the
"Depositary"), (c) executed by the Company, and authenticated and delivered by
the Trustee, in accordance with this Section 2.1 and with Section 2.2 and (d)
deposited with the Trustee at its Corporate Trust Office, as custodian for the
Depositary.
Each Global Security shall represent such of the outstanding Securities as
shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Securities from time to time endorsed thereon
and that the aggregate amount of outstanding Securities represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges,
repurchases and conversions. Any adjustment of the aggregate principal amount of
a Global Security to reflect the amount of any increase or decrease in the
amount of outstanding Securities represented thereby shall be made by the
Trustee in accordance with instructions given by the Holder thereof as required
by Section 2.12 hereof and shall be made on the records of the Trustee, the
Registrar and the Depositary.
Section 2.2 Execution and Authentication. The Securities shall be executed
on behalf of the Company by any Officer. The signature of the Officer on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were, at the time of the execution of the Securities, Officers 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 Securities or
did not hold such offices at the date of authentication of such Securities.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
The Trustee shall authenticate and deliver for original issue, without any
further action by the Company (notwithstanding anything to the contrary set
forth in this Indenture), (a) on the Closing Date, Securities with an aggregate
principal amount not to exceed $36,000,000 and (b) then thereafter in accordance
with the provisions of Section 2.15, Securities (with an aggregate principal
amount not to exceed $14,000,000) in an aggregate principal amount specified in
one or more Company Orders (such Securities issued after the Closing Date, the
"Additional Securities").
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The Securities shall be issued only in registered form without coupons and
only in denominations of $1,000 of principal amount and any integral multiple of
$1,000.
Section 2.3 Registrar, Paying Agent and Conversion Agent. The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange ("Registrar"), an office or agency in
the Borough of Manhattan, The City of New York, where Securities may be
presented for purchase or payment ("Paying Agent") and an office or agency where
Securities may be presented for conversion ("Conversion Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars, one or more additional paying agents
and one or more additional conversion agents. The term Paying Agent includes any
additional paying agent, including any named pursuant to Section 5.5. The term
Conversion Agent includes any additional conversion agent, including any named
pursuant to Section 5.5.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent or co-registrar (in each case, if such
Registrar, agent or co-registrar is a Person other than the Trustee). The
agreement shall implement the provisions of this Indenture that relate to such
agent. The Company shall notify the Trustee of the name and address of any such
agent. If the Company fails to maintain a Registrar, Paying Agent or Conversion
Agent, the Trustee shall act as such and shall be entitled to appropriate
compensation therefor pursuant to Section 9.7. The Company or any Subsidiary or
an Affiliate of either of them may not act as Paying Agent, Registrar,
Conversion Agent or co-registrar under this Indenture.
The Company initially appoints the Trustee as Registrar, Conversion Agent
and Paying Agent in connection with the Securities.
Section 2.4 Paying Agent to Hold Money and Securities in Trust. Except as
otherwise provided herein, on or prior to each due date of payments in respect
of any Security, the Company shall deposit with the Paying Agent a sum of money
(in immediately available funds if deposited on the due date) sufficient to make
such payments when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the making of payments in respect of the Securities and shall
notify the Trustee of any default by the Company in making any such payment. At
any time during the continuance of any such default, the Paying Agent shall,
upon the written request of the Trustee, forthwith pay to the Trustee all money
so held in trust. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee and to account for any funds and Common Stock
disbursed by it. Upon doing so, the Paying Agent shall have no further liability
for the money.
Section 2.5 Securityholder Lists. If the Trustee is not the Registrar, the
Company shall cause to be furnished to the Trustee at least semi-annually on
January 1 and July 1 all information in the possession or control of the Company
as to the names and addresses of the Securityholders dated within 15 days of the
date on which the list is furnished and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders. The Trustee
shall
13
preserve in as current a form as is reasonably practicable all information
received from the Company as to the names and addresses of Securityholders.
Section 2.6 Transfer and Exchange.
(a) Subject to Section 2.12 hereof, upon surrender for registration
of transfer of any Security, together with a written instrument of
transfer satisfactory to the Registrar duly executed by the Securityholder
or such Securityholder's attorney duly authorized in writing, at the
office or agency of the Company designated as Registrar or co-registrar
pursuant to Section 2.3, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denomination or
denominations, of a like aggregate principal amount and of like series.
The Company shall not charge a service charge for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to pay all taxes, assessments or other governmental charges
that may be imposed in connection with the transfer or exchange of the
Securities from the Securityholder requesting such transfer or exchange,
other than exchanges pursuant to Section 2.9 not involving any transfer.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like
aggregate principal amount and series upon surrender of the Securities to
be exchanged, together with a written instrument of exchange satisfactory
to the Registrar duly executed by the Securityholder or such
Securityholder's attorney duly authorized in writing, at such office or
agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
The Company shall not be required to make, and the Registrar need
not register, transfers or exchanges of any Securities in respect of which
a Repurchase Notice or Fundamental Change Repurchase Notice has been given
and not withdrawn by the Holder thereof in accordance with the terms of
this Indenture.
(b) Notwithstanding any provision to the contrary herein, so long as
a Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, shall be
made only in accordance with Section 2.12 and this Section 2.6(b).
Transfers of a Global Security shall be limited to transfers of such
Global Security in whole or in part, to the Depositary, to nominees of the
Depositary or to a successor of the Depositary or such successor's
nominee.
(c) Successive registrations and registrations of transfers and
exchanges as aforesaid may be made from time to time as desired, and each
such registration shall be noted on the register for the Securities.
(d) Any Registrar appointed pursuant to Section 2.3 hereof shall
provide to the Trustee such information as the Trustee may reasonably
require in connection with the delivery by such Registrar of Securities
upon transfer or exchange of Securities.
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(e) No Registrar shall be required to make registrations of transfer
or exchange of Securities during any periods designated in the text of the
Securities or in this Indenture as periods during which such registration
of transfers and exchanges need not be made.
(f) If Securities are issued upon the registration of transfer,
exchange or replacement of Securities subject to restrictions on transfer
and bearing the legends set forth on the forms of Securities attached
hereto as Exhibits A and B setting forth such restrictions (collectively,
the "Legend"), or if a request is made to remove the Legend on a Security,
the Securities so issued shall bear the Legend, or the Legend shall not be
removed, as the case may be, unless there is delivered to the Company and
the Registrar such satisfactory evidence, which shall include an Opinion
of Counsel, as may be reasonably required by the Company and the
Registrar, that neither the Legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with
the provisions of Rule 144A or Rule 144 or that such Securities are not
"restricted" within the meaning of Rule 144. Upon (i) provision of such
satisfactory evidence or (ii) notification by the Company to the Trustee
and Registrar of the sale of such Security pursuant to a registration
statement that is effective at the time of such sale, the Trustee, upon
receipt of a Company Order, shall authenticate and deliver a Security that
does not bear the Legend. If the Legend is removed from the face of a
Security and the Security is subsequently held by an Affiliate of the
Company, the Company shall use its reasonable best efforts to reinstate
the Legend.
The Trustee and the Registrar shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect
to any transfer of any interest in any Security (including any transfers
between or among Depositary participants or beneficial owners of interests
in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly required
by, and to do so if and when expressly required by the terms of, this
Indenture, and to examine the same to determine substantial compliance as
to form with the express requirements hereof.
(g) Notwithstanding the provisions of Section 2.6(a) above or
Section 2.12(b) and (c) below, a pledge or other hypothecation of any
Security to a bank or other financial institution that is either an
accredited investor or a QIB, in connection with any bona fide margin
agreement or other loan or financing arrangement shall not be deemed to
constitute a "transfer" for purposes of this Indenture. Any foreclosure or
other disposition of any Securities so pledged or otherwise hypothecated
by such bank or other financial institution shall constitute a "transfer"
for all purposes hereunder and shall be made only in accordance with the
applicable provisions hereof.
Section 2.7 Replacement Securities. If (a) any mutilated Security is
surrendered to the Trustee, or (b) the Company and the Trustee receive evidence
to their satisfaction of the destruction, loss or theft of any Security, and
there is delivered to the Company and the Trustee such security 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 Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and upon its written request the
Trustee shall
15
authenticate and deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and series, bearing a certificate number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be purchased by the
Company pursuant to Article III hereof, the Company in its discretion may,
instead of issuing a new Security, pay or purchase such Security, as the case
may be.
Upon the issuance of any new Securities under this Section 2.7, 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 Trustee) connected therewith.
Every new Security issued pursuant to this Section 2.7 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section 2.7 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 Securities.
Section 2.8 Outstanding Securities; Determination of Holder's Action.
Securities outstanding at any time are all the Securities authenticated by the
Trustee except for those cancelled by it, those paid pursuant to Section 2.7,
those delivered to it for cancellation and those described in this Section 2.8
as not outstanding. A Security does not cease to be outstanding because the
Company or an Affiliate thereof holds the Security; provided, however, that in
determining whether the Holders of the requisite principal amount of Securities
have given or concurred in any request, demand, authorization, direction,
notice, consent, waiver, or other Act hereunder, Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or such
other obligor shall be disregarded and deemed not to be outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, waiver or other
Act, only Securities which a Responsible Officer knows are so owned shall be so
disregarded. Subject to the foregoing, only Securities outstanding at the time
of such determination shall be considered in any such determination (including,
without limitation, determinations pursuant to Article VIII and Article XI).
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds, in accordance with this Indenture, on the
Business Day following a Repurchase Date or Fundamental Change Repurchase Date,
or on Stated Maturity, money sufficient to pay Securities payable on that date,
then immediately after such Xxxxxxxxxx
00
Xxxx, Xxxxxxxxxxx Xxxxxx Xxxxxxxxxx Date or Stated Maturity, as the case may be,
such Securities shall cease to be outstanding and interest and Liquidated
Damages, if any, on such Securities shall cease to accrue.
If a Security is converted in accordance with Article XIII, then from and
after the time of conversion on the date of conversion, such Security shall
cease to be outstanding and interest, and Liquidated Damages, if any, shall
cease to accrue on such Security.
Section 2.9 Temporary Securities. Pending the preparation of definitive
Securities, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 2.3,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
Section 2.10 Cancellation. All Securities surrendered for payment,
purchased by the Company pursuant to Article III, conversion or registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder that the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. The Company may not issue new Securities to
replace Securities it has repurchased, paid for or delivered to the Trustee for
cancellation, or that any Holder has converted pursuant to Article XIII. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section 2.10, except as expressly permitted by
this Indenture. All cancelled Securities held by the Trustee shall be disposed
of by the Trustee in accordance with the Trustee's customary procedure.
Section 2.11 Persons Deemed Owners. Prior to due presentment of a Security
for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may deem and treat the Person in whose name such Security
is registered as the owner of such Security for the purpose of receiving payment
of principal of the Security or the payment of any Repurchase Price or
Fundamental Change Repurchase Price in respect thereof, and interest thereon,
for the purpose of conversion and for all other purposes whatsoever, whether or
not such Security be overdue, and neither the Company, the Trustee nor any agent
of the Company or the Trustee shall be affected by notice to the contrary.
17
Section 2.12 Special Transfer Provisions.
(a) Notwithstanding any other provisions of this Indenture or the
Securities, (A) transfers of a Global Security, in whole or in part, shall
be made only in accordance with Section 2.6 and Section 2.12(a)(i) below,
(B) transfers of a beneficial interest in a Global Security in exchange
for a Certificated Security shall comply with Section 2.6, Section
2.12(a)(ii) below and Section 2.12(e)(i) below, and (C) transfers of a
Certificated Security shall comply with Section 2.6 and Section
2.12(a)(iii) and (iv) below.
(i) Transfer of Global Security. A Global Security may not be
transferred, in whole or in part, to any Person other than the
Depositary or a nominee or any successor thereof, and no such
transfer to any such other Person may be registered; provided,
however, that this clause (i) shall not prohibit any transfer of a
Security that is issued in exchange for a Global Security but is not
itself a Global Security. No transfer of a Security to any Person
shall be effective under this Indenture or the Securities unless and
until such Security has been registered in the name of such Person.
Nothing in this Section 2.12(a)(i) shall prohibit or render
ineffective any transfer of a beneficial interest in a Global
Security effected in accordance with the other provisions of this
Section 2.12(a).
(ii) Restrictions on Transfer of a Beneficial Interest in a
Global Security in Exchange for a Certificated Security. A
beneficial interest in a Global Security may not be exchanged for a
Certificated Security except upon satisfaction of the requirements
set forth below and in Section 2.12(e)(i) below. Upon receipt by the
Trustee of a transfer of a beneficial interest in a Global Security
in accordance with Applicable Procedures for a Certificated Security
in the form satisfactory to the Trustee, together with:
(A) so long as the Securities are Restricted Securities,
certification in the form set forth in Exhibit C;
(B) written instructions to the Trustee to make, or
direct the Registrar to make, an adjustment on its books and
records with respect to such Global Security to reflect a
decrease in the aggregate principal amount of the Securities
represented by the Global Security, such instructions to
contain information regarding the Depositary account to be
credited with such decrease; and
(C) if the Company so reasonably requests, an opinion of
counsel or other evidence reasonably satisfactory to it as to
the compliance with the restrictions set forth in the Legend,
then the Trustee shall cause, or direct the Registrar to cause, in
accordance with the standing instructions and procedures existing
between the Depositary and the Registrar, the aggregate principal
amount of the Securities represented by the Global Security to be
decreased by the aggregate principal amount of the Certificated
Security to be issued, shall issue such Certificated Security and
shall
18
debit or cause to be debited to the account of the Person specified
in such instructions a beneficial interest in the Global Security
equal to the principal amount of the Certificated Security so
issued.
(iii) Transfer and Exchange of Certificated Securities. When
Certificated Securities are presented to the Registrar with a
request:
(y) to register the transfer of such Certificated
Securities; or
(z) to exchange such Certificated Securities for an
equal principal amount of Certificated Securities of other
authorized denominations,
the Registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are
met; provided, however, that the Certificated Securities surrendered
for transfer or exchange:
(A) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Company and the Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing; and
(B) so long as such Securities are Restricted
Securities, such Securities are being transferred or exchanged
pursuant to an effective registration statement under the
Securities Act or pursuant to clause (1), (2) or (3) below,
and are accompanied by the following additional information
and documents, as applicable:
(1) if such Certificated Securities are being
delivered to the Registrar by a Holder for registration
in the name of such Holder, without transfer, a
certification from such Holder to that effect; or
(2) if such Certificated Securities are being
transferred to the Company, a certification to that
effect; or
(3) if such Certificated Securities are being
transferred pursuant to an exemption from registration,
(i) a certification to that effect (in the form set
forth in Exhibit C, if applicable) and (ii) if the
Company so requests, an opinion of counsel or other
evidence reasonably satisfactory to it as to the
compliance with the restrictions set forth in the
Legend.
(iv) Restrictions on Transfer of a Certificated Security for a
Beneficial Interest in a Global Security. A Certificated Security
may not be exchanged for a beneficial interest in a Global Security
except upon satisfaction of the requirements set forth below.
19
Upon receipt by the Trustee of a Certificated Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(A) so long as the Securities are Restricted Securities,
certification, in the form set forth in Exhibit E, that either
(x) the Holder of such Certificated Security is a QIB and is
exchanging its Certificated Security for an interest in the
Global Security pursuant to Section 2.1 or (y) the Securities
represented by such Certificated Security are being
transferred in compliance with Rule 144A; and
(B) written instructions directing the Trustee to make,
or to direct the Registrar to make, an adjustment on its books
and records with respect to such Global Security to reflect an
increase in the aggregate principal amount of the Securities
represented by the Global Security, such instructions to
contain information regarding the Depositary account to be
credited with such increase, then the Trustee shall cancel
such Certificated Security and cause, or direct the Registrar
to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Registrar,
the aggregate principal amount of Securities represented by
the Global Security to be increased by the aggregate principal
amount of the Certificated Security to be exchanged, and shall
credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the
Global Security equal to the principal amount of the
Certificated Security so cancelled. If no Global Securities
are then outstanding, the Company shall issue and the Trustee
shall authenticate, upon written order of the Company in the
form of an Officers' Certificate, a new Global Security in the
appropriate principal amount.
(b) Subject to the succeeding Section 2.12(c), every Security shall
be subject to the restrictions on transfer provided in the Legend
including the delivery of an opinion of counsel, if so provided. Whenever
any Restricted Security is presented or surrendered for registration of
transfer or for exchange for a Security registered in a name other than
that of the Holder, such Security must be accompanied by a certificate in
substantially the form set forth in Exhibit C, dated the date of such
surrender and signed by the Holder of such Security, as to compliance with
such restrictions on transfer. The Registrar shall not be required to
accept for such registration of transfer or exchange any Security not so
accompanied by a properly completed certificate.
(c) The restrictions imposed by the Legend upon the transferability
of any Security shall cease and terminate when such Security has been sold
pursuant to an effective registration statement under the Securities Act
or transferred in compliance with Rule 144 or, if earlier, upon the
expiration of the holding period applicable to sales thereof under Rule
144(k). Any Security as to which such restrictions on transfer shall have
expired in accordance with their terms or shall have terminated may, upon
a surrender of such Security for exchange to the Registrar in accordance
with the
20
provisions of this Section 2.12 (accompanied, in the event that such
restrictions on transfer have terminated by reason of a transfer in
compliance with Rule 144, by an opinion of counsel having substantial
experience in practice under the Securities Act and otherwise reasonably
acceptable to the Company, addressed to the Company and in form reasonably
acceptable to the Company, to the effect that the transfer of such
Security has been made in compliance with Rule 144), be exchanged for a
new Security, of like tenor and aggregate principal amount, which shall
not bear the restrictive Legend. The Company shall inform the Trustee of
the effective date of any registration statement registering the
Securities under the Securities Act. The Trustee shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance
with the aforementioned opinion of counsel or registration statement.
(d) As used in the preceding two paragraphs of this Section 2.12,
the term "transfer" encompasses any sale, transfer, loan or other
disposition of any Security; but subject to the provisions of Section
2.6(g) above.
(e) The provisions of this paragraph (e) shall apply only to Global
Securities:
(i) Notwithstanding any other provisions of this Indenture or
the Securities, a Global Security shall not be exchanged in whole or
in part for a Security registered in the name of any Person other
than the Depositary or one or more nominees thereof, provided,
however, that a Global Security may be exchanged for Securities
registered in the names of any Person designated by the Depositary
in the event that (x) the Depositary has notified the Company that
it is unwilling or unable to continue as Depositary for such Global
Security or such Depositary has ceased to be a "clearing agency"
registered under the Exchange Act, and a successor Depositary is not
appointed by the Company within 90 days or (y) an Event of Default
has occurred and is continuing with respect to the Securities. Any
Global Security exchanged pursuant to clause (x) above shall be so
exchanged in whole and not in part, and any Global Security
exchanged pursuant to clause (y) above may be exchanged in whole or
from time to time in part as directed by the Depositary. Any
Security issued in exchange for a Global Security or any portion
thereof shall be a Global Security; provided, however, that any such
Security so issued that is registered in the name of a Person other
than the Depositary or a nominee thereof shall not be a Global
Security.
(ii) Securities issued in exchange for a Global Security or
any portion thereof shall be issued in definitive, fully registered
form, without interest coupons, shall have an aggregate principal
amount equal to that of such Global Security or portion thereof to
be so exchanged, shall be registered in such names and be in such
authorized denominations as the Depositary shall designate and shall
bear the applicable legends provided for herein. Any Global Security
to be exchanged in whole shall be surrendered by the Depositary to
the Trustee, as Registrar. With regard to any Global Security to be
exchanged in part, either such Global Security shall be so
surrendered for exchange or, if the Trustee is acting as custodian
for the Depositary or its nominee with respect to such Global
Security, the principal amount thereof shall be reduced, by an
amount equal to the portion
21
thereof to be so exchanged, by means of an appropriate adjustment
made on the records of the Trustee. Upon any such surrender or
adjustment, the Trustee shall authenticate and deliver the Security
issuable on such exchange to or upon the order of the Depositary or
an authorized representative thereof.
(iii) Subject to the provisions of clause (v) below, the
registered Holder may grant proxies and otherwise authorize any
Person, including Agent Members (as defined below) and Persons that
may hold interests through Agent Members, to take any action which a
Holder is entitled to take under this Indenture or the Securities.
(iv) In the event of the occurrence of any of the events
specified in clause (i) above, the Company will promptly make
available to the Trustee a reasonable supply of Certificated
Securities in definitive, fully registered form, without interest
coupons.
(v) Neither any members of, or participants in, the Depositary
(collectively, the "Agent Members") nor any other Persons on whose
behalf Agent Members may act shall have any rights under this
Indenture with respect to any Global Security registered in the name
of the Depositary or any nominee thereof, or under any such Global
Security, and the Depositary or such nominee, as the case may be,
may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner and Holder of such
Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or
any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the
Depositary or such nominee, as the case may be, or impair, as
between the Depositary, its Agent Members and any other Person on
whose behalf an Agent Member may act, the operation of customary
practices of such Persons governing the exercise of the rights of a
Holder of any Security.
Section 2.13 CUSIP Numbers. The Company in issuing the Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
Section 2.14 Re-Issuance as Same Series. In the event the Company shall
issue new Securities or replacement Securities in connection with any exchange,
transfer or other re-issuance, the newly issued Securities shall be of the same
series as the Securities surrendered in such transfer, exchange or other
re-issuance.
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Section 2.15 Issuance of Additional Securities. The Company will be
entitled to issue Securities under this Indenture in an aggregate principal
amount of $36 million on the Closing Date and up to an additional aggregate
principal amount not to exceed $14 million to the initial purchasers of the
Securities on such date (the "Initial Purchasers"), or a later date, pursuant to
the terms of the Purchase Agreement. Other than as set forth in the preceding
sentence, the Company shall not issue any Securities under this Indenture.
ARTICLE III
REPURCHASE OF SECURITIES
Section 3.1 Purchase of Securities at Option of the Holder. Each Holder
shall have the right, at the Holder's option, to require the Company to
repurchase, and upon the exercise of such right the Company shall repurchase,
all of such Holder's Securities not theretofore called for redemption, or any
portion of the principal amount thereof that is equal to $1,000 or any integral
multiple of $1,000 in excess thereof on November 1, 2008 (the "Repurchase
Date"), provided that no single Security may be repurchased in part unless the
portion of the principal amount of such Security to be outstanding after such
repurchase is equal to $1,000 or an integral multiple of U.S. $1,000 in excess
thereof), at a repurchase price equal to 100% of the principal amount of the
Securities to be repurchased plus interest (and Liquidated Damages, if any)
accrued but unpaid to, but excluding, the Repurchase Date (the "Repurchase
Price"), subject to the provisions of Section 3.3. 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 Section 3.3 and subject to the Share
Limitation, by delivery of shares of Common Stock or a combination of cash and
Common Stock. Each Holder whose Securities are repurchased pursuant to this
Section 3.1 shall receive the same percentage(s) of cash and/or shares of Common
Stock in payment of the Repurchase Price for such Securities, except with regard
to the payment of cash in lieu of fractional shares of Common Stock. The number
of shares of Common Stock to be delivered shall equal such number of shares of
Common Stock as have a fair market value (as determined under Section 3.3
hereof) equal to the percentage of the Repurchase Price to be paid in shares of
Common Stock as set forth in the applicable Company Notice. At any time prior to
the delivery of the applicable Company Notice, the Company may unilaterally
irrevocably waive its right under this Section 3.1 to pay all or any portion of
the Repurchase Price in shares of Common Stock by providing written notice of
such waiver to the Trustee and the Holders.
Section 3.2 Purchase of Securities at Option of the Holder upon a
Fundamental Change. In the event that a Fundamental Change shall occur, then
each Holder shall have the right, at the Holder's option, to require the Company
to repurchase, and upon the exercise of such right the Company shall repurchase,
all of such Holder's Securities not theretofore called for redemption, or any
portion of the principal amount thereof that is equal to $1,000 or any integral
multiple of $1,000 in excess thereof (provided, however, that no single Security
may be repurchased in part unless the portion of the principal amount of such
Security to be outstanding after such repurchase is equal to $1,000 or an
integral multiple of $1,000 in excess thereof), on the date (the "Fundamental
Change Repurchase Date") that is (i) in the event of a Fundamental Change
arising from a Change of Control, on the first Business Day after expiration of
the Fundamental Change Conversion Period and (ii) otherwise on the 35th Business
Day after a Termination of Trading, at a repurchase price equal to 100% of the
principal amount of the
23
Securities to be repurchased plus interest (and Liquidated Damages, if any)
accrued but unpaid to, but excluding, the Fundamental Change Repurchase Date
(the "Fundamental Change Repurchase Price"). Such right to require the
repurchase of the Securities shall not continue after a discharge of the Company
from its obligations with respect to the Securities in accordance with Article
X, unless a Fundamental Change shall have occurred prior to such discharge. The
Fundamental Change Repurchase Price shall be paid in cash; provided, that the
Company shall have the option to pay the Fundamental Change Repurchase Price,
subject to the fulfillment by the Company of the conditions set forth in Section
3.3 and subject to the Share Limitation, by delivery of shares of Common Stock
or a combination of cash and Common Stock. Each Holder whose Securities are
repurchased pursuant to this Section 3.2 shall receive the same percentage(s) of
cash and/or shares of Common Stock in payment of the Fundamental Change
Repurchase Price for such Securities, except with regard to the payment of cash
in lieu of fractional shares of Common Stock. The number of shares of Common
Stock to be delivered shall equal such number of shares of Common Stock as have
a fair market value (as determined under Section 3.3 hereof) equal to the
percentage of the Fundamental Change Repurchase Price to be paid in shares of
Common Stock as set forth in the applicable Company Notice. At any time prior to
the delivery of the applicable Company Notice, the Company may unilaterally
irrevocably waive its right under this Section 3.2 to pay all or any portion of
the Fundamental Change Repurchase Price in shares of Common Stock by providing
written notice of such waiver to the Trustee and the Holders.
Section 3.3 Conditions to the Company's Election to Pay the Repurchase
Price or the Fundamental Change Repurchase Price in Common Stock. The Company
may elect to pay all or any portion of the Repurchase Price or the Fundamental
Change Repurchase Price, as the case may be, in shares of Common Stock if and
only if the following conditions shall have been satisfied (or waived by the
applicable Holder):
(a) The shares of Common Stock deliverable in payment of the
Repurchase Price, or the Fundamental Change Repurchase Price, as the case
may be, shall not exceed the amount calculated pursuant to the provisions
of Section 3.3(f) below. For purposes of this Article III only, the "fair
market value" of shares of Common Stock means the product of (i) 0.97
times (ii) the arithmetic average of the Closing Prices per share of the
Common Stock for the fifteen (15) consecutive Trading Days immediately
preceding and including the third Trading Day prior to the Repurchase Date
or the Fundamental Change Repurchase Date, as the case may be,
appropriately adjusted to take into account the occurrence, during such
fifteen (15) Trading Day period, of any event described in Section 13.3;
(b) The Repurchase Price or the Fundamental Change Repurchase Price,
as the case may be, shall be paid only in cash (1) in the event of a
Termination of Trading or (2) in the event that any shares of Common Stock
to be issued upon repurchase of Securities hereunder (i) require
registration or approval under any federal securities law before such
shares may be freely transferable without being subject to any transfer
restrictions under the Securities Act upon repurchase and if such
registration is not completed or does not become effective prior to the
delivery of the Company Notice and such completion and effectiveness is
not maintained from after delivery of such Company Notice to the
Repurchase Date or the Fundamental Change Repurchase Date, as the case may
be, or (ii)
24
require registration or qualification under any state securities law
before such shares may be validly issued or delivered upon repurchase and
if such registration or qualification is not completed or does not become
effective prior to the delivery of the applicable Company Notice and such
completion and effectiveness is not maintained from after delivery of such
Company Notice to the Repurchase Date or the Fundamental Change Repurchase
Date, as the case may be, or (iii) violates any Federal or state
securities laws;
(c) The shares of Common Stock to be issued in respect of the
Repurchase Price or the Fundamental Change Repurchase Price, as the case
may be, is, or shall have been, listed or approved for listing on the
NYSE, the AMEX, the NASDAQ National Market or the NASDAQ SmallCap Market,
in either case, prior to the delivery of the applicable Company Notice;
(d) The Company shall have sufficient authorized but unissued (or
issued but not outstanding) shares of Common Stock (or, in the event of a
merger, consolidation or other similar transaction involving the Company
that is otherwise permitted under the terms of this Indenture in which the
Company is not the surviving entity, out of the authorized but unissued
Common Stock of the surviving entity or its direct or indirect parent
entity) to issue the shares of Common Stock to be issued upon repurchase
of the Securities on the Repurchase Date or the Fundamental Change
Repurchase Date, as the case may be, and, such Common Stock will upon
issue, be duly and validly issued and fully paid and nonassessable and
free of any preemptive rights;
(e) The Company has timely given a Company Notice containing all the
information required under Section 3.4 and such Company Notice shall set
forth the percentage of the Repurchase Price or the Fundamental Change
Repurchase Price, as the case may be, stated in a total principal amount
as if all of the Securities then outstanding shall be redeemed on the
applicable Repurchase Date or the applicable Fundamental Change Repurchase
Date, as the case may be, that will be paid in shares of Common Stock;
(f) The total principal amount to be paid in shares of Common Stock
shall not exceed 20% of the product of (x) the total daily trading volume
of the Common Stock as reported by Bloomberg through its "HP" function
during the ten Trading Days immediately preceding the date of delivery of
the Company Notice and (y) the arithmetic average of the Weighted Average
Price per share of Common Stock on each of such ten Trading Days as
reported by Bloomberg through its "HP" function; and
(g) The Trustee shall receive at the time of delivery of the
applicable Company Notice and just prior to the Repurchase Date or the
Fundamental Change Repurchase Date, as the case may be, (i) an Officer's
Certificate stating that the terms of the issuance of the shares of Common
Stock are in conformity with this Indenture, (ii) an Opinion of Counsel to
the effect that the shares of Common Stock to be issued by the Company in
respect of the Repurchase Price or the Fundamental Change Repurchase
Price, as the case may be, have been duly authorized and, when issued and
delivered pursuant to the terms of this Indenture, will be validly issued,
fully paid and non-assessable and (iii) an
25
Officer's Certificate stating that the conditions to the issuance of the
shares of Common Stock have been satisfied.
Promptly after determination of the actual number of shares of Common Stock to
be issued upon repurchase of Securities, the Company shall disseminate a press
release through Dow Xxxxx & Company, Inc. or Bloomberg Business News containing
this information or publish the information on the Company's web site or through
such other public medium as the Company may use at that time.
Section 3.4 Notices; Method of Exercising Repurchase Right, Etc.
(a) Unless the Company shall have theretofore called for redemption
all of the outstanding Securities, the Company shall give to the Trustee,
the Paying Agent and all Holders of Securities, in the manner provided in
this Section 3.4, notice (the "Company Notice") (i) on or before the 20th
Business Day prior to the Repurchase Date or, in the event of a
Fundamental Change arising from a Change of Control, the anticipated
Effective Date (but in no event earlier than 45 days prior to the
Repurchase Date or anticipated Effective Date, as the case may be), and
(ii) within 15 Business Days after the Company knows or reasonably should
know of the occurrence of a Fundamental Change that arises as a result of
any Termination of Trading. Prior to or concurrently with the delivery of
any Company Notice, the Company will issue a press release or publish such
information on the Company's then existing website including the
information required to be included in such Company Notice hereunder. The
Company shall also deliver a copy of any Company Notice to the Trustee. At
the request and expense of the Company on or before the fifth Business Day
prior to the date on which the Company Notice is to be mailed, the Trustee
shall give the Company Notice to the Holders.
Each Company Notice shall state:
(i) the Repurchase Date or the Fundamental Change Repurchase
Date, as the case may be,
(ii) the date by which the repurchase right must be exercised,
(iii) the Repurchase Price or the Fundamental Change
Repurchase Price, as the case may be, and whether the Repurchase
Price or the Fundamental Change Repurchase Price, as the case may
be, shall be paid by the Company in cash or by delivery of shares of
Common Stock, or a specified combination thereof and the percentage
of the Repurchase Price or the Fundamental Change Repurchase Price,
as the case may be, stated in a total principal amount as if all of
the Securities then outstanding shall be redeemed on the applicable
Repurchase Date or the applicable Fundamental Change Repurchase
Date, as the case may be, that will be paid in shares of Common
Stock (which indication shall be irrevocable, subject to the
satisfaction (or waiver) of the conditions set forth in Section
3.3),
(iv) if the notice relates to the occurrence of a Fundamental
Change, the events causing the Fundamental Change, the date of the
Fundamental Change
26
and that the Securities with respect to which a Holder gives a
Repurchase Notice with respect to a Fundamental Change (a
"Fundamental Change Repurchase Notice") may be converted only if the
Holder withdraws the Repurchase Notice as to such converted
Securities in accordance with the terms of this Indenture,
(v) a description of the procedure that a Holder must follow
to exercise a repurchase right, and the place or places where such
Securities are to be surrendered for payment of the Repurchase Price
or the Fundamental Change Repurchase Price, as the case may be, and
accrued but unpaid interest (and Liquidated Damages), if any, to,
but excluding, the Repurchase Date or the Fundamental Change
Repurchase Date, as the case may be,
(vi) that on the Repurchase Date or the Fundamental Change
Repurchase Date, as the case may be, the Repurchase Price or the
Fundamental Change Repurchase Price, as the case may be, and accrued
but unpaid interest (and Liquidated Damages), if any, to, but
excluding, the Repurchase Date or the Fundamental Change Repurchase
Date, as the case may be, will become due and payable upon each such
Security designated by the Holder to be repurchased, and that
interest thereon shall cease to accrue on and after said date,
(vii) the Conversion Price then in effect,
(viii) the place or places that the Security certificate
(including the Election of Holder to Require Repurchase attached
thereto) and the Repurchase Notice (as defined below) shall be
delivered, and, if the Security is a Restricted Security, the place
or places that the Transfer Certificate in the form set forth in
Exhibit C, required by Section 2.12 shall be delivered,
(ix) the name and address of the Paying Agent and Conversion
Agent, and
(x) the respective percentages of any Make-Whole Premium that
will be paid (as contemplated by Section 6.1(b)) in shares of Common
Stock and in cash (which indication shall be irrevocable), subject
to the satisfaction (or waiver) of the conditions set forth in
Section 6.1(c)), in the event that a Holder should, in lieu of
electing to have Securities repurchased on the Fundamental Change
Repurchase Date, elect to convert such Securities during the
Fundamental Change Conversion Period, and
(xi) any other information to be included therein pursuant to
Section 6.1.
No failure of the Company to give the foregoing notices or defect therein
shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this Article III
are inconsistent with applicable law, such law shall govern.
27
(b) To exercise a repurchase right pursuant to Section 3.1 or
Section 3.2, a Holder shall deliver to the Paying Agent (i) written notice
(a "Repurchase Notice") of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal amount of the
Securities to be repurchased (and, if any Security is to repurchased in
part, the serial number thereof, the portion of the principal amount
thereof to be repurchased (which portion must be in principal amounts of
$1,000 or a whole multiple of $1,000) and the name of the Person in which
the portion thereof to remain outstanding after such repurchase is to be
registered), if certified, the certificate numbers of the Securities to be
repurchased, and a statement that an election to exercise the repurchase
right pursuant to the terms and conditions specified in the Securities and
the Indenture is being made thereby, and, in the event that any portion of
the Repurchase Price or the Fundamental Change Repurchase Price, as the
case may be, shall be paid in shares of Common Stock, the name or names
(with addresses) in which the certificate or certificates for shares of
Common Stock shall be issued, and (ii) book-entry transfer or delivery of
such Security to the Paying Agent at any time after delivery of the
Repurchase Notice (together with all necessary endorsements) at the
offices of the Paying Agent, such delivery being a condition to receipt by
the Holder of the Repurchase Price therefor or the Fundamental Change
Repurchase Price therefor, as the case may be; provided, however, that
such Repurchase Price or Fundamental Change Repurchase Price, as the case
may be, shall be so paid pursuant to this Section 3.4(b) only if the
Security so delivered to the Paying Agent shall conform in all respects to
the description thereof in the related Repurchase Notice. In the case of a
repurchase right pursuant to Section 3.1 and Section 3.2, such delivery
shall be at any time from the opening of business on the date that is 20
Business Days prior to the Repurchase Date until the close of business on
the second Business Day prior to the Repurchase Date or the Fundamental
Change Repurchase Date, as the case may be, subject to extension to comply
with applicable law.
A repurchase notice given by a Holder in accordance with this Section
3.4(b) may be withdrawn, in whole or in part, by means of a written notice
of withdrawal delivered to the office of the Paying Agent at any time
prior to the close of business on the day that is one Business Day before
the Repurchase Date or Fundamental Change Repurchase Date, as the case may
be, specifying:
(i) the certificate number, if any, of the Security in respect
of which such notice of withdrawal is being submitted, or the
appropriate Depositary procedures if Certificated Securities have
not been issued,
(ii) the principal amount of the Security with respect to
which such notice of withdrawal is being submitted, and
(iii) the principal amount, if any, of such Security which
remains subject to the original Repurchase Notice and which has been
or will be delivered for purchase by the Company.
The Company may, in its sole and complete discretion, accept a written
notice of withdrawal on or after the close of business on the day that is
one Business Day prior to
28
the Repurchase Date or the Fundamental Change Repurchase Date, as the case
may be. The decision of the Company to accept or reject such a withdrawal
notice shall be conclusive and binding on the Holder proposing to make the
withdrawal.
(c) There shall be no purchase of any Securities pursuant to this
Article III if an Event of Default has occurred and is continuing (other
than a default that is cured by the payment of the Repurchase Price or
Fundamental Change Repurchase Price, as the case may be). The Paying Agent
shall promptly return to the respective Holders thereof any Securities (i)
with respect to which a Repurchase Notice or Fundamental Change Repurchase
Notice, as the case may be, has been withdrawn in compliance with this
Indenture or (ii) held by it during the continuance of an Event of Default
(other than a default that is cured by the payment of the Repurchase Price
or the Fundamental Change Repurchase Price, as the case may be) in which
case, upon such return, the Repurchase Notice or the Fundamental Change
Repurchase Notice with respect thereto shall be deemed to have been
withdrawn.
(d) 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
Trustee the Repurchase Price or the Fundamental Change Repurchase Price,
as the case may be, in cash and/or shares of Common Stock, subject to and
as provided in Section 3.3 and subject to the Share Limitation, for
payment to the Holder on the Repurchase Date or the Fundamental Change
Repurchase Date, as the case may be, together with accrued and unpaid
interest to, but excluding, the Repurchase Date or the Fundamental Change
Repurchase Date, as the case may be, payable with respect to the
Securities as to which the repurchase right has been exercised.
(e) If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date or the Fundamental Change
Repurchase Date, as the case may be, the Repurchase Price or the
Fundamental Change Repurchase Price, as the case may be with respect to
such Security shall, until so repurchased, bear interest to the extent
permitted by applicable law from the Repurchase Date or the Fundamental
Change Repurchase Date, as the case may be, at a rate equal to the
Interest Rate on the Security plus 1% per annum, and such Security shall
remain convertible into Common Stock until the Repurchase Price or the
Fundamental Change Repurchase Price, as the case may be, plus any default
interest accrued under this Section 3.4(e), shall have been paid or duly
provided for.
(f) Any Security that is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and make available for
delivery to the Holder of such Security 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.
29
(g) Any issuance of shares of Common Stock in respect of the
Repurchase Price or the Fundamental Change Repurchase Price, as the case
may be, shall be deemed to have been effected immediately prior to the
close of business on the Repurchase Date or the Fundamental Change
Repurchase Date, as the case may be, and the Person or Persons in whose
name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such repurchase shall be deemed to have become on
the Repurchase Date or the Fundamental Change Repurchase Date, as the case
may be, the holder or holders of record of the shares represented thereby;
provided, however, that any surrender for repurchase on a date when the
stock transfer books of the Company shall be closed shall constitute the
Person or Persons in whose name or names the certificate or certificates
for such shares are to be issued as 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 upon
repurchase of any Security declared prior to the Repurchase Date or the
Fundamental Change Repurchase Date, as the case may be.
(h) No fractional shares shall be issued upon repurchase of
Securities. If more than one Security shall be repurchased from the same
Holder and the Repurchase Price or the Fundamental Change Repurchase
Price, as the case may be, shall be payable in shares of Common Stock,
then the number of full shares that shall be issuable upon such repurchase
shall be computed on the basis of the aggregate principal amount of the
Securities so repurchased. Instead of any fractional share of Common Stock
that would otherwise be issuable on the repurchase of any Security or
Securities, the Company will deliver to the applicable Holder its check
for the current market value of such fractional share. The current market
value of a fraction of a share is determined by multiplying the current
market price of a full share by the fraction, and rounding the result to
the nearest cent. For purposes of this Section 3.4(h), the current market
price of a share of Common Stock is the Closing Price Per Share on the
most recent Trading Day immediately preceding the Repurchase Date or the
Fundamental Change Repurchase Date, as the case may be.
(i) Any issuance and delivery of certificates for shares of Common
Stock on repurchase of Securities shall be made without charge to the
Holder of Securities being repurchased for such certificates or for any
tax or duty in respect of the issuance or delivery of such certificates or
the securities represented thereby; provided, however, that the Company
shall not be required to pay any tax or duty that may be payable in
respect of (1) income of the Holder or (2) any transfer involved in the
issuance or delivery of certificates for shares of Common Stock in a name
other than that of the Holder of the Securities being repurchased, and no
such issuance or delivery shall be made unless and until the Person
requesting such issuance or delivery 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.
(j) If shares of Common Stock to be delivered upon repurchase of a
Restricted Security are to be registered in a name other than that of the
"beneficial owner" of such Security (determined in accordance with Rule
13d-3, as in effect on the date of the
30
original execution of this Indenture, promulgated by the SEC pursuant to
the Exchange Act), then such Holder must deliver to the Trustee a Transfer
Certificate in the form set forth in Exhibit C, dated the date of
surrender of such Restricted Security and signed by such beneficial owner,
as to compliance with the restrictions on transfer applicable to such
Restricted Security. Neither the Trustee nor any Registrar or Transfer
Agent or other agents shall be required to register in a name other than
that of the beneficial owner shares of Common Stock issued upon repurchase
of any such Restricted Security not so accompanied by a properly completed
Transfer Certificate.
(k) All Securities delivered for repurchase shall be delivered to
the Trustee to be canceled at the direction of the Trustee.
Section 3.5 Deposit of Repurchase Price or Fundamental Change Repurchase
Price. Prior to 10:00 a.m. (New York City time) on the Repurchase Date or the
Fundamental Change Repurchase Date, as the case may be, the Company shall
deposit with the Paying Agent (or if the Company is the Paying Agent, shall
segregate and hold in trust) cash and/or Common Stock (if permitted pursuant to
Section 3.3) sufficient to pay the Repurchase Price or the Fundamental Change
Repurchase Price, as the case may be. The Company shall promptly notify the
Trustee in writing of the amount of any deposits of cash or Common Stock made
pursuant to this Section 3.5.
Section 3.6 Covenant to Comply With Securities Laws Upon Purchase of
Securities. When complying with the provisions of Section 3.1 and Section 3.2
hereof (provided, however, that such offer or purchase constitutes an "issuer
tender offer" for purposes of Rule 13e-4 (which term, as used herein, includes
any successor provision thereto) under the Exchange Act at the time of such
offer or purchase), and subject to any exemptions available under applicable
law, the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 (or any
successor provision) under the Exchange Act, (ii) file the related Schedule TO
(or any successor schedule, form or report) under the Exchange Act, and (iii)
otherwise comply with all Federal and state securities laws so as to permit the
rights and obligations under Section 3.1 and Section 3.2 to be exercised in the
time and in the manner specified in Section 3.1 and Section 3.2.
ARTICLE IV
REDEMPTION OF SECURITIES
Section 4.1 Optional Redemption. The Securities are not redeemable prior
to November 1, 2008. On and after November 1, 2008, the Company may, at its
option, redeem the Securities in whole at any time or in part from time to time,
on any date prior to the Stated Maturity of the Securities upon at least 30
days' notice and not more than 60 days' notice given in the manner set forth in
Section 4.4, at a redemption price (the "Optional Redemption Price") equal to
the sum of (i) 100% of the principal amount of the Securities to be redeemed
plus (ii) interest (and Liquidated Damages, if any) accrued but unpaid to, but
excluding the Redemption Date, plus (iii) the Redemption Premium; provided that
such redemption may only occur if, (x) on the date that the Company gives such
notice, the Closing Price Per Share for at least 20 Trading Days of the 30
consecutive Trading Days immediately preceding such date is at least 150% of the
Conversion Price then in effect, appropriately adjusted to take into account the
31
occurrence, during such 30 Trading Day period, of any event described in Section
13.3 and (y) on the date that the Company delivers such Company Notice through
the date of redemption, the Common Stock issuable upon conversion of the
Securities is either (1) covered by a registration statement covering resales
thereof that is effective and available for use and is expected to remain
effective and available for use for the 30 days following the date of such
notice or (2) eligible to be resold by non-affiliates pursuant to Rule 144(k)
under the Securities Act.
Each Holder who elects to convert Securities pursuant to the provisions of
Article XIII during a Redemption Conversion Period shall be entitled to receive
the Redemption Premium in respect of the Securities so converted as provided in
Section 6.1.
Section 4.2 Election to Redeem; Notice to Trustee. The election of the
Company to redeem any Securities shall be evidenced by a Board Resolution. In
case of any redemption at the election of the Company of any of the Securities,
the Company shall, at least 35 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee in writing of such Redemption Date, the Optional Redemption Price
and whether, if Holders elect to convert their Securities during the Redemption
Conversion Period, the Redemption Premium will be payable in cash or shares of
Common Stock or a specified combination thereof, and, if less than all the
Securities are being redeemed, the principal amount of the Securities to be
redeemed.
Section 4.3 Selection by Trustee of Securities to Be Redeemed. If less
than all the Securities are to be redeemed, the particular Securities to be
redeemed shall be selected (in principal amounts of $1,000 or integral multiples
thereof) by the Trustee on a pro rata basis, treating the Series A Securities
and the Series B Securities as a single series within five Business Days after
it receives the notice described in Section 4.2, from the outstanding Securities
not previously called for redemption. If any Security selected for partial
redemption is converted in part before termination of the conversion right with
respect to the portion of the Security so selected, the converted portion of
such Security shall be deemed (so far as may be) to be the portion selected for
redemption. Securities which have been converted during a selection of
Securities to be redeemed may be treated by the Trustee as outstanding for the
purpose of such selection. The Trustee shall promptly notify the Company and
each Security Registrar in writing of the Securities selected for redemption
pursuant to this Section 4.3 and, in the case of any Securities selected for
partial redemption, the principal amount thereof to be redeemed. For all
purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Securities redeemed or to be redeemed only in part, to the portion of the
principal amount of such Securities which has been or is to be redeemed.
Section 4.4 Notice of Redemption. Notice of redemption (a "Redemption
Notice") shall be given by the Company in the manner provided in this Section
4.4 to the Trustee, the Paying Agent and the Holders of Securities to be
redeemed not less than 30 nor more than 60 days prior to the Redemption Date,
and such notice shall be irrevocable. The Company shall, concurrently with the
giving of such notice, publish a press release including the information
required to be included in such Redemption Notice hereunder.
All Redemption Notices shall state:
32
(a) the date of redemption (the "Redemption Date"),
(b) the Optional Redemption Price and the amounts attributable to
each element thereof, as specified in clause (i), (ii) and (iii) of the
definition of "Optional Redemption Price" in Section 4.1,
(c) whether, if Holders elect to convert their Securities during the
Redemption Conversion Period, the Redemption Premium will be paid in cash
or shares of Common Stock or in a specified combination thereof,
(d) if less than all outstanding Securities are to be redeemed, the
aggregate principal amount of Securities to be redeemed and the aggregate
principal amount of Securities that will be outstanding after such partial
redemption,
(e) that on the Redemption Date the Optional Redemption Price will
become due and payable upon each such Security to be redeemed, and that
interest thereon shall cease to accrue on and after said date,
(f) the Conversion Price, that the right to convert the Securities
to be redeemed will terminate on the Redemption Date and the places where
such Securities may be surrendered for conversion,
(g) the place or places where such Securities are to be surrendered
for payment of the Optional Redemption Price; and
(h) the CUSIP numbers of the Securities to be redeemed.
In case of a partial redemption, the notice shall specify the serial and CUSIP
numbers (if any) and the portions thereof called for redemption and that
transfers and exchanges may occur on or prior to the Redemption Date.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's written request, by
the Trustee in the name of and at the expense of the Company. Notice of
redemption of Securities to be redeemed at the election of the Company received
by the Trustee shall be given by the Trustee to each Paying Agent in the name of
and at the expense of the Company.
Section 4.5 Deposit of Redemption Price. On or prior to 10:00 a.m. (New
York City time) on the Redemption Date, the Company shall deposit with the
Trustee an amount of money (which shall be in immediately available funds on
such Redemption Date) sufficient to pay the Optional Redemption Price of all the
Securities which are to be redeemed on that date other than any Securities
called for redemption on that date which have been converted prior to the date
of such deposit. If any Security called for redemption is converted, any money
deposited with the Trustee or so segregated and held in trust for the redemption
of such Security shall be paid to the Company on Company Request or, if then
held by the Company, shall be discharged from such trust.
33
Section 4.6 Securities Payable on Redemption Date. Notice of redemption
having been given as aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Optional Redemption Price therein
specified and from and after such date (unless the Company shall default in the
payment of the Optional Redemption Price) such Securities shall cease to bear
interest. Upon surrender of any Security for redemption in accordance with said
notice such Security shall be paid by the Company at the Optional Redemption
Price.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the Optional Redemption Price with respect to such
Security, to the extent permitted by applicable law, shall, until paid, bear
interest from the Redemption Date at a rate equal to the Interest Rate on the
Security plus 1% per annum and such Security shall remain convertible into
Common Stock until the Optional Redemption Price plus any default interest
accrued under this Section 4.6, shall have been paid in full or duly provided
for.
Any Security that is to be redeemed only in part shall be surrendered at
the Corporate Trust Office or an office or agency of the Company designated for
that purpose pursuant to Section 5.5 (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and make available for delivery to the Holder of
such Security without service charge, a new Security or Securities, of like
series and of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered. Upon redemption, interests in
Global Securities shall be reduced in accordance with the Applicable Procedures.
Section 4.7 Conversion Arrangement on Call for Redemption. In connection
with any redemption of Securities, the Company may arrange for the purchase and
conversion of any Securities to be redeemed by an agreement with one or more
investment bankers or other purchasers (the "Purchasers") to purchase such
securities by paying to the Trustee in trust for the Holders, on or before 10:00
a.m. (New York City time) on the Redemption Date, an amount not less than the
applicable Optional Redemption Price. Notwithstanding anything to the contrary
contained in this Article IV, the obligation of the Company to pay the Optional
Redemption Price shall be deemed to be satisfied and discharged to the extent
such amount is so paid by such Purchasers. If such an agreement is entered into
(a copy of which shall be filed with the Trustee prior to the close of business
on the Business Day immediately prior to the Redemption Date), any Securities
called for redemption that are not duly surrendered for conversion by the
Holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, and consistent with any agreement or agreements with
such Purchasers, to be acquired by such Purchasers from such Holders and
(notwithstanding anything to the contrary contained in Article XIII) surrendered
by such Purchasers for conversion, all as of immediately prior to the close of
business on the Business Day prior to the Redemption Date, subject to payment of
the above amount as aforesaid. At the direction of the Company, the Trustee
shall hold and dispose of any such amount paid to it by the Purchasers to the
Holders in the same manner as it would monies deposited with it by the Company
for the redemption of Securities. Without the Trustee's prior written consent,
no arrangement between the Company and such Purchasers for the purchase and
34
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such Purchasers, including the costs and
expenses, including reasonable legal fees, incurred by the Trustee in the
defense of any claim or liability arising out of or in connection with the
exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.
ARTICLE V
COVENANTS
Section 5.1 Payment of Securities. The Company shall promptly make all
payments in respect of the Securities on the dates and in the manner provided in
the Securities or pursuant to this Indenture. Any amounts of cash to be given to
the Trustee or Paying Agent shall be deposited with the Trustee or Paying Agent
by 10:00 a.m. (New York City time) on the applicable date by the Company.
Principal amount plus accrued interest, if any, including the Repurchase Price,
the Fundamental Change Repurchase Price, the Optional Redemption Price,
Liquidated Damages, if any, and interest, if any, shall be considered paid on
the applicable date due if on such date the Trustee or the Paying Agent holds,
in accordance with this Indenture, cash sufficient to pay all such amounts then
due.
Section 5.2 SEC and Other Reports. The Company shall file with the
Trustee, within 15 days after it is required to file such annual and quarterly
reports, information, documents and other reports with the SEC, copies of its
annual report and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. The Company also shall comply with the other
provisions of TIA Section 314(a), whether or not the Securities are governed by
the TIA. Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely conclusively on Officers' Certificates). At any time when the
Company is not subject to Section 13 of 15(d) of the Exchange Act, the Company
shall furnish to the Trustee (i) quarterly financial statements on or before the
45th day after the end of each fiscal quarter that are substantially equivalent
to those the Company would be required to file with the SEC in a Quarterly
Report on Form 10-Q, (ii) annual financial statements on or before the 90th day
after the end of each fiscal year that are substantially equivalent to those the
Company would be required to file with the SEC in an Annual Report on Form 10-K,
including a report thereon by the Company's certified independent accountants,
(iii) accompanying each of the financial statements required by (i) and (ii)
above, information substantially equivalent to that required by Regulation S-K
Item 303, "Management Discussion and Analysis of Financial Condition and Results
of Operations;", and (iv) all reports that are substantially equivalent to that
which would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports, provided, that in each case the delivery of
materials to the Trustee by electronic means shall be deemed "furnished" to
35
the Trustee for purposes of this Section 5.2; provided, further, that the
Company shall be deemed to have satisfied its obligations under each of (i),
(ii), (iii) and (iv) above if it files such information with the SEC (if the SEC
will accept such filing) or otherwise makes such financial statements and other
information available on or through its web site.
Notwithstanding anything to the contrary set forth in this Indenture, the
obligations of the Company set forth in the immediately preceding paragraph
shall commence on December 15, 2004, and the Company shall be under no
obligation to comply with the provisions of the immediately preceding paragraph
before such date.
Section 5.3 Compliance Certificate. The Company and each Guarantor (to the
extent that such Guarantor is so required under the TIA) shall deliver to the
Trustee on or before the 120th day after the end of each fiscal year of the
Company (beginning with the fiscal year ending on September 30, 2005) an
Officers' Certificate which complies with the requirements of the TIA, stating
whether or not to the knowledge of the signers thereof, the Company is in
default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and if the Company shall be in
default, specifying all such defaults and the nature and status thereof of which
they may have knowledge.
The Company will promptly deliver to the Trustee, forthwith upon becoming
aware of (i) any default in the performance or observance of any covenant,
agreement or condition contained in this Indenture, or (ii) any Event of
Default, an Officers' Certificate specifying with particularity such default or
Event of Default and further stating what action the Company has taken, is
taking or proposes to take with respect thereto.
Section 5.4 Further Instruments and Acts. Upon request of the Trustee, the
Company will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purposes of this Indenture.
Section 5.5 Maintenance of Office or Agency. The Company will maintain an
office or agency in the Borough of Manhattan, The City of New York, of the
Trustee, Registrar, Paying Agent and Conversion Agent where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer, exchange, purchase or conversion and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The office of The Bank of New York, a New York banking
corporation, at 000 Xxxxxxx Xx., 0xx Xxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000, shall
initially be such office or agency for all of the aforesaid purposes. The
Company shall give prompt written notice to the Trustee of the location, and of
any change in the location, of any such office or agency (other than a change in
the location of the office of the Trustee). If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in Section
14.2.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations.
36
Section 5.6 Delivery of Certain Information. Upon the request of a Holder
or any beneficial owner of Securities or holder or beneficial owner of shares of
Common Stock issued upon conversion thereof, the Company and the Guarantors will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) and any reports required to be filed by them under the Exchange Act or
the Securities Act to such Holder or any beneficial owner of Securities or
holder or beneficial owner of shares of Common Stock, or to a prospective
purchaser of any such security designated by any such holder, as the case may
be, to the extent required to permit compliance by such Holder or holder with
Rule 144A under the Securities Act in connection with the resale of any such
security. "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act.
Section 5.7 Existence. Subject to Article VII, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and franchises; 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 desirable in the conduct of the business of the Company.
Section 5.8 Resale of Certain Securities. During the period beginning on
the Issue Date and ending on the date that is two years from the Issue Date, the
Company shall not, and shall not permit any of its "affiliates" (as defined in
Rule 144 under the Securities Act or any successor provision thereto) to, resell
any Securities which constitute "restricted securities" under Rule 144 that have
been reacquired by any of them.
Section 5.9 Liquidated Damages Under the Registration Rights Agreement. If
at any time Liquidated Damages become payable by the Company pursuant to the
Registration Rights Agreement, the Company shall promptly deliver to the Trustee
a certificate to that effect and stating (i) the amount of such Liquidated
Damages that are payable and (ii) the date on which such Liquidated Damages are
payable pursuant to the terms of the Registration Rights Agreement. Unless and
until a Responsible Officer of the Trustee receives such a certificate, the
Trustee may assume without inquiry that no Liquidated Damages are payable. If
the Company has paid Liquidated Damages directly to the Persons entitled to such
Liquidated Damages, the Company shall deliver to the Trustee a certificate
setting forth particulars of such payment.
Section 5.10 Information for IRS Filings. Upon request, the Company shall
provide to the Trustee on a timely basis such information as the Trustee
requires to enable the Trustee to prepare and file any form required to be
submitted by the Company with the Internal Revenue Service and the Holders of
the Securities.
Section 5.11 Additional Subsidiary Guarantees. If, after the date of this
Indenture, any Domestic Subsidiary of the Company that is not a Guarantor shall
be a Significant Subsidiary, then the Company shall cause such Significant
Subsidiary to become a Guarantor by executing a supplemental indenture in
substantially the form of Exhibit H hereto, and the Company shall deliver an
Opinion of Counsel satisfactory to the Trustee, within 10 Business Days of the
date on which such Domestic Subsidiary became a Significant Subsidiary to the
effect that such supplemental indenture has been duly authorized, executed and
delivered by that Significant Subsidiary and constitutes a valid and binding
agreement of that Significant Subsidiary, enforceable in accordance with its
terms (subject to customary exceptions).
37
Section 5.12 Book-Entry System. If the Securities cease to be traded in
the Depositary's book-entry settlement system, the Company covenants and agrees
that it shall use reasonable efforts to make other book entry arrangements that
it determines are reasonable for the Securities.
ARTICLE VI
MAKE-WHOLE PREMIUM AND REDEMPTION PREMIUM
Section 6.1 Entitlement to Make-Whole Premium and Redemption Premium. If a
Fundamental Change occurs, Holders who convert their Securities (in accordance
with the provisions of Article XIII) during the Fundamental Change Conversion
Period in which such Fundamental Change occurs shall receive from the Company
the Make-Whole Premium upon such conversion. If a Redemption Notice has been
provided in accordance with the provisions of Section 4.4, Holders who convert
their Securities (in accordance with the provisions of Article XIII) during the
Redemption Conversion Period beginning on the date of such Redemption Notice
shall receive from the Company the Redemption Premium upon such conversion, and
Holders who do not convert their Securities during the Redemption Conversion
Period shall receive from the Company the Redemption Premium upon redemption in
accordance with Article IV.
(a) The Make-Whole Premium shall be determined as follows:
(i) "Effective Date" means the date that the applicable
Fundamental Change becomes effective.
(ii) "Stock Price" means the price per share of Common Stock,
determined as follows:
(A) if, in connection with a transaction constituting a
Fundamental Change, holders of Common Stock receive only cash
pursuant to such Fundamental Change, the Stock Price shall be
the cash amount paid per share of Common Stock; or
(B) in all other circumstances, the Stock Price shall be
the arithmetic average of the Closing Prices Per Share of the
Common Stock on the five Trading Days prior to, but not
including, the Effective Date.
(iii) "Make-Whole Premium" means a number of additional shares
of Common Stock to be received upon conversion per $1,000 principal
amount of Securities during a Fundamental Change Conversion Period,
equal to:
(A) if the Stock Price is less than $2.16 (subject to
adjustment pursuant to Section 6.3) (the "Stock Price
Threshold"), no shares;
(B) if the Stock Price is more than $36.00 (subject to
adjustment pursuant to Section 6.3) (the "Stock Price Cap"),
no shares; and
38
(C) otherwise, consideration as determined in accordance
with the provisions of this Section 6.1 having a value equal
to the number of shares of Common Stock set forth in the
following table (the "Make-Whole Premium Table") corresponding
to the Stock Price and the Effective Date applicable pursuant
to the terms hereof, to the Fundamental Change to be
consummated during such Fundamental Change Conversion Period.
39
STOCK PRICE $ 2.16 $ 2.17 $ 2.44 $ 2.71 $ 2.98 $ 3.25 $ 6.00 $ 9.00 $ 12.00 $ 15.00
----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
EFFECTIVE DATE
November 24, 2004 0.00 155.25 131.97 113.73 99.94 89.04 39.76 22.04 13.74 9.07
November 15, 2005 0.00 155.12 131.81 113.52 99.09 88.16 38.72 21.51 13.46 8.93
November 15, 2006 0.00 154.90 131.74 113.43 98.78 86.91 37.48 20.84 13.09 8.73
November 15, 2007 0.00 154.66 131.62 113.18 97.75 85.39 35.72 19.84 12.51 8.37
November 15, 2008 0.00 154.30 118.48 102.06 89.20 78.89 33.34 18.46 11.68 7.85
November 15, 2009 0.00 137.89 115.27 98.20 84.99 74.53 30.19 16.61 10.55 7.14
November 15, 2010 0.00 136.16 111.85 93.76 79.95 69.18 26.14 14.21 9.06 6.17
November 15, 2011 0.00 134.33 107.53 87.91 73.21 61.97 20.77 11.09 7.12 4.90
November 15, 2012 0.00 133.31 102.55 80.42 64.23 52.21 13.82 7.21 4.70 3.29
November 15, 2013 0.00 133.20 96.96 70.00 50.88 37.35 4.80 2.49 1.67 1.19
November 15, 2014 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
STOCK PRICE $ 18.00 $ 21.00 $ 24.00 $ 27.00 $ 30.00 $ 33.00 $ 36.00
----------- -------- -------- -------- -------- -------- -------- --------
EFFECTIVE DATE
November 24, 2004 6.18 4.27 2.96 2.04 1.39 0.91 0.00
November 15, 2005 6.11 4.24 2.96 2.02 1.38 0.90 0.00
November 15, 2006 6.00 4.18 2.93 2.01 1.38 0.90 0.00
November 15, 2007 5.78 4.05 2.84 1.99 1.37 0.89 0.00
November 15, 2008 5.44 3.82 2.69 1.89 1.30 0.87 0.00
November 15, 2009 4.98 3.52 2.49 1.75 1.21 0.81 0.00
November 15, 2010 4.33 3.08 2.19 1.54 1.06 0.71 0.00
November 15, 2011 3.47 2.48 1.77 1.25 0.86 0.56 0.00
November 15, 2012 2.36 1.71 1.23 0.87 0.59 0.39 0.00
November 15, 2013 0.87 0.64 0.46 0.33 0.22 0.13 0.00
November 15, 2014 0.00 0.00 0.00 0.00 0.00 0.00 0.00
40
If the Stock Price is between two Stock Price amounts on the Make-Whole Premium
Table or the Effective Date is between two dates on the Make-Whole Premium
Table, the Make-Whole Premium shall be determined by straight-line interpolation
between the number of additional shares set forth in the Make-Whole Premium
Table for the higher and lower Stock Price amounts and the two dates, as
applicable, based on a 365-day year. The Stock Prices set forth in the column
headers are subject to adjustment pursuant to Section 6.3.
(b) Subject to Section 6.1(c) and the Share Limitation, the Company
may pay any Make-Whole Premium required pursuant to Section 6.1(a): (i) in
shares of Common Stock (other than cash paid in lieu of fractional
shares), (ii) in cash, (iii) in the same form of consideration into which
shares of Common Stock have been converted in connection with the
applicable Fundamental Change; or (iv) in any combination of the
foregoing. The Company Notice delivered pursuant to Section 3.4 in
connection with the Fundamental Change shall state the percentage of any
Make-Whole Premium, stated in total principal amount as if all Securities
then outstanding shall be converted during the Fundamental Change
Conversion Period, that will be paid in shares of Common Stock (which
indication shall be irrevocable). If holders of Common Stock have the
right to elect the form of consideration received in a Fundamental Change,
then for purposes of the foregoing the consideration into which a share of
Common Stock has been converted shall be deemed to equal the same
percentage of each form of consideration as encompasses the aggregate
consideration distributed in respect of all shares of Common Stock
participating in the distribution. Unless the Company gives notice to the
contrary, the Make-Whole Premium shall be paid in shares of Common Stock
(or, if applicable, in the same form of consideration into which shares of
Common Stock have been converted in connection with the applicable
Fundamental Change). The amount of cash to be received shall equal the
product of (i) the portion of the Make-Whole Premium to be paid in cash
expressed as a number of shares of Common Stock and (ii) the Stock Price.
The Company, in its sole discretion, may elect to pay all or any
portion of any Redemption Premium required pursuant to Section 6.1(a) to
be paid upon the conversion of Securities as described in Section 13.1
within the Redemption Conversion Period (i) in shares of Common Stock
(other than cash paid in lieu of fractional shares), (ii) in cash or (iii)
in any combination of the foregoing, in accordance with the provisions of
Article XIII.
The Company may from time to time appoint a calculation agent with
respect to the calculation of the Make-Whole Premium (the "Calculation
Agent"). The Calculation Agent shall, on behalf of and upon request by the
Company or the Trustee, calculate (A) the Stock Price and (B) the
Make-Whole Premium with respect to such Stock Price based on the Effective
Date specified by the Company or the Trustee and shall deliver its
calculation of the Stock Price and Make-Whole Premium to the Company and
the Trustee within five Business Days of the request by the Company or the
Trustee. The Company, or at the Company's request, the Trustee in the name
and at the expense of the Company, (X) shall notify the Holders of the
Stock Price and the estimated Make-Whole Premium per $1,000 principal
amount of Securities with respect to a Fundamental Change as part of the
Company Notice delivered in connection with a Fundamental Change in
accordance with Section 3.4 and (Y) shall notify the Holders promptly upon
the opening
41
of business on the Effective Date of the consideration expressed as the
number of additional shares (or, at the option of the Company, cash or
other securities, assets or property into which all or substantially all
of the shares of Common Stock have been converted as of the Effective Date
as described above) to be delivered in respect of the Make-Whole Premium,
if any, payable in connection with conversions during the Fundamental
Change Conversion Period.
(c) Provided that the Company has timely given a Company Notice
containing all the information required under Section 3.4 and subject to
compliance with the Share Limitation, the Company may elect to pay all or
any portion of the Make-Whole Premium in Common Stock rather than cash, if
and only if the following conditions shall have been satisfied (or waived
by the applicable Holder):
(i) From and after the delivery of the Company Notice relating
to the Make-Whole Premium through the payment of the Make-Whole
Premium, (i) the shares of Common Stock to be issued in connection
with the Make-Whole Premium are (x) either registered, approved
and/or qualified, as applicable, or exempt from any such
registration, approval and qualification, as applicable, under
applicable federal and state securities law such that such shares of
Common Stock shall be upon issue validly issued and delivered in
accordance with applicable federal and state securities laws and not
subject to any transfer restrictions under the Securities Act or
other securities laws and (y) listed or approved for listing on the
NYSE, the AMEX, the Nasdaq National Market or The Nasdaq SmallCap
Market; and (ii) there shall be sufficient authorized but unissued
(or issued but not outstanding) shares of Common Stock to issue the
shares of Common Stock in connection with the Make-Whole Premium,
and such Common Stock will upon issue, be duly and validly issued
and fully paid and nonassessable and free of any preemptive or
similar rights; and
(ii) The Trustee shall receive at the time of delivery of the
applicable Company Notice and just prior to the date of payment of
the Make-Whole Premium, (i) an Officer's Certificate stating that
the terms of the issuance of such shares of Common Stock are in
conformity with this Indenture, (ii) an Opinion of Counsel to the
effect that the shares of Common Stock in respect of the Make-Whole
Premium have been duly authorized and, when issued and delivered
pursuant to the terms of this Indenture, will be validly issued,
fully paid and non-assessable and (iii) an Officer's Certificate
stating that the conditions to the issuance of the shares of Common
Stock have been satisfied.
In the event of a Fundamental Change where the Company is not the
surviving entity, for each conversion by a Holder after the Effective
Date, such Holder shall receive in lieu of each share of Common Stock
payable as part of the Make-Whole Premium, consideration in the form and
amount payable in respect of a share of Common Stock pursuant to such
Fundamental Change (provided that any securities that are issuable as part
of such consideration shall meet the conditions set forth in this Section
6.1(c) as if such securities were "Common Stock" under this Section
6.1(c)).
42
Promptly after determination of the actual number of shares of
Common Stock to be issued in respect of the Make-Whole Premium, the
Company shall disseminate a press release through Dow Xxxxx & Company,
Inc. or Bloomberg Business News containing the information or publish this
information on the Company's web site or through such other public medium
as the Company may use at that time.
Section 6.2 Payment of Make-Whole Premium and Redemption Premium. On or
prior to 10:00 a.m. (New York City time) on the sixteenth (16th) Trading Day
following the Effective Date, the Company will deposit with the Trustee or with
one or more Paying Agents additional shares of Common Stock and/or cash
sufficient to satisfy the entitlement of the Holders of Securities under Section
6.1 to receive a Make-Whole Premium. Payment of the Make-Whole Premium pursuant
to Section 6.1 to Holders of Securities surrendered for conversion within a
Fundamental Change Conversion Period will be made promptly following the later
of the Effective Date of the Fundamental Change and the date of such surrender
for conversion, as the case may be, by delivering entitlements to securities,
mailing checks in respect of cash and/or delivering other assets or property for
the amount payable to the Holders of such Securities entitled thereto as they
(and their addresses) shall appear in the security register. To the extent that
the aggregate number of shares of Common Stock or amount of cash deposited by
the Company pursuant to this Section 6.2 exceeds the aggregate entitlement to
receive the Make-Whole Premium under Section 6.1 of the Holders of Securities
that are converted during a Fundamental Change Conversion Period, then, promptly
after the end of the Fundamental Change Conversion Period, as the case may be,
the Paying Agent shall return any such excess to the Company.
If the Company elects to pay all or any portion of the Redemption Premium
required pursuant to the provisions of Section 6.1 to be paid upon the
conversion of Securities as described in Section 13.1 within the Redemption
Conversion Period in cash, the Company will deposit with the Trustee or with one
or more Paying Agents cash sufficient to satisfy the portion of the entitlement
of the Holders of Securities under Section 6.1 to such Redemption Premium to be
paid in cash. Payment of such all or a portion of such entitlement in the form
of cash pursuant to Section 6.1 to Holders of Securities surrendered for
conversion within a Redemption Conversion Period will be made promptly following
the Conversion Date (but in no event later than the Redemption Date immediately
following the Redemption Conversion Period) by mailing checks in respect of cash
for the amount payable to the Holders of such Securities entitled thereto as
they (and their addresses) shall appear in the security register. To the extent
that the aggregate amount of cash deposited by the Company pursuant to this
Section 6.2 exceeds the aggregate entitlement to receive the Redemption Premium
under Section 6.1 of the Holders of Securities that are converted during a
Redemption Conversion Period, then, promptly after the end of the Redemption
Conversion Period, the Trustee or such Paying Agent shall return any such excess
to the Company. If the Company elects to pay all or any portion of the
Redemption Premium in shares of Common Stock, the number of shares of Common
Stock to be issued upon conversion of Securities during a Redemption Conversion
Period shall be increased pursuant to the provisions of Section 13.1.
Section 6.3 Adjustment to the Make-Whole Premium. Whenever the Conversion
Price shall be adjusted from time to time by the Company pursuant to Section
13.3, the Stock Price Threshold and the Stock Price Cap shall be adjusted and
each of the Stock Prices set forth
43
in the Make-Whole Premium Table shall be adjusted by multiplying each such
amount by a fraction the numerator of which is the Conversion Price as so
adjusted and the denominator of which is the Conversion Price immediately prior
to such adjustment. If an adjustment is made to the Conversion Price pursuant to
Section 13.3, the number of additional shares as set forth in each entry on the
Make-Whole Premium Table shall be adjusted by multiplying each such amount by a
fraction the numerator of which is the Conversion Price immediately prior to
such adjustment and the denominator of which is the Conversion Price as so
adjusted.
ARTICLE VII
SUCCESSOR CORPORATION
Section 7.1 When Company May Merge or Transfer Assets. The Company shall
not consolidate with or merge with or into any other Person or convey, transfer,
sell, lease or otherwise dispose of all or substantially all of its properties
and assets to any Person, unless:
(a) either (1) the Company shall be the continuing corporation or
(2) the Person (if other than the Company) formed by such consolidation or
into which the Company is merged or the Person which acquires by
conveyance, transfer or lease the all or substantially all of the
properties and assets of the Company (i) shall be organized and validly
existing under the laws of the United States or any State thereof or the
District of Columbia and (ii) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee, all of the obligations of the
Company under the Securities and this Indenture;
(b) immediately after giving effect to such transaction, no Event of
Default, and no event that, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing; and
(c) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture, comply with this Article VII and that all
conditions precedent herein provided for relating to such transaction have
been satisfied.
The successor Person formed by such consolidation or into which the Company is
merged or the successor Person 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 this Indenture with the same effect as if such
successor had been named as the Company herein; and thereafter, the Company
shall be discharged from all obligations and covenants under this Indenture and
the Securities. Subject to Section 11.6, the Company, the Trustee and the
successor Person shall enter into a supplemental indenture to evidence the
succession and substitution of such successor Person and such discharge and
release of the Company.
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ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1 Events of Default. So long as any Securities are outstanding,
each of the following shall be an "Event of Default":
(a) default in the payment of the principal amount on any Security
when the same becomes due and payable, whether at Stated Maturity, upon
redemption or repurchase or otherwise;
(b) default in the payment of the Make-Whole Premium, if any, when
due and payable;
(c) default in the payment of any accrued and unpaid interest, or
the payment of any Liquidated Damages, if any, on any Security, or any
other amount due on any Securities (other than those referred to in
clauses (a) and (b) above), in each case when due and payable, and
continuance of such default for a period of 30 days;
(d) failure by the Company or any Guarantor to comply with any of
their respective agreements or covenants in the Securities or this
Indenture (other than those referred to in clauses (a) through (c) above)
and such failure continues for a period of 30 consecutive days after
receipt by the Company of a Notice of Default;
(e) except as provided in Section 8.1(b), the failure to deliver
shares of Common Stock, together with cash instead of fractional shares,
when those shares of Common Stock or cash instead of fractional shares is
required to be delivered following conversion of a Security, and that
failure continues for a period of 10 days;
(f) a default under any Indebtedness for money borrowed by the
Company or any Guarantor having a principal amount then outstanding,
individually or in the aggregate, of $25 million or more, for a period of
30 days after written notice of default is given to the Company by the
Trustee or to the Company and the Trustee by Holders of not less than 50%
in aggregate principal amount of the Securities then outstanding, which
default results in the acceleration of such Indebtedness, unless such
acceleration is waived, cured, rescinded or annulled or unless such
Indebtedness is discharged;
(g) the rendering of a final judgment or judgments (not subject to
appeal) against the Company or any of its Subsidiaries in an aggregate
amount in excess of $25 million which remains unstayed, undischarged or
unbonded for a period of 60 days thereafter;
(h) the Company fails to timely provide a Company Notice in
connection with a Fundamental Change in accordance with Section 3.4;
(i) the entry by a court having jurisdiction in the premises of (i)
a decree or order for relief in respect of the Company or any Subsidiary
that is a Significant Subsidiary, in an involuntary case or proceeding
under the Bankruptcy Code or any other applicable bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order
45
adjudging the Company or any Subsidiary that is a Significant Subsidiary,
as bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Subsidiary that is a Significant Subsidiary,
under the Bankruptcy Code or any other applicable 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
(j) the commencement by the Company or any Subsidiary that is a
Significant Subsidiary, of a voluntary case or proceeding under the
Bankruptcy Code or any other applicable 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 the Company or
any Subsidiary that is a Significant Subsidiary, to the entry of a decree
or order for relief in respect of the Company or any Subsidiary that is a
Significant Subsidiary, in an involuntary case or proceeding under the
Bankruptcy Code or any other applicable bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against the Company, or the
filing by the Company or any Subsidiary that is a Significant Subsidiary,
of a petition or answer or consent seeking reorganization or relief under
any applicable law, or the consent by the Company to the filing of such
petition or to the appointment of or the 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 the Company or any Subsidiary that is a Significant Subsidiary,
of an assignment for the benefit of creditors, or the admission by the
Company or any Subsidiary that is a Significant Subsidiary, in writing of
its inability to pay its debts generally as they become due.
A Default under Section 8.1(d) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate principal amount of the Securities at the time outstanding
notify the Company and the Trustee, of the Default and the Company does
not cure such Default (and such Default is not waived) within the time
specified in Section 8.1(d) above after receipt of such notice. Any such
notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default."
The Trustee shall, on or before the 90th day after the occurrence of
a Default, give to the Holders of the Securities notice of all uncured
Defaults known to it and written notice of any event which with the giving
of notice or the lapse of time, or both, would become an Event of Default,
its status and what action the Company is taking or proposes to take with
respect thereto; provided, however, the Trustee shall be protected in
withholding such notice if it, in good faith, determines that the
withholding of such notice is in the best interest of such Holders, except
in the case of a Default under Section 8.1(a),(b) or (c).
46
Section 8.2 Acceleration. If an Event of Default (other than an Event of
Default specified in Section 8.1(i) or (j) with respect to the Company) occurs
and is continuing, the Trustee by notice to the Company, or the Holders of at
least 25% in aggregate principal amount of the Securities at the time
outstanding by notice to the Company and the Trustee, may declare the principal
amount plus accrued and unpaid interest, and Liquidated Damages, if any, on all
the Securities to be immediately due and payable in cash. To the extent
permitted by applicable law, if an Event of Default specified in Section 8.1(i)
or (j) occurs, the principal amount plus accrued and unpaid interest, and
Liquidated Damages, if any, on all the Securities shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. The Majority Holders or the Holders originally
causing such acceleration, by notice to the Trustee (and without notice to any
other Securityholder) may rescind an acceleration and its consequences if the
rescission would not violate any judgment or decree and if all existing Events
of Default have been cured or waived except nonpayment of the principal amount
plus accrued and unpaid interest, and Liquidated Damages, if any, that have
become due solely as a result of acceleration and if all amounts due to the
Trustee under Section 9.7 have been paid. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
Section 8.3 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the principal amount plus accrued and unpaid interest, including the
Repurchase Price, the Fundamental Change Repurchase Price, the Optional
Redemption Price, the Redemption Premium, the Make-Whole Premium and Liquidated
Damages, if any, on the Securities or to enforce the performance of any
provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if the Trustee does not possess
any of the Securities or does not produce any of the Securities in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of, or acquiescence in, the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
Section 8.4 Waiver of Past Defaults. The Majority Holders, by notice to
the Trustee (and without notice to any other Securityholder), may waive an
existing Default and its consequences except (i) an Event of Default described
in Section 8.1(a), Section 8.1(b) or Section 8.1(c), (ii) a Default in respect
of a provision that under Section 11.2 cannot be amended without the consent of
each Securityholder affected or (iii) a Default which constitutes a failure to
deliver shares of Common Stock upon conversion of any Security in accordance
with the terms of Article XIII. When a Default is waived, it is deemed cured,
but no such waiver shall extend to any subsequent or other Default or impair any
consequent right. This Section 8.4 shall be in lieu of Section 316(a)(1)(B) of
the TIA and such Section 316(a)(1)(B) is hereby expressly excluded from this
Indenture, as permitted by the TIA.
Section 8.5 Control by Majority. The Majority Holders may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee. However,
the Trustee may refuse to follow any direction that violates law or this
Indenture or that the Trustee determines in good faith is unduly
47
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability unless the Trustee is offered indemnity satisfactory to
it. This Section 8.5 shall be in lieu of Section 316(a)(1)(A) of the TIA and
such Section 316(a)(1)(A) is hereby expressly excluded from this Indenture, as
permitted by the TIA.
Section 8.6 Limitation on Suits. A Holder may not pursue any remedy with
respect to this Indenture or the Securities unless:
(a) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(b) the Majority Holders make a written request and offer
indemnification reasonably satisfactory to the Trustee to pursue the
remedy;
(c) the Trustee does not comply with the request within 60 days
after receipt of such notice, request and offer of security or indemnity;
and
(d) the Majority Holders do not give the Trustee a direction
inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of any
other Securityholder or to obtain a preference or priority over any other
Securityholder.
Section 8.7 Rights of Holders to Receive Payment. The right of any Holder
to receive payment of the principal amount, the Repurchase Price, the
Fundamental Change Repurchase Price, the Optional Redemption Price, the
Make-Whole Premium, the Redemption Premium and Liquidated Damages, if any, or
interest in respect of the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, and to convert the Securities
in accordance with Article XIII, or to bring suit for the enforcement of any
such payment on or after such respective dates or the right to convert, shall
not be impaired or affected adversely without the consent of such Holder.
Section 8.8 Collection Suit by Trustee. If an Event of Default described
in Section 8.1(a), (b) or (c) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount owing with respect to the Securities and the amounts
provided for in Section 9.7.
Section 8.9 Trustee 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 Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal amount, Repurchase Price, Fundamental Change Repurchase
Price, Make-Whole Premium, Liquidated Damages, if any, or interest in respect of
the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of any such amount) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
48
(a) to file and prove a claim for the whole amount of the principal
amount, Repurchase Price, Fundamental Change Repurchase Price, Make-Whole
Premium, Liquidated Damages, if any or interest and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel or any other amounts due the Trustee under Section 9.7)
and of the Holders allowed in such judicial proceeding, and
(b) 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 Holder to make such payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
9.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 8.10 Priorities. If the Trustee collects any money pursuant to
this Article VIII, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 9.7;
SECOND: to Securityholders for amounts due and unpaid on the Securities
for the principal amount, Repurchase Price, Fundamental Change Repurchase Price,
Make-Whole Premium, Liquidated Damages, if any, or interest, or any other amount
due and owing on the Securities or to the Holders from the Company, as the case
may be, ratably, without preference or priority of any kind, according to such
amounts due and payable on the Securities; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 8.10. At least 15 days before such
record date, the Trustee shall mail to each Securityholder and the Company a
notice that states the record date, the payment date and the amount to be paid.
Section 8.11 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant (other than the Trustee) in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 8.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
9.7 or a suit by Holders of more than 10% in aggregate principal amount of
49
the Securities at the time outstanding. This Section 8.11 shall be in lieu of
Section 315(e) of the TIA and such Section 315(e) is hereby expressly excluded
from this Indenture, as permitted by the TIA.
Section 8.12 Waiver of Stay, Extension or Usury Laws. Each of the Company
and the Guarantors 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 or any usury or
other law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive the Company from paying all or any portion of the principal
amount or Repurchase Price, Fundamental Change Repurchase Price or Make-Whole
Premium in respect of Securities, Liquidated Damages or any interest on such
amounts, as contemplated herein, or which may affect the covenants or the
performance of this Indenture; and each of the Company and the Guarantors (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.
Section 8.13 Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding has been
instituted.
Section 8.14 Rights and Remedies Cumulative. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities in the last paragraph of Section 2.7, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders 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 shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 8.15 Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder of any Security to exercise any right or remedy
accruing upon any Event of Default shall impair any 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 VIII or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
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ARTICLE IX
TRUSTEE
Section 9.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise as a
prudent Person would exercise or use under the circumstances in the
conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee conforming to the requirements of
this Indenture, but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture, but need not confirm or investigate
the accuracy of mathematical calculations or other facts stated
therein. This Section 9.1(b) shall be in lieu of Section 315(a) of
the TIA and such Section 315(a) is hereby expressly excluded from
this Indenture, as permitted by the TIA.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph (c) does not limit the effect of paragraph
(b) of this Section 9.1;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 8.5.
Subparagraphs (c)(i), (ii) and (iii) shall be in lieu of Sections
315(d)(1), 315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1),
315(d)(2) and 315(d)(3) are hereby expressly excluded from this Indenture,
as permitted by the TIA.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (e) and (f) of this
Section 9.1.
51
(e) Subject to Section 9.1(c), the Trustee may refuse to perform any
duty or exercise any right or power or extend or risk its own funds or
otherwise incur any financial liability unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(f) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The
Trustee (acting in any capacity hereunder) shall be under no liability for
interest on any money received by it hereunder unless otherwise agreed in
writing with the Company.
Section 9.2 Rights of Trustee. Subject to its duties and responsibilities
under the TIA,
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it in good faith to be genuine and to
have been signed or presented by the proper party or parties;
(b) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, conclusively rely upon an Officers' Certificate;
(c) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(d) the Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith which it believes to be
authorized or within its rights or powers conferred under this Indenture;
(e) subject to Section 9.1(c), the Trustee may consult with counsel
selected by it and any advice or Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance with
such advice or Opinion of Counsel;
(f) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity satisfactory to it against the costs,
expenses and liabilities which may be incurred therein or thereby;
(g) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by an Officer's Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
Board Resolution may be evidenced to
52
the Trustee by a copy thereof certified by the Secretary or an Assistant
Secretary of the Company;
(h) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney at the sole
cost of the Company and shall incur no liability or additional liability
of any kind by reason of such inquiry or investigation;
(i) the Trustee shall not be deemed to have notice of any Default or
Event of Default, except a Default under Section 8.1(a), (b) and (c),
unless written notice of any event which is in fact such a default is
received by the Trustee from the Company or the Holders of at least 25% of
the Securities then outstanding at the Corporate Trust Office of the
Trustee, and such notice references the Securities and this Indenture;
(j) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in
each of its capacities hereunder, and to each agent, custodian and other
Person employed to act hereunder; and
(k) the Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to
this Indenture, which Officers' Certificate may be signed by any Person
authorized to sign an Officers' Certificate, including any Person
specified as so authorized in any such certificate previously delivered
and not superseded.
Section 9.3 Individual Rights of Trustee. The Trustee in its individual or
any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Registrar, Conversion Agent or
co-registrar may do the same with like rights. However, the Trustee must comply
with Section 9.10 and Section 9.11.
Section 9.4 Trustee's Disclaimer. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use or application of the proceeds from the
Securities, it shall not be responsible for any statement in any registration
statement for the Securities under the Securities Act or in any offering
document for the Securities, the Indenture or the Securities (other than its
certificate of authentication), or the determination as to which beneficial
owners are entitled to receive any notices hereunder.
Section 9.5 Notice of Defaults. If a Default occurs and if it is known to
the Trustee, the Trustee shall give to each Holder notice of the Default within
90 days after it occurs or, if later, within 15 days after it is known to the
Trustee, unless such Default shall have been cured or
53
waived before the giving of such notice. Notwithstanding the preceding sentence,
except in the case of a Default described in Section 8.1(a), (b) or (c), the
Trustee may withhold the notice if and so long as a committee of Responsible
Officers in good faith determines that withholding the notice is in the interest
of the Securityholders. The preceding sentence shall be in lieu of the proviso
to Section 315(b) of the TIA and such proviso is hereby expressly excluded from
this Indenture, as permitted by the TIA. The Trustee shall not be deemed to have
knowledge of a Default unless a Responsible Officer has received written notice
of such Default by the Company or the Holders of at least ten percent (10%) in
aggregate principal amount of the Securities then outstanding, which notice
specifically references this Indenture and the Securities.
Section 9.6 Reports by Trustee to Holders. Within 60 days after each May
15th beginning with the May 15th following the date of this Indenture, the
Trustee shall mail to each Securityholder and such others in compliance with TIA
Section 313(a) a brief report dated as of such May 15 that complies with TIA
Section 313(a), if required by such Section 313(a). The Trustee also shall
comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each securities exchange, if any, on which the
Securities are listed. The Company agrees to notify the Trustee promptly
whenever the Securities become listed on any securities exchange and of any
delisting therefrom.
Section 9.7 Compensation and Indemnity. The Company and the Guarantors
agree:
(a) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited
(to the extent permitted by law) by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses, advances and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(c) to indemnify the Trustee or any predecessor Trustee and their
agents for, and to hold them harmless against, any loss, damage, claim,
liability, cost or expense (including attorney's fees and expenses, and
taxes (other than taxes based upon, measured by or determined by the
income of the Trustee)) incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
defending itself against any claim (whether asserted by the Company, a
Guarantor or any Holder or any other Person) or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
To secure the Company's and the Guarantors' payment obligations in this
Section 9.7, the Trustee shall have a lien prior to the Securities on all money
or property held or collected by the Trustee, except amounts held in trust to
pay the principal amount, the Repurchase Price, the
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Fundamental Change Repurchase Price, the Make-Whole Premium, the Liquidated
Damages, if any, or interest, as the case may be, on particular Securities.
The Company's and the Guarantors' payment obligations pursuant to this
Section 9.7 shall survive the discharge of this Indenture and the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 8.1(i) or (j), the expenses including the
reasonable charges and expenses of its counsel, are intended to constitute
expenses of administration under any bankruptcy law.
Section 9.8 Replacement of Trustee. The Trustee may resign by so notifying
the Company and to the Holders of Securities; provided, however, no such
resignation shall be effective until a successor Trustee has accepted its
appointment pursuant to this Section 9.8. The Majority Holders may remove the
Trustee by so notifying the Trustee and the Company. The Company shall remove
the Trustee if:
(a) the Trustee fails to comply with Section 9.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or public officer takes charge of the Trustee or its
property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint, by resolution of
its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company satisfactory in form and substance to
the retiring Trustee and the Company. Thereupon the resignation or removal of
the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 9.7.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, (i) the retiring Trustee may upon ten
Business Days' notice to the Company and the Securityholders, appoint a
successor identified in such notice, or (ii) the Trustee, the Company or the
Majority Holders may petition any court of competent jurisdiction at the expense
of the Company for the appointment of a successor Trustee.
The Majority Holders may upon removal of the Trustee nominate a successor
trustee that shall be deemed appointed as successor trustee unless, within ten
Business Days after notice to the Company of such nomination, the Company
objects thereto, in which case the Trustee so removed or any other
Securityholder, or if such Trustee so removed or any Securityholder fails to
act, the Company, upon the terms and conditions provided herein, may petition
any court of competent jurisdiction for an appointment of a successor trustee.
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If the Trustee fails to comply with Section 9.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
No successor trustee shall accept appointment as provided in this Section
9.8 unless, at the time of such acceptance, such successor complies with Section
9.10 hereof.
Section 9.9 Successor Trustee by Merger. If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee.
Section 9.10 Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA Sections 310(a)(1) and (5) and 310(b). The
Trustee (or its parent holding company) shall have a combined capital and
surplus of at least $50,000,000 as set forth in its most recent published annual
report of condition. Nothing herein contained shall prevent the Trustee from
filing with the SEC the application referred to in the penultimate paragraph of
TIA Section 310(b).
Section 9.11 Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE X
DISCHARGE OF INDENTURE
Section 10.1 Discharge of Liability on Securities. If (i) the Company
delivers to the Trustee all outstanding Securities (other than Securities
replaced or repaid pursuant to Section 2.7) for cancellation or (ii) all
outstanding Securities shall become due and payable and, in each case, the
Company deposits with the Trustee cash sufficient to pay all amounts due and
owing on all outstanding Securities (other than Securities replaced pursuant to
Section 2.7), and if in each case the Company pays all other sums payable
hereunder by the Company or otherwise payable to the Holders in relation
thereto, then this Indenture shall, subject to Section 9.7, cease to be of
further effect. The Trustee shall join in the execution of a document prepared
by the Company acknowledging satisfaction and discharge of this Indenture on
demand of the Company accompanied by an Officers' Certificate and Opinion of
Counsel and at the cost and expense of the Company. Notwithstanding the
satisfaction and discharge of this Indenture, the obligations of the Company to
the Trustee under Section 9.7 and the obligations of the Trustee as to the
application and discharge of any funds deposited with it shall survive such
satisfaction and discharge.
Section 10.2 Repayment to the Company. The Trustee and the Paying Agent
shall return to the Company upon written request any money or securities held by
them with respect to the Securities and not applied that remains unclaimed for
two years, subject to applicable unclaimed property law. After return to the
Company, Holders entitled to the money or
56
securities must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person and the Trustee and
the Paying Agent shall have no further liability to the Securityholders with
respect to such money or securities for that period commencing after the return
thereof.
ARTICLE XI
AMENDMENTS
Section 11.1 Without Consent of Holders. The Company, the Guarantors and
the Trustee may amend this Indenture, all (but not less than all) of the
Securities or the Subsidiary Guarantees without the consent of any
Securityholder to:
(a) add to the covenants of the Company for the benefit of the
Holders of Securities;
(b) surrender any right or power herein conferred upon the Company;
(c) provide for the assumption of the Company's or a Guarantor's
obligations to the Holders of Securities in the case of a merger,
consolidation, conveyance, transfer or lease pursuant to Article VII or
Section 13.4 hereof and in accordance with the terms of this Indenture;
(d) reduce the Conversion Price with respect to all outstanding
Securities; provided, however, that such reduction in the Conversion Price
shall be in accordance with the terms of this Indenture and shall not
adversely affect the interests of the Holders of Securities (including
after taking into account tax and other consequences of such reduction);
(e) cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which
is otherwise defective; provided, however, that such action pursuant to
this clause (e) does not adversely affect the interests of the Holders of
Securities in any material respect;
(f) add or modify any other provisions herein with respect to
matters or questions arising hereunder which the Company and the Trustee
may deem necessary or desirable and that will not adversely affect the
interests of the Holders of Securities;
(g) to add new Guarantors with respect to the Securities pursuant to
Section 5.11;
(h) add additional Events of Default; or
(i) convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities any property or assets.
Section 11.2 With Consent of Holders. Except as provided below in this
Section 11.2, this Indenture, the Securities and the Subsidiary Guarantees may
be amended, modified or supplemented, and noncompliance in any particular
instance with any provision of this
57
Indenture, the Securities or Subsidiary Guarantees may be waived, in each case
with the written consent of the Majority Holders.
Without the written consent or the affirmative vote of each Holder of
Securities affected thereby, an amendment or waiver under this Section 11.2 may
not:
(a) change the Stated Maturity of the principal amount of, or the
date any installment of interest, or the payment of Liquidated Damages, is
due on, any Security;
(b) reduce the principal amount of, or interest, or the payment of
Liquidated Damages payable on, any Security;
(c) make any change that impairs the conversion rights of any
Securities under Article XIII;
(d) reduce the Repurchase Price, the Fundamental Change Repurchase
Price, the Optional Redemption Price, the Redemption Premium or the
Make-Whole Premium of any Security or amend or modify in any manner
adverse to the Holders of Securities the Company's obligation to make such
payments;
(e) modify the provisions of Section 4.1 in any manner adverse to
the Holders of Securities;
(f) reduce the quorum or voting requirements under this Indenture;
(g) change the currency of any amount owed or owing under the
Security or any interest thereon from U.S. Dollars;
(h) impair the right of any Holder, or the percentage of Holders
required hereunder, to institute suit or give instructions or directions
to the Trustee for the enforcement of any payment or with respect to, or
conversion of, any Security;
(i) modify any of the provisions of this Section 11.2 or Section 8.4
(Waiver of Past Defaults), except to provide that certain other provisions
of this Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Security affected thereby; or
(j) reduce the percentage of the principal amount of the outstanding
Securities the consent of whose Holders is required for any such
supplemental indenture or the consent of whose Holders is required for any
waiver provided for in this Indenture.
It shall not be necessary for the consent of the Holders under this
Section 11.2 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 11.2 becomes effective, the Company
shall mail to each Holder a notice briefly describing the amendment.
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Section 11.3 Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article XI shall comply with the TIA.
Section 11.4 Revocation and Effect of Consents, Waivers and Actions. Until
an amendment, waiver or other action by Holders becomes effective, a consent
thereto by a Holder of a Security hereunder is a continuing consent by the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same obligation as the consenting Holder's Security, even if
notation of the consent, waiver or action is not made on the Security. However,
any such Holder or subsequent Holder may revoke the consent, waiver or action as
to such Holder's Security or portion of the Security if the Trustee receives the
notice of revocation before the date the amendment, waiver or action becomes
effective. After an amendment, waiver or action becomes effective, it shall bind
every Securityholder.
Section 11.5 Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article XI may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
outstanding Securities.
Section 11.6 Trustee to Sign Supplemental Indentures. In signing a
supplemental indenture permitted by this Article XI, the Trustee shall receive,
and (subject to the provisions of Section 9.1) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture. Subject to the
preceding sentence, the Trustee shall sign any supplemental indenture authorized
pursuant to this Article XI if the amendment contained therein does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign such supplemental indenture.
Section 11.7 Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article XI, this Indenture shall be modified
in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
ARTICLE XII
SUBSIDIARY GUARANTEES
Section 12.1 Guarantee.
(a) Subject to this Article XII, each of the Guarantors hereby,
jointly and severally, fully and unconditionally guarantees to each Holder
of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Securities or the obligations of the Company
hereunder or thereunder, that:
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(i) the principal, the Repurchase Price, the Fundamental
Change Repurchase Price and the Optional Redemption Price of, and
the Redemption Premium, any Make-Whole Premium (only to the extent
not otherwise satisfied by the Company in other than cash in
accordance with the applicable Company Notice), Liquidated Damages,
if any, and interest on, the Securities will be promptly paid in
full when due, whether at Stated Maturity, by acceleration,
redemption, repurchase or otherwise, and interest on the overdue
principal of and interest on the Securities, if any, if lawful, and
all other cash payment obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of
any Securities or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at Stated Maturity, by
acceleration or otherwise;
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors will be jointly and
severally obligated to pay the same immediately. Each Guarantor agrees
that this is a guarantee of payment and not a guarantee of collection. No
Guarantor shall have any obligation to guarantee the Company's performance
of its obligations under Article XIII.
(b) The Guarantors hereby agree that their obligations hereunder are
unconditional, irrespective of the validity, regularity or enforceability
of the Securities or this Indenture, the absence of any action to enforce
the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenant that this Subsidiary Guarantee will not be
discharged except by complete performance of the obligations contained in
the Securities and this Indenture (other than the Company's obligations
pursuant to Article XIII);
(c) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian,
trustee, liquidator or other similar official acting in relation to either
the Company or the Guarantors, any amount paid by either to the Trustee or
such Holder, this Subsidiary Guarantee, to the extent theretofore
discharged, will be reinstated in full force and effect.
(d) Each Guarantor agrees that it will not be entitled to exercise
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders and the Trustee, on the other
hand, (1) the maturity of the obligations guaranteed hereby may be
accelerated as
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provided in Article VIII hereof for the purposes of this Subsidiary
Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed
hereby, and (2) in the event of any declaration of acceleration of such
obligations as provided in Article VIII hereof, such obligations (whether
or not due and payable) will forthwith become due and payable by the
Guarantors for the purpose of this Subsidiary Guarantee. The Guarantors
will have the right to seek contribution from any non-paying Guarantor so
long as the exercise of such right does not impair the rights of the
Holders under the Subsidiary Guarantee.
Section 12.2 Limitation on Guarantor Liability. Each Guarantor, and by its
acceptance of Securities, each Holder, hereby confirms that it is the intention
of all such parties that the Subsidiary Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Title 11, U.S.
Code or any similar federal or state law for the relief of debtors ("Bankruptcy
Law"), the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar federal or state law to the extent applicable to any
Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the
Holders and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will be limited to the maximum amount that will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article XII, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
Section 12.3 Execution and Delivery of Subsidiary Guarantee. To evidence
its Subsidiary Guarantee set forth in Section 12.1 hereof, each Guarantor hereby
agrees that a notation of such Subsidiary Guarantee substantially in the form
attached as Exhibit G hereto will be endorsed by an Officer of such Guarantor on
each Security authenticated and delivered by the Trustee and that this Indenture
will be executed on behalf of such Guarantor by one of its Officers.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in
Section 12.1 hereof will remain in full force and effect notwithstanding any
failure to endorse on each Security a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Security on which a Security Guarantee is endorsed, the Subsidiary Guarantee
will be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, will constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any Domestic Subsidiary
after the date of this Indenture, if required by Section 5.11 hereof, the
Company will cause such Domestic Subsidiary to comply with the provisions of
Section 5.11 hereof and this Article XII, to the extent applicable.
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Section 12.4 Guarantors May Consolidate, Etc. on Certain Terms. Except as
otherwise provided in Section 12.5 hereof, no Guarantor may sell or otherwise
dispose of all or substantially all of its assets to, or consolidate with or
merge with or into (whether or not such Guarantor is the surviving Person)
another Person, other than the Company or another Guarantor, unless:
(a) immediately after giving effect to such transaction, no Default
or Event of Default exists; and
(b) subject to Section 12.5 hereof, the Person acquiring the
property in any such sale or disposition or the Person formed by or
surviving any such consolidation or merger unconditionally assumes all the
obligations of that Guarantor under this Indenture and its Subsidiary
Guarantee on the terms set forth herein or therein, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to
the Trustee.
In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Securities and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person will succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Subsidiary Guarantees to be endorsed upon all of the
Securities issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee. All the Subsidiary Guarantees so
issued will in all respects have the same legal rank and benefit under this
Indenture as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Subsidiary
Guarantees had been issued at the date of the execution hereof.
Except as set forth in Article V and Article VII hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Securities will prevent any consolidation or merger of a
Guarantor with or into the Company or another Guarantor, or will prevent any
sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.
Section 12.5 Releases.
(a) In the event of any sale or other disposition of all or
substantially all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the
Capital Stock of any Guarantor, in each case to a Person that is not
(either before or after giving effect to such transactions) the Company or
a Guarantor, then such Guarantor or the corporation acquiring the
property, as applicable, will be released and relieved of any obligations
under its Subsidiary Guarantee. Upon delivery by the Company to the
Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in
accordance with the provisions of this Indenture, the Trustee will execute
any documents reasonably required in order to evidence the release of any
Guarantor from its obligations under its Subsidiary Guarantee.
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(b) In the event that any Guarantor ceases to be a Significant
Subsidiary, such Guarantor will be released and relieved of any
obligations under its Subsidiary Guarantee immediately upon such
cessation.
(c) Upon satisfaction and discharge of this Indenture in accordance
with Article X hereof, each Guarantor will be released and relieved of any
obligations under its Subsidiary Guarantee.
Any Guarantor not released from its obligations under its Subsidiary Guarantee
as provided in this Section 12.5 will remain liable for the full amount of the
principal amount, the Repurchase Price, the Fundamental Change Repurchase Price
and the Optional Redemption Price of, and interest, any Make-Whole Premium (only
to the extent not otherwise satisfied by the Company in other than cash in
accordance with the applicable Company Notice), any Redemption Premium and any
Liquidated Damages on, the Securities and for the other obligations of any
Guarantor under this Indenture as provided in this Article XII.
ARTICLE XIII
CONVERSIONS
Section 13.1 Conversion Privilege; Limitations on Conversion.
(a) Subject to and upon compliance with the provisions of this
Article XIII, a Holder of a Security shall have the right, at such
Holder's option, at any time and from time to time, to convert all or any
portion (if the portion to be converted is $1,000 or an integral multiple
of $1,000) of the principal amount of such Security (the "Converted
Principal Amount") into a number of shares of Common Stock, equal to the
quotient of (i) the sum of (1) the Converted Principal Amount plus (2) the
Redemption Premium (or portion thereof), if any, payable in respect of
such Converted Principal Amount pursuant to the provisions of Section 6.1
and not paid in cash, divided by (ii) the Conversion Price in effect on
the date of conversion. The Conversion Price shall initially be $3.25 (the
"Conversion Price"), and shall be adjusted in certain instances as
provided in this Article XIII. In addition, pursuant to Article VI,
Holders may be entitled to a Make-Whole Premium if they elect to convert
their Securities within a Fundamental Change Conversion Period.
(b) The limitation set forth below in this Section 13.1(b) is
referred to herein as the "Share Limitation." The Company shall not (i)
have the right to pay any amount due under this Indenture (including the
Repurchase Price, the Fundamental Change Repurchase Price, any Make-Whole
Premium and any Redemption Premium) in shares of Common Stock or (ii)
effect any conversion of any Security (and no Holder shall have the right
to convert any portion of any Security) to the extent that after giving
effect to any such payment in shares of Common Stock or conversion, the
Holder (together with the Holder's affiliates) receiving such payment or
effecting such conversion would beneficially own in excess of 4.99% of the
number of shares of Common Stock outstanding immediately after giving
effect to such payment in shares of Common Stock or such conversion. For
purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its affiliates shall include the
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number of shares of Common Stock issuable upon payments of any amounts
payable in shares of Common Stock pursuant to the terms of this Indenture
and the Securities and the number of shares issuable upon conversion of
any Security with respect to which the determination pursuant to such
sentence is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) conversion of the remaining,
nonconverted portion of any Security beneficially owned by the Holder or
any of its affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the Holder or any of its affiliates. Except
as set forth in the preceding sentence, for purposes of this Section,
beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act. For purposes of this Section 13.1(b), in determining
the number of outstanding shares of Common Stock, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the
Company's most recent report on Form 10-K, Form 10-Q or Form 8-K, as the
case may be, (y) a more recent public announcement by the Company or (z)
any other notice by the Company (which shall be provided upon request)
setting forth the number of shares of Common Stock outstanding. In any
case, the number of outstanding shares of Common Stock as of the date of
any payment or conversion shall be determined after giving effect to
payment or conversion or exercise of securities of the Company, including
any Security, by the Holder or its affiliates since the date as of which
such number of outstanding shares of Common Stock was reported. In order
to facilitate compliance with the foregoing, each Holder will be required,
as a condition to any conversion of Securities held by such Holder, to
make a representation to the Company that such Holder and its Affiliates
shall be in compliance with the Share Limitation immediately after
converting any Security and receipt of any shares of Common Stock issuable
upon such conversion. By written notice to the Company, any Holder may
increase or decrease the Share Limitation to any other percentage not in
excess of 9.99% specified in such notice; provided that (i) no such notice
may be sent prior to the second anniversary of the Issue Date, (ii) any
such increase will not be effective until the 61st day after such notice
is delivered to the Company, and (iii) any such increase or decrease will
apply only to the Holder sending such notice and not to any other holder
of Securities. Notwithstanding the foregoing, the Share Limitation shall
not be applicable (i) on any of the ten Trading Days up to and including
the Stated Maturity, (ii) on any of the ten Trading Days up to and
including the Effective Date, or (iii) during the Fundamental Change
Conversion Period or the Redemption Conversion Period.
(c) Notwithstanding any contrary provision of this Indenture, the
following provisions shall apply (and any such contrary provisions shall
be qualified by the following provisions of this Section 13.1(c)), but
only until (and not on or after) the date on which Stockholder Approval
(as defined below) shall have been obtained:
(i) In connection with the Company's first annual meeting or
special meeting of stockholders next succeeding the Closing Date,
the Company shall (i) provide each stockholder entitled to vote at
such special or annual meeting of stockholders, a proxy statement
soliciting each such stockholder's affirmative vote for approval in
accordance with the Company's Certificate of Incorporation
64
and (if the Common Stock is then listed and admitted to trading on
the NYSE) the rules of the NYSE (such affirmative approval being
referred to as the "Stockholder Approval") of resolutions providing
for the issuance and delivery of all shares of Common Stock
(including, without limitation, shares in excess of the Exchange Cap
(as defined below)) issuable upon conversion, redemption or
repurchase of the aggregate principal amount of the Securities
issued or issuable under this Indenture or upon any election in
accordance with the terms hereof to pay any amounts due hereunder or
under the Securities in shares of Common Stock and (ii) otherwise
use its best efforts to obtain the Stockholder Approval by February
24, 2005. Upon receipt by the Company of the Stockholder Approval,
the Company shall deliver a written notice thereof to the Trustee
and the Paying Agent, and the Trustee shall in turn give written
notice thereof to the Holders.
(ii) In addition to any authorized but unissued shares of
Common Stock that may be reserved for issuance upon conversion of
Securities in accordance with the provisions of this Article XIII,
the Company shall reserve for delivery upon such conversion all
Available Treasury Shares. "Available Treasury Shares" means all
shares of Common Stock held by the Company in treasury on the
Closing Date or acquired by the Company after the Closing Date and
held in treasury (other than 232,134 shares of Common Stock held in
treasury by the Company on the Closing Date and previously
reserved). If and for so long as any Available Treasury Shares
remain so held in treasury, the Company shall not (A) deliver any
such Available Treasury Shares to any Person other than Holders of
Securities, or for any purpose other than in connection with
conversion of Securities held by such Holders, or (B) issue or
deliver any shares of Common Stock (other than Available Treasury
Shares) to Holders of Securities upon conversion of such Securities.
(iii) The Company shall not issue or deliver any shares of
Common Stock in satisfaction of any obligation under this Indenture
or under the Securities (that it is otherwise entitled to deliver in
satisfaction of such obligation), other than pursuant to a
conversion by a Holder of a Security pursuant to the terms of this
Indenture.
(iv) If and only if the Stockholder Approval is not received
by March 1, 2006, (1) the Company will use its best efforts to
continue to seek and obtain the Stockholder Approval and (2)
liquidated damages ("Conversion Block Liquidated Damages") shall
accrue on all the issued and outstanding Securities at the rate of
1.0% per annum (computed on the basis of a 360-day year of twelve
30-day months) of the principal amount of such Securities from and
including March 1, 2006 until the Stated Maturity. Conversion Block
Liquidated Damages, if any, shall be payable to the Holders
semi-annually in arrears on each Interest Payment Date, commencing
on the first Interest Payment Date next following March 1, 2006.
(v) The Company shall not issue or deliver shares of Common
Stock upon conversion of any Security to the extent that such
issuance of shares of
65
Common Stock would result in the aggregate number of shares of
Common Stock issued or delivered in respect of all conversions
hereunder to exceed the Aggregate Cap. Subject to the clause (viii)
and clause (ix) and the other provisions of this Section 13.1(c), to
the extent the preceding sentence precludes the Company from issuing
or delivering any shares of Common Stock upon a conversion of any
Security, the Company shall settle such conversion in cash pursuant
to the provisions of Section 13.2.
(vi) "Exchange Cap" means an aggregate of 7,515,754 shares of
Common Stock.
(vii) "Aggregate Cap" means the Exchange Cap plus the number
of Available Treasury Shares.
(viii) Prior to March 1, 2006, the Company shall not convert
any Security (regardless of whether such conversion would be into
shares of Common Stock or settled for cash or any other property)
and no Holder shall have the right to convert any Security, to the
extent that effecting such conversion by issuing or delivering
shares of Common Stock would result in the Company issuing or
delivering shares of Common Stock in excess of the Aggregate Cap in
respect of such conversion when taken together with all previous
conversions of Securities.
(ix) On or after March 1, 2006 and prior to November 1, 2008,
if the Current Market Price (as defined in Section 13.3(g)) on any
Conversion Date is less than the Conversion Price on such Conversion
Date, then the Company shall not be required to convert any Security
into cash, and no Holder shall have the right to convert any such
Security into cash.
(x) No Holder shall receive in the aggregate, upon conversion,
repurchase or redemption of Securities, shares of Common Stock in an
amount greater than the product of the number of shares of Common
Stock constituting the Aggregate Cap multiplied by a fraction, the
numerator of which is the principal amount of Securities held by
such Holder on the Conversion Date and the denominator of which is
the aggregate principal amount of all Securities issued and
outstanding under this Indenture (with respect to each Holder, the
"Aggregate Cap Allocation").
(xi) In the event that the Company receives a Conversion
Notice from more than one Holder for the same Conversion Date and
the Company can convert into shares of Common Stock some, but not
all, of such portions of the Securities submitted for conversion,
the Company, subject to the Aggregate Cap Allocation, shall convert
from each Holder electing to have Securities converted on such date
a pro rata amount of such Holder's Securities submitted for
conversion based on the principal amount of Securities submitted for
conversion on such date relative to the aggregate principal amount
of all Securities submitted for conversion on such date.
66
Section 13.2 Conversion Procedure; Fractional Shares; Cash Settlement.
Subject to the Share Limitation and Section 13.1, each Security shall be
convertible at the office of the Conversion Agent into fully paid and
nonassessable shares (calculated to the nearest 1/100th of a share) of Common
Stock on the Conversion Date. The Security will be converted into shares of
Common Stock at the Conversion Price therefor. No payment or adjustment shall be
made in respect of dividends on the Common Stock or accrued interest on a
converted Security, except as described in Section 13.9 hereof. The Company
shall not issue any fraction of a share of Common Stock in connection with any
conversion of Securities, but instead shall make a cash payment (calculated to
the nearest cent) equal to such fraction multiplied by the Closing Price of the
Common Stock on the last Trading Day prior to the date of conversion.
Notwithstanding the foregoing, a Security in respect of which a Holder has
delivered a Repurchase Notice or Fundamental Change Repurchase Notice exercising
such Holder's option to require the Company to repurchase such Security may be
converted only if such notice of exercise is withdrawn as to such conversion
amount in accordance with Section 3.4 hereof.
Before any Holder of a Security shall be entitled to convert the same into
Common Stock, such Holder shall, in the case of Global Securities, comply with
the procedures of the Depositary in effect at that time, and in the case of
Certificated Securities, surrender such Securities, duly endorsed to the Company
or in blank, at the office of the Conversion Agent, and shall give written
notice ("Holder's Conversion Notice") to the Company at said office or place
that such Holder elects to convert the same and shall state in writing therein
the principal amount of Securities to be converted and the name or names (with
addresses) in which such Holder wishes the certificate or certificates for
Common Stock to be issued.
Before any such conversion, a Holder also shall pay all funds required, if
any, relating to interest on the Securities, as provided in Section 13.9, and
all taxes or duties, if any, as provided in Section 13.8.
If more than one Security shall be surrendered for conversion at one time
by the same Holder, the number of full shares of Common Stock which shall be
deliverable upon conversion shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof to the extent
permitted thereby) so surrendered. Subject to the next succeeding sentence, the
Company will, as soon as practicable thereafter, issue and deliver at said
office or place to such Holder of a Security, or to such Holder's nominee or
nominees, certificates for the number of full shares of Common Stock to which
such Holder shall be entitled as aforesaid, together with cash in lieu of any
fraction of a share to which such Holder would otherwise be entitled. The
Company shall not be required to deliver certificates for shares of Common Stock
while the stock transfer books for such stock or the security register are duly
closed for any purpose, but certificates for shares of Common Stock shall be
issued and delivered as soon as practicable after the opening of such books or
security register.
A Security shall be deemed to have been converted as of the close of
business on the date of the surrender of such Securities for conversion as
provided above, and the Person or Persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
Holder or Holders of such Common Stock as of the close of business on such date.
67
In case any Security shall be surrendered for partial conversion, the
Company shall execute and the Trustee shall authenticate and deliver to or upon
the written order of the Holder of the Security so surrendered, without charge
to such Holder (subject to the provisions of Section 13.8 hereof), a new
Security or Securities in authorized denominations in an aggregate principal
amount equal to the unconverted portion of the surrendered Securities.
In the case of a conversion during a Fundamental Change Conversion Period,
Holders electing to convert Securities shall also receive the Make-Whole Premium
payable upon such conversion as set forth in Article VI hereof. Holders may
surrender Securities for conversion at any time within the Fundamental Change
Conversion Period. In the case of a conversion during a Redemption Conversion
Period, Holders electing to convert Securities shall also receive the Redemption
Premium payable upon such conversion as set forth in Article IV and Article VI
hereof. Holders may surrender Securities for conversion at any time within the
Redemption Conversion Period.
Notwithstanding the foregoing, subject to the provisions of Section
13.1(c)(v), the Company, in its sole discretion, may satisfy all or any portion
of its obligation to convert the Securities (the "Conversion Obligation"), by
paying cash in lieu of issuing or delivering shares of Common Stock upon
conversion, including the Make-Whole Premium, if any. If the Company elects to
satisfy all or any portion of its Conversion Obligation in cash, the Company
shall deliver a written notice to the Trustee, who will in turn give written
notice to the Holders of the portion of the Conversion Obligation to be
satisfied in cash and the portion, if any, of the Conversion Obligation to be
satisfied in shares of Common Stock (which portions shall be expressed as a
number of shares of Common Stock), at any time on or before the date that is two
(2) Trading Days following receipt of the Holder's Conversion Notice (the "Cash
Settlement Notice Period"). If the Company timely elects to pay cash for any
portion of the Common Stock otherwise issuable to a Holder upon conversion, such
Holder may retract its Holder's Conversion Notice at any time during the six (6)
Trading Days following the final day of the Cash Settlement Notice Period (the
"Conversion Retraction Period") by delivering written notice of such retraction
to the Company and the Trustee during the Conversion Retraction Period. No such
retraction can be made (and a Holder's Conversion Notice shall be irrevocable)
if the Company does not elect to deliver cash (other than cash in lieu of
fractional shares) in lieu of all or a portion of the Common Stock otherwise to
be issued or delivered upon conversion. Upon the expiration of a Conversion
Retraction Period, a Holder's Conversion Notice shall be irrevocable. If the
Company is required to satisfy all or any portion of the Conversion Obligation
in cash, and one or more pending Conversion Notices have not been retracted,
then the Company shall deposit the Conversion Obligation with the Trustee (in
cash or in cash and shares of Common Stock or solely in shares of Common Stock)
no later than the fifteenth (15th) Trading Day following the last day of the
Conversion Retraction Period. Such settlement shall be distributed to the
Holders as their interests may appear upon surrender of their Securities.
If any portion of the Conversion Obligation is to be paid in cash, the
amount of cash (the "Cash Settlement Amount") payable in settlement of the
aggregate principal amount which will not be paid in shares of Common Stock
(such principal amount, the "Non-Converted Principal Amount") shall be equal to
the product of (a) the Non-Converted Principal Amount divided by the Conversion
Price times (b) the arithmetic average of the Closing Prices of the Common Stock
for the five (5) consecutive Trading Days following the last day of the
Conversion Retraction
68
Period. The Company shall deliver a written statement of the results of such
calculation to the Trustee, and of any other information relating thereto as the
Trustee may reasonably request.
Section 13.3 Adjustment of Conversion Price. The Conversion Price shall be
adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all Holders of the outstanding Common Stock in shares of
Common Stock, the Conversion Price in effect at the opening of business on
the date following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be reduced
by multiplying such Conversion Price by a fraction, the numerator of which
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 of
which shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day
following the date fixed for such determination. If any dividend or
distribution of the type described in this Section 13.3(a) is declared but
not so paid or made, the Conversion Price shall again be adjusted to the
Conversion Price which would then be in effect if such dividend or
distribution had not been declared.
(b) In case the Company shall issue rights or warrants to all
Holders of its outstanding shares of Common Stock entitling them (for a
period expiring within 45 days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for
or purchase shares of Common Stock (or securities convertible into Common
Stock) at a price per share (or having a conversion price per share) less
than the Current Market Price (as defined below) on the date fixed for
determination of stockholders entitled to receive such rights or warrants,
the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the date fixed for determination of stockholders entitled to
receive such rights or warrants by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for determination of stockholders entitled to
receive such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would
purchase at such Current Market Price (or the aggregate conversion price
of the convertible securities so offered, which shall be determined by
multiplying the number of shares of Common Stock issuable upon conversion
of such convertible securities by the conversion price per share of Common
Stock pursuant to the terms of such convertible securities), and the
denominator of which shall be the number of shares of Common Stock
outstanding on the date fixed for determination of stockholders entitled
to receive such rights or warrants plus the total number of additional
shares of Common Stock offered for subscription or purchase or into which
convertible securities so offered are convertible; provided, however, the
Company may, at its option and in lieu of the foregoing adjustment, elect
to distribute or reserve for distribution the pro rata portion of such
rights or warrants so that each Holder of Securities shall receive, or
shall have the right to receive upon conversion, as the case may be, the
amount of such rights or warrants that such Holder of Securities would
have received if such Holder of Securities had converted such Securities
on the date fixed for determination of
69
stockholders to receive such rights or warrants. Such adjustment shall be
successively made whenever any such rights or warrants are issued, and
shall become effective immediately after the opening of business on the
day following the date fixed for determination of stockholders entitled to
receive such rights or warrants. To the extent that shares of Common Stock
(or securities convertible into Common Stock) are not delivered before the
expiration of such rights or warrants, then after the expiration of such
rights or warrants the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made on the basis of
delivery of only the number of shares of Common Stock actually delivered
(or the number of shares of Common Stock issuable upon conversion of
convertible securities actually issued). In the event that such rights or
warrants are not so issued, the Conversion Price shall again be adjusted
to be the Conversion Price which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such
rights or warrants had not been fixed. In determining whether any rights
or warrants entitle the Holders to subscribe for or purchase shares of
Common Stock at less than such Current Market Price, and in determining
the aggregate offering price of such shares of Common Stock, there shall
be taken into account any consideration received by the Company for such
rights or warrants or to be received upon exercise of such rights or
warrants, the value of such consideration, if other than cash, to be
determined in good faith by the Board of Directors and set forth in a
Board Resolution.
(c) 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 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.
(d) In case the Company shall, by dividend or otherwise, distribute
to all Holders of its Common Stock shares of any class of capital stock of
the Company (other than any dividends or distributions to which Section
13.3(a) applies) or evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in Section
13.3(b), and excluding any dividend or distribution (x) paid exclusively
in cash or (y) referred to in Section 13.3(a)) (any of the foregoing
hereinafter in this Section 13.3(d) called the "Distributed Securities"),
then, in each such case, the Conversion Price shall be reduced so that the
same shall be equal to the price determined by multiplying the Conversion
Price in effect on the Record Date (as defined below) with respect to such
distribution by a fraction, the numerator of which shall be the Current
Market Price per share of the Common Stock on such Record Date less the
fair market value (as determined by the Board of Directors, whose good
faith determination shall be conclusive, and described in a resolution of
the Board if Directors) on the Record Date of the portion of the
Distributed Securities so distributed applicable to one share of
70
Common Stock and the denominator of which shall be the Current Market
Price per share of the Common Stock on such Record Date, such reduction to
become effective immediately prior to the opening of business on the day
following such Record Date. If the Board of Directors determines the fair
market value of any distribution for purposes of this Section 13.3(d) by
reference to the actual or when issued trading market for any securities,
it must in doing so consider the prices in such market over the same
period used in computing the Current Market Price of the Common Stock.
Each share of Common Stock issued upon conversion of securities pursuant
to this Article 13 shall be entitled to receive the appropriate number of
common stock or preferred stock purchase rights, if any, as may be
provided by the terms of any stockholder rights plan adopted by the
Company (notwithstanding the occurrence of an event causing such rights to
separate from the Common Stock at or prior to the time of conversion). Any
distribution of rights or warrants pursuant to a stockholder rights plan
complying with the requirements set forth in the immediately preceding
sentence of this paragraph shall not constitute a distribution of rights
or warrants for the purposes of Section 13.3(b) or this Section 13.3(d).
Rights or warrants distributed by the Company to all holders of
Common Stock entitling the Holders thereof to subscribe for or purchase
shares of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a
specified event or events ("Trigger Event"): (i) are deemed to be
transferred with such shares of Common Stock; (ii) are not exercisable;
and (iii) are also issued in respect of future issuances of Common Stock,
shall be deemed not to have been distributed for purposes of this Section
13.3 (and no adjustment to the Conversion Price under this Section 13.3
will be required) until the occurrence of the earliest Trigger Event,
whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the
Conversion Price shall be made under this Section 13.3(d). If any such
right or warrant, including any such existing rights or warrants
distributed prior to the date of this Indenture, are subject to events,
upon the occurrence of which such rights or warrants become exercisable to
purchase different securities, evidences of indebtedness or other assets,
then the date of the occurrence of any and each such event shall be deemed
to be the date of distribution and record date with respect to new rights
or warrants with such rights (and a termination or expiration of the
existing rights or warrants without exercise by any of the Holders
thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect thereto
that was counted for purposes of calculating a distribution amount for
which an adjustment to the Conversion Price under this Section 13.3 was
made, (1) in the case of any such rights or warrants which shall all have
been repurchased without exercise by any holders thereof, the Conversion
Price shall be readjusted upon such final repurchase to give effect to
such distribution or Trigger Event, as the case may be, as though it were
a cash distribution, equal to the per share repurchase price received by a
holder or holders of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all
applicable holders of Common Stock as of the date of such repurchase, and
(2) in the case of such rights or warrants which shall have expired or
been terminated without exercise by any
71
holders thereof, the Conversion Price shall be readjusted as if such
rights and warrants had not been issued.
For purposes of Section 13.3(a), Section 13.3(b) and this Section
13.3(d), any dividend or distribution to which this Section 13.3(d) is
applicable that also includes shares of Common Stock, or rights or
warrants to subscribe for or purchase shares of Common Stock (or both),
shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, assets or shares of capital stock other than
such shares of Common Stock or rights or warrants (and any Conversion
Price reduction required by this Section 13.3(d) with respect to such
dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Price reduction required by Section
13.3(a) and Section 13.3(b) with respect to such dividend or distribution
shall then be made), except (A) the Record Date of such dividend or
distribution shall be substituted as "the date fixed for the determination
of stockholders entitled to receive such dividend or other distribution"
and "the date fixed for such determination" within the meaning of Section
13.3(a) and Section 13.3(b) and (B) any shares of Common Stock included in
such dividend or distribution shall not be deemed "outstanding at the
close of business on the date fixed for such determination" within the
meaning of Section 13.3(a).
(e) In case the Company shall, by dividend or otherwise, distribute
to all Holders of its Common Stock cash (excluding any cash that is
distributed upon a merger or consolidation to which Section 13.4 applies
or as part of a distribution referred to in Section 13.3(d)), in an
aggregate amount that, combined together with (1) the aggregate amount of
any other such distributions to all Holders of its Common Stock made
exclusively in cash within the 12 months preceding the date of payment of
such distribution, and in respect of which no adjustment pursuant to this
Section 13.3(e) has been made, and (2) the aggregate of any cash plus the
fair market value (as determined by the Board of Directors, whose good
faith determination shall be conclusive and described in a resolution of
the Board of Directors) of consideration payable in respect of any tender
offer by the Company or any of its subsidiaries for all or any portion of
the Common Stock concluded within the 12 months preceding the date of
payment of such distribution, and in respect of which no adjustment
pursuant to Section 13.3(f) has been made, exceeds 12.5% of the product of
the Current Market Price on the Record Date with respect to such
distribution times the number of shares of Common Stock outstanding on
such date, then, and in each such case, immediately after the close of
business on such date, the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Conversion Price
in effect immediately prior to the close of business on such Record Date
by a fraction (i) the numerator of which shall be equal to the Current
Market Price on the Record Date less an amount equal to the quotient of
(x) the excess of such combined amount over such 12.5% and (y) the number
of shares of Common Stock outstanding on the Record Date and (ii) the
denominator of which shall be equal to the Current Market Price on such
date; provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater
than the Current Market Price of the Common Stock on the Record Date, in
lieu of the foregoing adjustment, adequate provision shall be made so that
each Security holder shall have the right to receive upon conversion of a
Security (or any portion
72
thereof) the amount of cash such Holder would have received had such
Holder converted such Security (or portion thereof) immediately prior to
such Record Date. In the event that such dividend or distribution is not
so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or
distribution had not been declared. Any cash distribution to all Holders
of Common Stock as to which the Company makes the election permitted by
Section 13.3(m) and as to which the Company has complied with the
requirements of such Section shall be treated as not having been made for
all purposes of this Section 13.3(e).
(f) In case a tender offer made by the Company or any of its
subsidiaries for all or any portion of the Common Stock shall expire and
such tender offer (as amended upon the expiration thereof) shall require
the payment to stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as
defined below)) of an aggregate consideration having a fair market value
(as determined by the Board of Directors, whose good faith determination
shall be conclusive and described in a resolution of the Board of
Directors) that combined together with (1) the aggregate of the cash plus
the fair market value (as determined by the Board of Directors, whose good
faith determination shall be conclusive and described in a resolution of
the Board of Directors), as of the expiration of such tender offer, of
consideration payable in respect of any other tender offers, by the
Company or any of its subsidiaries for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such
tender offer and in respect of which no adjustment pursuant to this
Section 13.3(f) has been made and (2) the aggregate amount of any
distributions to all Holders of the Common Stock made exclusively in cash
within 12 months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to Section 13.3(e) has been made,
exceeds 12.5% of the product of the Current Market Price as of the last
time (the "Expiration Time") tenders could have been made pursuant to such
tender offer (as it may be amended) times the number of shares of Common
Stock outstanding (including any tendered shares) at the Expiration Time,
then, and in each such case, immediately prior to the opening of business
on the day after the date of the Expiration Time, the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to close of
business on the date of the Expiration Time by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time multiplied by the
Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time and the denominator shall be the sum of (x)
the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the
Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction (if any) to become
effective immediately prior to the opening of business on the day
following the Expiration Time. In the event that the Company is obligated
to purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any such purchases
or all such purchases are
73
rescinded, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such tender offer had
not been made. If the application of this Section 13.3(f) to any tender
offer would result in an increase in the Conversion Price, no adjustment
shall be made for such tender offer under this Section 13.3(f). Any cash
distribution to all holders of Common Stock as to which the Company has
made the election permitted by Section 13.3(m) and as to which the Company
has complied with the requirements of such Section shall be treated as not
having been made for all purposes of this Section 13.3(f).
(g) For purposes of this Section 13.3, the following terms shall
have the meaning indicated:
(i) "Closing Price" with respect to any securities on any day
shall mean the closing sale price, regular way, on such day or, in
case no such sale takes place on such day, the average of the
reported closing bid and asked prices, regular way, in each case on
the principal national securities exchange or quotation system on
which such security is quoted or listed or admitted to trading, or,
if not quoted or listed or admitted to trading on any national
securities exchange or quotation system, the average of the closing
bid and asked prices of such security on the over-the-counter market
on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or
if not so available, in such manner as furnished by any NYSE member
firm selected from time to time by the Board of Directors for that
purpose, or a price determined in good faith by the Board of
Directors whose determination shall be conclusive.
(ii) "Current Market Price" shall, for the purposes of any
computation under paragraphs (b), (d), (e) and (f) of this Section
13.3 relating to the current market price per share of Common Stock
at a specified date, mean the average of the Closing Prices for the
10 consecutive Trading Days (as defined below) preceding the day
before the record date (or, if earlier, the ex-dividend date) with
respect to any distribution, issuance or other event requiring such
computation.
(iii) "fair market value" shall mean the amount which a
willing buyer would pay a willing seller in an arm's length
transaction.
(iv) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security)
is exchanged for or converted into any combination of cash,
securities or other property, the date fixed for determination of
stockholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).
(h) The Company may make such reductions in the Conversion Price, in
addition to those required by paragraphs (a), (b), (c), (d), (e) or (f) of
this Section 13.3, as the
74
Board of Directors considers to be advisable to avoid or diminish any
income tax to Holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. To the
extent permitted by applicable law, the Company from time to time may
reduce the Conversion Price by any amount for any period of time if the
period is at least 20 days, the reduction is irrevocable during the period
and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which
determination shall be conclusive. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Company shall mail to
Holders of record of the Securities a notice of the reduction at least 15
days prior to the date the reduced Conversion Price takes effect, and such
notice shall state the reduced Conversion Price and the period during
which it will be in effect.
(i) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of
this Section 13.3(i) are not required to be made shall be carried forward
and taken into account in making the first subsequent adjustment made
following the event which did not result in an adjustment by reason of
this Section 13.3(i). All calculations under this Article XIII shall be
made by the Company and shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. No adjustment need
be made for rights to purchase Common Stock pursuant to a Company plan for
reinvestment of dividends or interest. To the extent the Securities become
convertible into cash, assets, property or securities (other than capital
stock of the Company), no adjustment need be made thereafter as to the
cash, assets, property or such securities. Interest will not accrue on the
cash.
(j) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly file with the Conversion Agent an Officers'
Certificate setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
Unless and until a Responsible Officer of the Trustee shall have received
such Officers' Certificate, the Trustee shall not be deemed to have
knowledge of any adjustment of the Conversion Price and may assume without
inquiry that the last Conversion Price of which it has knowledge is still
in effect. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price setting forth
the adjusted Conversion Price and the date on which each adjustment
becomes effective and shall mail such notice of such adjustment of the
Conversion Price to each Holder of Securities at such Holder's last
address appearing on the list of Security holders provided for in Section
2.5 of this Indenture, within 20 days after execution thereof. Failure to
deliver such notice shall not affect the legality or validity of any such
adjustment.
(k) In any case in which this Section 13.3 provides that an
adjustment shall become effective immediately after a Record Date for an
event, the Company may defer until the occurrence of such event (i)
issuing to the Holder of any Securities converted after such Record Date
and before the occurrence of such event the additional shares of Common
Stock issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Stock issuable upon such
conversion before
75
giving effect to such adjustment and (ii) paying to such Holder any amount
in cash in lieu of any fractional shares pursuant to Section 13.2.
(l) For purposes of this Section 13.3, 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.
(m) In lieu of making any adjustment to the Conversion Price
pursuant to Section 13.3(e) or Section 13.3(f), the Company may elect to
reserve an amount of cash for distribution to the Holders of the
Securities upon the conversion of the Securities so that any such Holder
converting Securities will receive upon such conversion, in addition to
the shares of Common Stock and other items to which such Holder is
entitled, the full amount of cash which such Holder would have received if
such Holder had, immediately prior to the Record Date for such
distribution of cash or the Expiration Time of the tender offer, as the
case may be, converted its Securities into Common Stock, together with any
interest accrued with respect to such amount, in accordance with this
Section 13.3(m). The Company may make such election by providing an
Officers' Certificate to the Trustee to such effect on or prior to the
payment date for any such distribution and depositing with the Trustee on
or prior to such date an amount of cash equal to the aggregate amount the
Holders of the Securities would have received if such Holders had,
immediately prior to the Record Date for such distribution or the
Expiration Time, as the case may be, converted all of the Securities into
Common Stock. Any such funds so deposited by the Company with the Trustee
shall be invested by the Trustee pursuant to written direction by the
Company in marketable obligations issued or fully guaranteed by the United
States government with a maturity not more than 3 months from the date of
issuance. Upon conversion of Securities by a Holder, the Holder will be
entitled to receive, in addition to the Common Stock issuable upon
conversion, an amount of cash equal to the amount such Holder would have
received if such Holder had, immediately prior to the Record Date for such
distribution or the Expiration Time, as the case may be, converted its
Security into Common Stock, along with such Holder's pro rata share of any
accrued interest earned as a consequence of the investment of such funds.
Promptly after making an election pursuant to this Section 13.3(m), the
Company shall give or shall cause to be given notice to all Security
holders of such election, which notice shall state the amount of cash per
$1,000 principal amount of Securities such Holders shall be entitled to
receive (excluding interest) upon conversion of the Securities as a
consequence of the Company having made such election.
Section 13.4 Consolidation or Merger of the Company.
If any of the following events occurs, namely:
(a) any reclassification or change of the outstanding 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);
76
(b) any merger, consolidation, statutory share exchange or
combination of the Company with another corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange
for such Common Stock; or
(c) any sale or conveyance of the properties and assets of the
Company as, or substantially as, an entirety to any other corporation as a
result of which holders of Common Stock shall be entitled to receive
stock, securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock;
the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Trustee a supplemental indenture (which shall comply with
the Trust Indenture Act as in force at the date of execution of such
supplemental indenture, if such supplemental indenture is then required to so
comply) providing that such Securities shall be convertible into the kind and
amount of shares of stock and other securities or property or assets (including
cash) which such Holder would have been entitled to receive upon such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance had such Securities been converted into Common
Stock immediately prior to such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance assuming such holder
of Common Stock did not exercise its rights of election, if any, as to the kind
or amount of securities, cash or other property receivable upon such merger,
consolidation, statutory share exchange, sale or conveyance (provided, however,
that if the kind or amount of securities, cash or other property receivable upon
such merger, consolidation, statutory share exchange, sale or conveyance is not
the same for each share of Common Stock in respect of which such rights of
election shall not have been exercised ("Non-Electing Share"), then for the
purposes of Section 13.3, the kind and amount of securities, cash or other
property receivable upon such merger, consolidation, statutory share exchange,
sale or conveyance for each Non-Electing Share shall be deemed to be the kind
and amount so receivable per share by a plurality of the Non-Electing Shares).
Such supplemental indenture shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article XIII. If, in the case of any such reclassification, change, merger,
consolidation, statutory share exchange, combination, sale or conveyance, the
stock or other securities and assets receivable thereupon by a holder of Common
Stock includes shares of stock or other securities and assets of a corporation
other than the successor or purchasing corporation, as the case may be, in such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the Holders of the Securities as the Board of
Directors shall reasonably consider necessary by reason of the foregoing,
including to the extent practicable the provisions providing for the conversion
rights set forth in this Article XIII.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder, at the address of such Holder as it
appears on the register of the Securities maintained by the Registrar, within 20
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section 13.4 shall similarly apply to
successive reclassifications, mergers, consolidations, statutory share
exchanges, combinations, sales and
77
conveyances. If this Section 13.4 applies to any event or occurrence, Section
13.3 shall not apply.
Section 13.5 Notice of Adjustment.
Whenever an adjustment in the Conversion Price with respect to the
Securities is required:
(a) the Company shall forthwith place on file with the Trustee and
any Conversion Agent for such securities a certificate of the Treasurer of
the Company, stating the adjusted Conversion Price determined as provided
herein and setting forth in reasonable detail such facts as shall be
necessary to show the reason for and the manner of computing such
adjustment; and
(b) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall forthwith be given by
the Company or, at the Company's request, by the Trustee in the name and
at the expense of the Company, to each Holder in the manner provided in
Section 14.2. Any notice so given shall be conclusively presumed to have
been duly given, whether or not the Holder receives such notice.
Section 13.6 Notice in Certain Events.
In case:
(a) of a 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 conveyance to another Person or entity or group of Persons or
entities acting in concert as a partnership, limited partnership,
syndicate or other group (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of all or substantially all
of the property and assets of the Company; or
(b) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(c) of any action triggering an adjustment of the Conversion Price
referred to in clauses (x) or (y) below;
then, in each case, the Company shall cause to be filed with the Trustee and the
Conversion Agent, and shall cause to be given, to the Holders of the Securities
in the manner provided in Section 14.2, at least 15 days prior to the applicable
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of any distribution or grant of rights or warrants
triggering an adjustment to the Conversion Price pursuant to this Article XIII,
or, if a record is not to be taken, the date as of which the holders of record
of Common Stock entitled to such distribution, rights or warrants are to be
determined, or (y) the date on which any reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up triggering an
adjustment to the Conversion Price pursuant to this Article XIII is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record
78
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger sale,
conveyance, dissolution, liquidation or winding up.
Failure to give such notice or any defect therein shall not affect the
legality or validity of the proceedings described in clause (a), (b) or (c) of
this Section 13.6.
Section 13.7 Company To Reserve Stock. The Company shall, in accordance
with the laws of the State of Delaware, at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of the Securities, such
number of its duly authorized shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all Securities then outstanding into
such Common Stock at any time; provided, however, that nothing contained herein
shall preclude the Company from satisfying its obligations in respect of the
conversion of the Securities by delivery of purchased shares of Common Stock
which are then held in the treasury of the Company. The Company covenants that
all shares of Common Stock which may be issued upon conversion of Securities
will upon issue be fully paid and nonassessable and free from all liens and
charges arising by, through or under the Company, and, except as provided in
Section 13.8, taxes with respect to the issue thereof.
Section 13.8 Taxes on Conversion. The issue of stock certificates on
conversion of Securities shall be made without charge to the converting Holder
for any documentary, stamp or similar issue or transfer taxes in respect of the
issue thereof, and the Company shall pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the issue or
delivery of shares of Common Stock on conversion of Securities pursuant hereto.
The Company shall not, however, be required to pay any such tax which may be
payable in respect of any transfer involved in the issue or delivery of shares
of Common Stock or the portion, if any, of the Securities which are not so
converted in a name other than that in which the Securities so converted were
registered, 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 such tax or
has established to the satisfaction of the Company that such tax has been paid.
Section 13.9 Conversion After Record Date. Except as provided in the next
succeeding paragraph of this Section 13.9 and in the proviso to this sentence,
upon surrender of Securities for conversion, the Holder of such Securities shall
not be entitled to receive any interest that has accrued on such Securities
since the prior Interest Payment Date; provided, however, that (a) if any
Securities are surrendered for conversion during a Fundamental Change Conversion
Period, then the Holder thereof shall be entitled to receive all interest that
has accrued on such Securities since the prior Interest Payment Date until the
Effective Date of the applicable Fundamental Change and (b) if any Securities
are surrendered for conversion during a Redemption Conversion Period, then the
Holder thereof shall be entitled to receive all interest that has accrued on
such Securities since the prior Interest Payment Date until the Redemption Date
immediately following the Redemption Conversion Period. Except as set forth in
the proviso to the preceding sentence, by delivery to the Holder of the number
of shares of Common Stock or other consideration issuable upon conversion in
accordance with this Article XIII, any accrued and unpaid interest on such
Securities will be deemed to have been paid in full.
79
If any Securities are surrendered for conversion subsequent to the record
date preceding an Interest Payment Date but on or prior to such Interest Payment
Date, the Holder of such Securities at the close of business on such record date
shall receive the interest payable on such Securities on such Interest Payment
Date notwithstanding the conversion thereof. Securities surrendered for
conversion during the period from the close of business on any record date
preceding any Interest Payment Date to the opening of business on such Interest
Payment Date shall, unless the Securities being converted (a) have been called
for redemption during such period or on such Interest Payment Date or (b) are
being converted during a Fundamental Change Conversion Period, be accompanied by
payment by the Holders thereof, for the account of the Company, of an amount
equal to the interest payable on such Interest Payment Date on the Securities
being surrendered for conversion. Except as provided in this Section 13.9, no
adjustments in respect of payments of interest on Securities surrendered for
conversion or any dividends or distributions or interest on the Common Stock
issued upon conversion shall be made upon the conversion of any Securities.
Section 13.10 Responsibility of Trustee for Conversion Provisions. The
Trustee has no duty to determine when an adjustment under this Article XIII
should be made, how it should be made or what it should be. The Trustee has no
duty to determine whether a supplemental indenture under Section 13.4 need be
entered into or whether any provisions of any supplemental indenture are
correct. The Trustee makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities. The Trustee shall not
be responsible for any failure of the Company to comply with this Article XIII.
Each Conversion Agent other than the Company shall have the same protection
under this Section 13.10 as the Trustee.
The rights, privileges, protections, immunities and benefits given to the
Trustee under the Indenture including, without limitation, its rights to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each Paying Agent or Conversion Agent acting
hereunder.
Section 13.11 Unconditional Right of Holders to Convert. Notwithstanding
any other provision in this Indenture, the Holder of any Security shall have the
right, which is absolute and unconditional, to convert its Security in
accordance with this Article XIII and to bring an action for the enforcement of
any such right to convert, and such rights shall not be impaired or affected
without the consent of such Holder.
Section 13.12 Common Stock Restricted Securities Legends. Unless such
Common Stock has been sold or otherwise transferred pursuant to a registration
statement that has been declared effective under the Securities Act or is
eligible for resale pursuant to Rule 144(k), each stock certificate representing
Common Stock issued upon conversion of the Securities will bear the legend set
forth on Exhibit F hereto (the "Common Stock Restricted Securities Legend"). The
Common Stock Restricted Securities Legend may be removed from any stock
certificate representing shares of the Common Stock issued upon conversion of
any Security only if there is delivered to the Company such satisfactory
evidence, which shall include an Opinion of Counsel, as may be reasonably
required by the Company and the transfer agent for the Common Stock, that
neither the Common Stock Restricted Securities Legend nor the restrictions on
transfer set forth therein are required to ensure that transfers thereof comply
with the provisions of Rule 144A or Rule 144 or that such shares of Common Stock
are not "restricted" within the meaning
80
of Rule 144. Upon provision of such satisfactory evidence, at the written
direction of the Company, the transfer agent for the Common Stock shall
authenticate and deliver in exchange for the stock certificate or stock
certificates representing such shares of Common Stock bearing such legend, one
or more new stock certificates representing a like aggregate number of shares of
Common Stock that do not bear such legend. If the Common Stock Restricted
Securities Legend has been removed from a stock certificate representing shares
of the Common Stock issued upon conversion of any Security as provided above, no
other stock certificates representing shares of the Common Stock issued upon
conversion of such Security shall bear such legend, unless the Company has
reasonable cause to believe that such shares of Common Stock are "restricted
securities" within the meaning of Rule 144.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or violates another provision which is required to
be included in this Indenture by the TIA, the required provision shall control.
Section 14.2 Notices. Any request, demand, authorization, notice, waiver,
consent or communication shall be in writing and delivered in person or mailed
by first-class mail, postage prepaid, addressed as follows or transmitted by
facsimile transmission (confirmed by guaranteed overnight courier) to the
following facsimile numbers:
if to the Company and/or any Guarantor:
Integrated Electrical Services, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxx LLP
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: G. Xxxxxxx X'Xxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
81
if to the Trustee:
The Bank of New York
101 Xxxxxxx St., 0xx Xxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Services
Facsimile.: (000) 000-0000
Telephone: (000) 000-0000
The Company, any Guarantor or the Trustee by notice given to the other in
the manner provided above may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication given to a Securityholder shall be mailed to
the Securityholder, by first-class mail, postage prepaid, at the
Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.
If the Company mails a notice or communication to the Securityholders, it
shall mail a copy to the Trustee and each Registrar, Paying Agent, Conversion
Agent or co-registrar.
Section 14.3 Communication by Holders with Other Holders. Securityholders
may communicate pursuant to TIA Section 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Trustee
shall comply with TIA Section 312(b) relating to Securityholder communications.
The Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent
and anyone else shall have the protection of TIA Section 312(c).
Section 14.4 Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; or
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 14.5 Statements Required in Certificate or Opinion. Except as
otherwise herein provided, each Officers' Certificate or Opinion of Counsel with
respect to compliance with a covenant or condition provided for in this
Indenture shall include:
(a) a statement that each Person making such Officers' Certificate
or Opinion of Counsel has read such covenant or condition;
82
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
Officers' Certificate or Opinion of Counsel are based;
(c) a statement that, in the opinion of each such Person, he has
made such examination or investigation as is reasonably necessary to
enable such Person to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement that, in the opinion of such Person, such covenant
or condition has been complied with.
Section 14.6 Separability Clause. In case any provision in this Indenture
or in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 14.7 Rules by Trustee, Paying Agent, Conversion Agent and
Registrar. The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar, the Conversion Agent and the Paying Agent may
make reasonable rules for their functions.
Section 14.8 Governing Law. THIS INDENTURE, THE SECURITIES AND THE
SUBSIDIARY GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
Section 14.9 No Recourse Against Others. A director, officer, employee,
stockholder, member, manager, limited partner or general partner (and their
respective Affiliates, other than the Company or any Guarantor), as such, of the
Company or any Guarantor shall not have any liability for any obligations of the
Company under the Securities, Subsidiary Guarantees or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
Section 14.10 Successors. All agreements of the Company in this Indenture
and the Securities shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor. All agreements of each Guarantor in
this Indenture will bind its successors, except as otherwise provided in Section
9.5 hereof.
Section 14.11 Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
Section 14.12 Designated Senior Indebtedness. The Company hereby
designates all of the Securities as Designated Senior Indebtedness for purposes
of the Indenture dated as of January 28, 1999 under which the Company's 9 3/8%
Senior Subordinated Notes, Series A and Series B, due 2009 are issued and for
purposes of the Indenture dated as of May 29, 2001 under which the Company's
9 3/8% Senior Subordinated Notes, Series A and Series B, due 2009 are issued.
83
(Signature Pages Follow)
84
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.
COMPANY:
INTEGRATED ELECTRICAL SERVICES, INC.
By: ___________________________________
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
[SIGNATURE PAGE TO INDENTURE]
GUARANTORS:
EACH OF THE GUARANTORS NAMED ON SCHEDULE I
HERETO
By: ___________________________________
Name: Xxxxxxx X. Xxxxx
Acting in his capacity as (i) the Chief
Executive Officer of the Guarantors listed
in Part I of Schedule I and (ii) Sole
Manager and Chief Executive Officer of the
general partner of each of the Guarantors
listed in Part II of Schedule I (such
general partners acting on behalf of such
Guarantors).
By: ___________________________________
Name: Xxxxxx Xxxx
Acting in his capacity as the President of
the Guarantors listed in Part III of
Schedule I.
By: ___________________________________
Name: Xxxx Xxxx
Acting in his capacity as the Manager of the
Guarantors listed in Part IV of Schedule I.
[SIGNATURE PAGE TO INDENTURE]
THE BANK OF NEW YORK, a New York banking
corporation, as Trustee
By: ___________________________________
Name:
Title:
SCHEDULE I
EXISTING GUARANTORS
PART I:
NAME
Pan American Electric, Inc.
Xxxxxxx-Xxxxxxxx Electric Holdings III, Inc.
Xxxxx Electrical Contractors, Inc.
PART II:
NAME GENERAL PARTNER
Xxxxxxx-Xxxxxxxx Electrical Contractors XX Xxxxxxx-Xxxxxxxx Management LLC,
an Arizona limited liability
company
Xxxxx Electric XX Xxxxx Management LLC, an Arizona
limited liability company
PART III:
NAME
Xxxxxxx-Xxxxxxxx Holdings LLC
Xxxxx Electrical Holdings LLC
PART IV:
NAME
Xxxxxxx-Xxxxxxxx Holdings II LLC
Xxxxx Electrical Holdings II LLC
EXHIBIT A
[FORM OF FACE OF GLOBAL SECURITY]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF
THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN Article II OF
THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THE SECURITY EVIDENCED BY THIS CERTIFICATE AND ANY SHARES OF COMMON STOCK
ISSUABLE UPON THE CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER:
(1) REPRESENTS THAT IT IS (A) A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT (A "QIB"); (B) AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"); OR (C) NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT;
(2) AGREES THAT (I) IT WILL NOT, PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d)
UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT
ON THE DATE OF THE TRANSFER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM SUCH SELLER REASONABLY BELIEVES TO BE A QIB PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) TO PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) TO A PERSON WHOM SUCH SELLER REASONABLY
BELIEVES TO BE AN IAI OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, SUBJECT TO THE OBLIGATION OF SUCH HOLDER TO FURNISH
THE COMPANY AND THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS MAY BE REQUIRED PURSUANT TO THE INDENTURE AND, IN EACH CASE, IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (II) IT WILL, AFTER THE
EXPIRATION OF THE HOLDING PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO
ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE)
UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS
SECURITY, PROVIDE A REPRESENTATION TO THE COMPANY THAT IT HAS HELD THE SECURITY
EVIDENCED BY THIS CERTIFICATE FOR A PERIOD OF TWO YEARS AND IS NOT AN AFFILIATE
(AS SUCH TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) PRIOR TO ANY
RESALE OR TRANSFER OF THIS SECURITY;
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(3) AGREES THAT IT WILL NOTIFY EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (2)(I)(F) ABOVE)
OF THE RESALE RESTRICTIONS CONTAINED IN THIS LEGEND;
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION OF THE
CONDITIONS SPECIFIED IN THE INDENTURE.
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INTEGRATED ELECTRICAL SERVICES, INC.
[Series A] [Series B] 6.5% Senior Convertible Notes due 2014
No. CUSIP: ________
Issue Date: ________ __, 20__ Principal Amount: $
INTEGRATED ELECTRICAL SERVICES, INC., a Delaware corporation, promises to
pay to ______________________ or registered assigns, the principal amount of
________ ______________ DOLLARS ($_____________) on November 1, 2014.
Interest Payment Dates: May 1 and November 1, commencing May 1, 2005.
Record Dates: April 15 and October 15.
Reference is hereby made to the further provisions of this Security set
forth on the reverse side of this Security, which further provisions shall for
all purposes have the same effect as if set forth at this place.
The Company hereby designates this Security as "Designated Senior
Indebtedness" for purposes of the Indenture dated as of January 28, 1999 under
which the Company's 9?% Senior Subordinated Notes, Series A and Series B, due
2009 are issued and for purposes of the Indenture dated as of May 29, 2001 under
which the Company's 9?% Senior Subordinated Notes, Series A and Series B, due
2009 are issued.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: ________ __, 20__ INTEGRATED ELECTRICAL SERVICES, INC.
By:_________________________________________
Title:______________________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK, a New York banking corporation,
as Trustee, certifies that this is one
of the Securities referred to in the
within-mentioned Indenture.
By__________________________________
Authorized Signatory
Dated: ________ __, 20__
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[FORM OF REVERSE OF GLOBAL SECURITY]
[Series A] [Series B] 6.5% Senior Convertible Notes due 2014
This Security is one of a duly authorized issue of [Series A] [Series B]
6.5% Senior Convertible Notes due 2014 of Integrated Electrical Services, Inc.,
a Delaware corporation (including any successor corporation under the Indenture
hereinafter referred to, the "Company"), issued under an Indenture, dated as of
November 24, 2004 (together with any supplemental indenture thereto, the
"Indenture"), between the Company, the Guarantors and The Bank of New York, a
New York banking corporation, as trustee (the "Trustee"). The terms of the
Security include those stated in the Indenture, those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended ("TIA"), and those
set forth in this Security. This Security is subject to all such terms, and
Holders are referred to the Indenture and the TIA for a statement of all such
terms. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Security and the terms of the Indenture,
the terms of the Indenture shall control. Capitalized terms used but not defined
herein have the meanings assigned to them in the Indenture unless otherwise
indicated.
1. Interest.
The Company promises to pay interest on the principal amount of the
Securities at the interest rate of 6.5% per annum (the "Interest Rate") from the
date of issuance until repayment in full at November 1, 2014, or until an
earlier repurchase. The Company will pay Interest on this Security semi-annually
in arrears on May 1 and November 1 of each year (each, an "Interest Payment
Date"), commencing May 1, 2005.
Interest on the Securities shall be computed (i) for any full semi-annual
period for which a particular Interest Rate is applicable, on the basis of a
360-day year of twelve 30-day months and (ii) for any period for which a
particular Interest Rate is applicable for less than a full semiannual period
for which Interest is calculated, on the basis of a 30-day month and, for such
periods of less than a month, the actual number of days elapsed over a 30-day
month.
If this Security is repurchased by the Company on a date that is after the
record date and prior to the corresponding Interest Payment Date, interest and
additional amounts, if any, accrued and unpaid hereon to but not including the
applicable Repurchase Date or Fundamental Change Repurchase Date, as the case
may be, will be paid to the same Holder to whom the Company pays the purchase
price of this Security.
A Holder of any Security at the close of business on a record date will be
entitled to receive interest (and Liquidated Damages, if any) on such Security
on the corresponding Interest Payment Date. Interest on Securities converted
after a record date but prior to the corresponding Interest Payment Date (other
than any Security whose maturity is prior to such Interest Payment Date) will be
paid on the next succeeding Interest Payment Date to the Holder of the
Securities on the record date but, upon conversion, the converting Holder must
pay the Company the interest, and Liquidated Damages, if any, which have accrued
to the date of conversion and will be paid on such Interest Payment Date.
If the principal amount hereof, any portion thereof, any interest,
including the payment of Liquidated Damages, if any, or any Repurchase Price,
Fundamental Change Repurchase Price, Optional Redemption Price or Make-Whole
Premium, if applicable, on any Security is not paid when due (whether upon
acceleration pursuant to Section 8.2 of the Indenture, upon the date set for
payment of the Repurchase Price, the Fundamental Change Repurchase Price, the
Optional Redemption Price or the Make-Whole Premium hereof or upon the Stated
Maturity of this Security), then in each such case the overdue amount shall, to
the extent permitted by law, bear interest at 1% over the then Interest Rate,
which interest shall accrue from the date on which such overdue amount was
originally due to the date of payment of such amount, including interest
thereon, has been made or duly provided for. All such interest shall be payable
on demand.
2. Method of Payment.
Except as provided below, interest and Liquidated Damages will be paid (i)
on the Global Securities to DTC in immediately available funds, (ii) to the
Person in whose name Securities are registered at the close of business on the
record date, (a) on any Certificated Securities having an aggregate principal
amount of $2,000,000
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or less, by check mailed to the Holders of such Securities; and (b) on any
Securities having an aggregate principal amount of more than $2,000,000, by wire
transfer in immediately available funds at the election of the Holders of those
Securities. At Stated Maturity the Company will pay principal and interest in
cash on Securities at the Company's office for payment, which initially will be
the Corporate Trust Office of the Trustee.
Subject to the terms and conditions of the Indenture, the Company will
make payments in cash in respect of the Repurchase Price, the Fundamental Change
Repurchase Price, the Optional Redemption Price, Liquidated Damages and amounts
payable at Stated Maturity to Holders who surrender Securities to the Paying
Agent to collect such payments in respect of the Securities. The Company will
pay cash amounts in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the Company may
make such cash payments by check payable in such money.
3. Paying Agent, Conversion Agent and Registrar.
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent, Conversion Agent and Registrar. The
Company may appoint and change any of the Paying Agent, Conversion Agent or
Registrar without notice, other than notice to the Trustee. Neither the Company
nor any of its Subsidiaries nor any of their Affiliates may act as Paying Agent,
Conversion Agent or Registrar.
4. Indenture.
This Security is one of a duly authorized issue of Securities of the
Company designated as its [Series A] [Series B] 6.5% Senior Convertible Notes
due 2014, issued under the Indenture. The terms of this Security include those
stated in the Indenture and those required by or made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended, as in effect on the
date of the Indenture. This Security is subject to all such terms, and the
Holder of this Security is referred to the Indenture and said Act for a
statement of them.
The Securities are general unsecured obligations of the Company. The
aggregate principal amount of Securities that may be issued under the Indenture
is limited to $50,000,000.
5. Repurchase of Securities at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company shall
repurchase all or a portion of the Securities (any such portion being at least
$1,000 or an integral multiple of $1,000 in excess thereof and provided that no
single Security may be repurchased in part unless the portion of the principal
amount of such Security to be outstanding after such repurchase is equal to
$1,000 or integral multiples of $1,000 in excess thereof) at the option of the
Holder on November 1, 2008 (the "Repurchase Date"), at a repurchase price equal
to 100% of the principal amount of the Securities to be repurchased, plus
interest (and Liquidated Damages, if any) accrued but unpaid to, but excluding,
such Repurchase Date (the "Repurchase Price"). 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 the Indenture, by delivery of shares of
Common Stock having a fair market value determined as set forth in the
Indenture.
If a Fundamental Change occurs, the Holder of this Security, at the
Holder's option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is at least $1,000 or an integral multiple of
$1,000 in excess thereof, provided that the portion of the principal amount of
this Security to be outstanding after such repurchase is at least equal to U.S.
$1,000) at a Fundamental Change Repurchase Price equal to 100% of the principal
amount thereof plus interest (and Liquidated Damages, if any) accrued to, but
excluding, the Fundamental Change Repurchase Date. At the option of the Company,
the Fundamental Change Repurchase Price may be paid in cash, by delivery of
shares of Common Stock having a fair market value equal to the Fundamental
Change Repurchase Price (subject to the conditions set forth in the Indenture),
or any combination thereof.
6. Optional Redemption
The Securities are not redeemable prior to November 1, 2008. On and after
November 1, 2008, the Company may, at its option, redeem the Securities in whole
at any time or in part from time to time, on any date prior to the Stated
Maturity upon at least 30 days' notice and not more than 60 days' notice given
in the manner set
A-5
forth in the Indenture, at a redemption price (the "Optional Redemption Price")
equal to 100% of the principal amount of the Securities to be redeemed plus
interest (and Liquidated Damages, if any) accrued but unpaid to, but excluding
the Redemption Date, plus the Redemption Premium; provided, however, that each
such optional redemption may occur only in accordance with the terms set forth
in the Indenture and only if, (i) on the date that the Company gives such
notice, the Closing Price per share of the Common Stock for at least 20 Trading
Days of the 30 consecutive Trading Days immediately preceding such date is at
least 150% of the Conversion Price then in effect, appropriately adjusted to
take into account the occurrence, during such 30 Trading Day period, of any
event described in Section 13.3 of the Indenture and (ii) on the date that the
Company delivers such Company Notice through the date of redemption, the Common
Stock issuable upon conversion of the Securities is either (1) covered by a
registration statement covering resales thereof that is effective and available
for use and is expected to remain effective and available for use for the 30
days following the date of such notice or (2) eligible to be resold by
non-affiliates pursuant to Rule 144(k) under the Securities Act.
7. Make-Whole Premium
If a Fundamental Change occurs, Holders of this Security will be entitled
to receive the Make-Whole Premium with respect to this Security to the extent it
is converted during the Fundamental Change Conversion Period. The Company may
pay the Make-Whole Premium in (at the Company's option) Common Stock, cash, in
the same form of consideration into which all or substantially all of the Common
Stock has been converted in connection with the applicable Fundamental Change,
valued as set forth in the Indenture, or any combination of the foregoing. If
holders of Common Stock have the right to elect the form of consideration
received in a Fundamental Change, then for purposes of the foregoing the
consideration into which a share of Common Stock has been converted shall be
deemed to equal the same percentage of each form of consideration as encompasses
the aggregate consideration distributed in respect of all shares of Common Stock
participating in the distribution. Unless the Company gives notice to the
contrary, the Make-Whole Premium shall be paid in shares of Common Stock (or, if
applicable, in the same form of consideration into which shares of Common Stock
have been converted in connection with the applicable Fundamental Change). The
amount of cash to be received shall equal the product of (i) the portion of the
Make-Whole Premium to be paid in cash expressed as a number of shares of Common
Stock and (ii) the arithmetic average of the Closing Prices per share of the
Common Stock on the five Trading Days prior to, but not including, the Effective
Date.
8. Conversion.
(a) Subject to and in compliance with the provisions of the Indenture, a
Holder shall have the right, at such Holder's option, to convert all or any
portion (if the portion to be converted is $1,000 or an integral multiple
$1,000) of this Security into fully paid and nonassessable shares of Common
Stock at the Conversion Price in effect on the Conversion Date. The Conversion
Price is subject to adjustment from time to time as set forth in Section 13.3 of
the Indenture. In the case of a conversion during a Fundamental Change
Conversion Period, Holders electing to convert Securities shall also receive the
Make-Whole Premium payable upon such conversion as set forth in Article VI of
the Indenture. Holders may surrender Securities for conversion at any time
within the Fundamental Change Conversion Period. In the case of a conversion
during a Redemption Conversion Period, Holders electing to convert Securities
shall also receive the Redemption Premium payable upon such conversion as set
forth in Article IV and Article VI of the Indenture. Holders may surrender
Securities for conversion at any time within the Redemption Conversion Period.
Pursuant to the terms of the Indenture, the Redemption Premium, if any, payable
upon conversion of Securities may be paid in the form of cash or additional
shares of Common Stock.
(b) The Company shall not effect any conversion of any Security, and no
Holder shall have the right to convert any portion of any Security, to the
extent that after giving effect to such conversion (including any Make-Whole
Premium and any Redemption Premium), the Holder (together with the Holder's
affiliates) would beneficially own in excess of 4.99% of the number of shares of
Common Stock outstanding immediately after giving effect to such conversion. For
purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its affiliates shall include the number of
shares of Common Stock issuable upon conversion of a Security with respect to
which the determination of such sentence is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A) conversion of
the remaining, nonconverted portion of any Security beneficially owned by the
Holder or any of its affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its affiliates.
Except as set forth in the preceding sentence, for purposes of this Section,
beneficial ownership shall be
A-6
calculated in accordance with Section 13(d) of the Exchange Act. By written
notice to the Company, any Holder may increase or decrease the Share Limitation
to any other percentage not in excess of 9.99% specified in such notice;
provided that (i) no such notice may be sent prior to the second anniversary of
the Issue Date, (ii) any such increase will not be effective until the 61st day
after such notice is delivered to the Company, and (iii) any such increase or
decrease will apply only to the Holder sending such notice and not to any other
holder of Securities. Notwithstanding the foregoing, the Share Limitation shall
not be applicable (i) on any of the ten Trading Days up to and including the
Stated Maturity, or (ii) on any of the ten Trading Days up to and including the
Effective Date, or (iii) during the Fundamental Change Conversion Period.
(c) A Security in respect of which a Holder has delivered a Repurchase
Notice or Fundamental Change Repurchase Notice, exercising the option of such
Holder to require the Company to purchase such Security, may be converted only
if such Repurchase Notice or Fundamental Change Repurchase Notice is withdrawn
in accordance with the terms of the Indenture.
(d) To surrender a Security for conversion, a Holder must (1) complete and
manually sign the conversion notice below (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Conversion Agent, (2)
surrender the Security to the Conversion Agent, (3) furnish appropriate
endorsements and transfer documents and (4) pay any transfer or similar tax, if
required.
(e) No fractional shares of Common Stock shall be issued upon conversion
of any Security. Instead of any fractional share of Common Stock that would
otherwise be issued upon conversion of such Security, the Company shall pay a
cash adjustment as provided in the Indenture.
9. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of principal amount and integral multiples of $1,000. A
Holder may register a transfer or exchange of Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements, legal opinions and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture. The Registrar need
not transfer or exchange any Securities in respect of which a Repurchase Notice
or Fundamental Change Repurchase Notice has been given and not withdrawn.
10. Persons Deemed Owners.
The registered Holder of this Security shall be treated as the owner of
this Security for all purposes.
11. Unclaimed Money or Securities.
The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of any amount with respect to the
Securities that remains unclaimed for two years after the date upon which such
payment shall have been due. After payment to the Company, Holders entitled to
the money or securities must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another Person
after the date upon which such payment shall have become due.
12. Amendment; Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, all (but not less than all) of the Securities or the Subsidiary
Guarantees may be amended with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
certain defaults may be waived with the written consent of the Holders of a
majority in aggregate principal amount of the outstanding Securities. The
Indenture, all (but not less than all) of the Securities and the Subsidiary
Guarantees may also be amended by the Company and the Trustee, without the
consent of any Holder, in certain circumstances set forth in the Indenture;
provided, however, that certain provisions of the Indenture and the Securities
may not be amended without the consent of each affected Holder.
A-7
13. Defaults and Remedies.
If any Event of Default with respect to the Securities shall occur and be
continuing, the principal of all the Securities may be declared due and payable
in the manner and with the effect provided in the Indenture.
14. Trustee Dealings with the Company.
Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others.
A director, officer, employee, stockholder, member, manager, limited
partner or general partner (and their respective Affiliates, other than the
Company or any Guarantor), as such, of the Company or any Guarantor shall not
have any liability for any obligations of the Company under the Securities, the
Subsidiary Guarantees or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting this Security,
each Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of this Security.
16. Authentication.
This Security shall not be valid until an authorized signatory of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
17. Abbreviations.
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
18. GOVERNING LAW.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
SECURITY.
19. Requests for Copies.
The Company will furnish to any Securityholder upon written request and
without charge a copy of the Indenture and, if requested, a copy of this
Security in larger type. Requests may be made to:
Integrated Electrical Services, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
20. Registration Rights.
The Holders of the Securities are entitled to the benefits of the
Registration Rights Agreement, dated as of November 24, 2004, between the
Company and the purchasers identified on the signature pages thereto, including
the receipt of Liquidated Damages (as defined in such agreement).
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ASSIGNMENT FORM CONVERSION NOTICE
--------------- -----------------
To assign this Security, fill in the form below: To convert this Security into Common Stock
of the Company, check the box [ ].
I or we assign and transfer this Security to To convert only part of this Security,
_________________________ state the principal amount to be converted
_________________________ (which must be $1,000 or an integral
(Insert assignee's soc. sec. or tax ID no.) multiple of $1,000):
_________________________
_________________________ If you want the stock certificate made out
_________________________ in another person's name fill in the form
(Print or type assignee's name, address and zip below:
code) __________________________
__________________________
and irrevocably appoint
(Insert the other person's soc. sec. tax
____________________ agent to transfer this ID no.)
Security on the books of the Company. The
agent may substitute another to act for him. __________________________
__________________________
__________________________
__________________________
__________________________
(Print or type other person's name,
address and zip code)
The undersigned, on behalf of itself and
its affiliates, hereby represents to the
Company that upon and immediately after the
conversion of Securities into shares
of Common Stock, it and its affiliates are
and will be in compliance with the
Share Limitation applicable to such
Securities pursuant to paragraph 8 of this
Security.
Date: ________________ Your Signature: _______________________________________
______________________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guaranteed
_____________________________________
Participant in a Recognized Signature
Guarantee Medallion Program
By:_____________________________
Authorized Signatory
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SCHEDULE OF INCREASES AND DECREASES OF GLOBAL SECURITY
Initial Principal Amount of Global Security: ____________($___________).
Amount of Amount of Principal
Increase in Decrease in Amount of Notation by
Principal Principal Global Security Registrar or
Amount of Amount of After Increase or Security
Date Global Security Global Security Decrease Custodian
____________ _______________ _______________ _________________ ____________
____________ _______________ _______________ _________________ ____________
____________ _______________ _______________ _________________ ____________
____________ _______________ _______________ _________________ ____________
____________ _______________ _______________ _________________ ____________
____________ _______________ _______________ _________________ ____________
____________ _______________ _______________ _________________ ____________
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ELECTION OF HOLDER TO REQUIRE REPURCHASE
Pursuant to Section 3.4 of the Indenture, the undersigned hereby elects to
have this Security repurchased by the Company.
Dated:
_______________________________________________________
_______________________________________________________
Signature(s)
Signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an
approved signature guarantee program pursuant
to Rule 17Ad-15 under the Securities Exchange
Act of 1934.
_______________________________________________________
Signature Guaranteed
Principal amount to be repurchased (at least
U.S. $1,000 or an integral multiple of $1,000
in excess thereof): ___________________
Remaining principal amount following such
repurchase (not less than U.S. $1,000):
__________________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
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EXHIBIT B
[FORM OF FACE OF CERTIFICATED SECURITY]
THE SECURITY EVIDENCED BY THIS CERTIFICATE AND ANY SHARES OF COMMON STOCK
ISSUABLE UPON THE CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER:
(1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT (A "QIB"); (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"); OR (C) IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT;
(2) AGREES THAT (I) IT WILL NOT, PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d)
UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT
ON THE DATE OF THE TRANSFER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM SUCH SELLER REASONABLY BELIEVES TO BE A QIB PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) TO PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) TO A PERSON WHOM SUCH SELLER REASONABLY
BELIEVES TO BE AN IAI OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, SUBJECT TO THE OBLIGATION OF SUCH HOLDER TO FURNISH
THE COMPANY AND THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS MAY BE REQUIRED PURSUANT TO THE INDENTURE AND, IN EACH CASE, IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (II) IT WILL, AFTER THE
EXPIRATION OF THE HOLDING PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO
ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE)
UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS
SECURITY, PROVIDE A REPRESENTATION TO THE COMPANY THAT IT HAS HELD THE SECURITY
EVIDENCED BY THIS CERTIFICATE FOR A PERIOD OF TWO YEARS AND IS NOT AN AFFILIATE
(AS SUCH TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) PRIOR TO ANY
RESALE OR TRANSFER OF THIS SECURITY;
(3) AGREES THAT IT WILL NOTIFY EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (2)(I)(F) ABOVE)
OF THE RESALE RESTRICTIONS CONTAINED IN THIS LEGEND;
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION OF THE
CONDITIONS SPECIFIED IN THE INDENTURE.
B-1
INTEGRATED ELECTRICAL SERVICES, INC.
[Series A] [Series B] 6.5% Senior Convertible Notes due 2014
No. CUSIP: ___________
Issue Date: ________ __, 20__ Principal Amount: $
INTEGRATED ELECTRICAL SERVICES, INC., a Delaware corporation, promises to
pay to ______________________ or registered assigns, the principal amount of
______________________ DOLLARS ($_____________) on November 1, 2014.
Interest Payment Dates: May 1 and November 1, commencing May 1, 2005.
Record Dates: April 15 and October 15.
Reference is hereby made to the further provisions of this Security set
forth on the reverse side of this Security, which further provisions shall for
all purposes have the same effect as if set forth at this place.
The Company hereby designates this Security as "Designated Senior
Indebtedness" for purposes of the Indenture dated as of January 28, 1999 under
which the Company's 9 3/8% Senior Subordinated Notes, Series A and Series B, due
2009 are issued and for purposes of the Indenture dated as of May 29, 2001 under
which the Company's 9 3/8% Senior Subordinated Notes, Series A and Series B, due
2009 are issued.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: ________ __, 20__ INTEGRATED ELECTRICAL SERVICES, INC.
By: _________________________________
Title: _________________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK, a New York banking corporation,
as Trustee, certifies that this
is one of the Securities referred
to in the within-mentioned Indenture.
By ________________________
Authorized Signatory
Dated: ________ __, 20__
B-2
[FORM OF REVERSE OF CERTIFICATED SECURITY IS IDENTICAL TO EXHIBIT A]
B-3
EXHIBIT C
Integrated Electrical Services, Inc.
[Series A] [Series B] 6.5% Senior Convertible Notes due 2014
Transfer Certificate
In connection with any transfer of any of the Securities within the period
prior to the expiration of the holding period applicable to the sales thereof
under Rule 144(k) under the Securities Act of 1933, as amended (the "Securities
Act") (or any successor provision) (other than any transfer pursuant to a
registration statement that has been declared effective under the Securities
Act), the undersigned registered owner of this Security hereby certifies with
respect to $____________ principal amount of the above-captioned Securities
presented or surrendered on the date hereof (the "Surrendered Securities") for
registration of transfer, or for exchange or conversion where the securities
issuable upon such exchange or conversion are to be registered in a name other
than that of the undersigned registered owner (each such transaction being a
"transfer"), that such transfer complies with the restrictive legend set forth
on the face of the Surrendered Securities for the reason checked below:
[ ] A transfer of the Surrendered Securities is made to Integrated
Electrical Services, Inc. (the "Company") or any of its
Subsidiaries;
[ ] The transfer of the Surrendered Securities complies with Rule 144A
under the Securities Act;
[ ] The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act;
[ ] The transfer of the Surrendered Securities is being effected to an
Institutional Accredited Investor and pursuant to an exemption from
the registration requirements of the Securities Act other than Rule
144A, Rule 144 or Rule 904, and the transferor hereby further
certifies that it has not engaged in any general solicitation within
the meaning of Regulation D under the Securities Act and the
transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Security under the Indenture
and the requirements of the exemption claimed, which certification
is supported by (1) a certificate executed by the transferee in the
form of Exhibit C to the Indenture and (2) an opinion of counsel
provided by the transferor or the transferee (a --------- copy of
which the transferor has attached to this certification), to the
effect that such transfer is in compliance with the Securities Act;
or
[ ] The transfer of the Surrendered Securities is pursuant to another
available exemption from the registration requirement of the
Securities Act;
and unless such Securities are being transferred to the Company or a subsidiary
thereof, the undersigned confirms that, to the undersigned's knowledge, such
Securities are not being transferred to an "affiliate" of the Company as defined
in
C-1
Rule 144 under the Securities Act (an "Affiliate"). Capitalized terms used but
not defined herein have the meanings set forth in the Indenture.
Unless one of the boxes above is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof.
DATE: __________________________________
Signature(s)
Notice: Signature must conform to name written on face of Security.
(If the registered owner is a corporation, partnership or fiduciary, the
title of the person signing on behalf of such registered owner must be stated.)
Signature(s) must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Securities Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Securities Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
_______________________________
Signature Guarantee
C-2
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Integrated Electrical Services, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attention: Chief Financial Officer
[Registrar address block]
Re: [Series A] [Series B] 6.5% Senior Convertible Notes due 2014
Reference is hereby made to the Indenture, dated as of November 24, 2004
(the "Indenture"), among Integrated Electrical Services, Inc., as issuer (the
"Company"), the Guarantors party thereto and The Bank of New York, a New York
banking corporation, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Security, or
(b) [ ]a Certificated Security,
we confirm that:
1. We understand that any subsequent transfer of the Securities or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell or
otherwise transfer the Securities or any interest therein except in compliance
with, such restrictions and conditions and the Securities Act of 1933, as
amended (the "Securities Act").
2. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Securities or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and an opinion
of legal counsel in form reasonably acceptable to the Company to the effect that
such transfer is in compliance with the Securities Act, (D) outside the United
States in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any Person purchasing the Certificated Security or
beneficial interest in a Global Security from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Securities or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Securities purchased
by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or its investment.
D-1
5. We are acquiring the Securities or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
___________________________________________
[Insert Name of Accredited Investor]
By: _______________________________________
Name:
Title:
Dated: _______________________
D-2
EXHIBIT E
Integrated Electrical Services, Inc.
[Series A] [Series B] 6.5% Senior Convertible Notes due 2014
Exchange Certificate
In connection with the exchange of a Certificated Security for an interest
in a Global Security pursuant to Section 2.12(a)(iv) of the Indenture
representing $____________ principal amount of the above-captioned Securities
presented or surrendered on the date hereof (the "Surrendered Securities"), the
undersigned registered owner of this Security hereby certifies that either:
[ ] the undersigned is a "qualified institutional buyer" as defined in
Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"); or
[ ] The Surrendered Securities are being transferred and such transfer
complies with Rule 144A under the Securities Act and unless the box
below is checked, the undersigned confirms that, to the
undersigned's knowledge, such Securities are not being transferred
to an "affiliate" of the Company as defined in Rule 144 under the
Securities Act (an "Affiliate").
[ ] The transferee is an Affiliate of the Company.
DATE: __________________________________
Signature(s)
(If the registered owner is a corporation, partnership or fiduciary, the title
of the person signing on behalf of such registered owner must be stated.)
Signature Guaranteed
______________________________________
Participant in a Recognized Signature
E-1
EXHIBIT F
COMMON STOCK RESTRICTED SECURITIES LEGEND
THE SECURITY EVIDENCED BY THIS CERTIFICATE AND ANY SHARES OF COMMON STOCK
ISSUABLE UPON THE CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER:
(1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT (A "QIB"); (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"); OR (C) IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT;
(2) AGREES THAT (I) IT WILL NOT, PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d)
UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT
ON THE DATE OF THE TRANSFER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM SUCH SELLER REASONABLY BELIEVES TO BE A QIB PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) TO PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) TO A PERSON WHOM SUCH SELLER REASONABLY
BELIEVES TO BE AN IAI OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE COMPANY AND THE TRUSTEE TO
REQUIRE DELIVERY OF SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
MAY BE NECESSARY TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, AND (II) IT WILL, AFTER THE EXPIRATION OF THE
HOLDING PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS
OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT
AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS SECURITY, PROVIDE A
REPRESENTATION TO THE COMPANY THAT IT HAS HELD THE SECURITY EVIDENCED BY THIS
CERTIFICATE FOR A PERIOD OF TWO YEARS AND IS NOT AN AFFILIATE (AS SUCH TERM IS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT) PRIOR TO ANY RESALE OR TRANSFER OF
THIS SECURITY;
(3) AGREES THAT IT WILL NOTIFY EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (2)(I)(F) ABOVE)
OF THE RESALE RESTRICTIONS CONTAINED IN THIS LEGEND;
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION OF THE
CONDITIONS SPECIFIED IN THE INDENTURE.
F-1
EXHIBIT G
FORM OF NOTATION OF SUBSIDIARY GUARANTEE
For value received, each Guarantor (which term includes any successor Person
under the Indenture) has, jointly and severally, fully and unconditionally and
irrevocably guaranteed, to the extent set forth in the Indenture and subject to
the provisions in the Indenture dated as of November 24, 2004 (the "Indenture")
among Integrated Electrical Services, Inc. (the "Company"), the Guarantors party
thereto and The Bank of New York, a New York banking corporation, as trustee
(the "Trustee"), (a) the due and punctual payment of the principal, Repurchase
Price or Fundamental Change Repurchase Price of, and the Make-Whole Premium
(only to the extent not otherwise satisfied by the Company in other than cash in
accordance with the applicable Company Notice), Redemption Premium, if any, and
Liquidated Damages, if any, and interest on, the Securities, whether at
maturity, by acceleration, redemption, repurchase or otherwise, the due and
punctual payment of interest on overdue principal of and interest on the
Securities, if any, and, to the extent permitted by law, the due and punctual
performance of all other obligations of the Company to the Holders (other than
the Company's obligations under Article XIII) or the Trustee all in accordance
with the terms of the Indenture and (b) in case of any extension of time of
payment or renewal of any Securities or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise. The obligations of the Guarantors to the Holders of Securities and
to the Trustee pursuant to the Subsidiary Guarantee and the Indenture are
expressly set forth in Article XII of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Subsidiary Guarantee. The
Subsidiary Guarantee shall be governed by and construed in accordance with the
laws of the State of New York.
Capitalized terms used but not defined herein have the meanings given to them in
the Indenture.
[NAME OF GUARANTOR]
By:
Name:
Title:
G-1
EXHIBIT H
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
_______________, 200__, among [NAME OF SUBSIDIARY] (the "Guaranteeing
Subsidiary"), a subsidiary of Integrated Electrical Services, Inc. (or its
permitted successor), a Delaware corporation (the "Company"), the other
Guarantors (as defined in the Indenture referred to herein) and The Bank of New
York, a New York banking corporation, as trustee under the Indenture referred to
below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company and the Guarantors have heretofore executed and
delivered to the Trustee an indenture (the "Indenture"), dated as of November
24, 2004 providing for the issuance of Series A 6.5% Senior Convertible
Securities due 2014 and Series B 6.5% Senior Convertible Securities due 2014
(collectively, the "Securities");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company' obligations (only to the extent not otherwise
satisfied by the Company in other than cash in accordance with the applicable
Company Notice) under the Securities and the Indenture on the terms and
conditions set forth herein and in the Indenture (the "Subsidiary Guarantee");
and
WHEREAS, pursuant to Section 11.1 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Securities as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to
provide an unconditional Guarantee on the terms and subject to the conditions
set forth in the Subsidiary Guarantee and in the Indenture including but not
limited to Article XII thereof. The obligations of the Guaranteeing Subsidiary
to the Holders of Securities and to the Trustee pursuant to the Subsidiary
Guarantee and the Indenture are expressly set forth in Article XII of the
Indenture and reference is hereby made to the Indenture for the precise terms of
the Subsidiary Guarantee. This Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and the
Indenture.
4. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have
H-1
any liability for any obligations of the Company or any Guaranteeing Subsidiary
under the Securities, any Subsidiary Guarantees, the Indenture or this
Supplemental Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of the Securities by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Securities.
5. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
7. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
8. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, 20___
[GUARANTEEING SUBSIDIARY]
By: _______________________________
Name:
Title:
INTEGRATED ELECTRICAL SERVICES, INC.
By: _______________________________
Name:
Title:
[EXISTING GUARANTORS]
By: _______________________________
Name:
Title:
H-2
[TRUSTEE],
as Trustee
By: _______________________________
Authorized Signatory
H-3
EXHIBIT B TO PURCHASE AGREEMENT - FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and entered
into as of November 24, 2004 by and among Integrated Electrical Services, Inc.,
a Delaware corporation (the "COMPANY"), the parties set forth on Schedule I
hereto (each, a "PURCHASER" and collectively, the "PURCHASERS") and the
subsidiaries of the Company set forth on Schedule II hereto (each, a "GUARANTOR"
and collectively, the "GUARANTORS").
In order to induce each of the Purchasers to enter into that certain
Purchase Agreement of dated as of November 22, 2004, by and among the Company,
the Guarantors and the Purchasers (the "PURCHASE AGREEMENT"), the Company has
agreed to provide the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Purchase
Agreement.
The Company and the Guarantors agree with the Purchasers (i) for their
benefit as the Purchasers and (ii) for the benefit of the beneficial owners
(including the Purchasers) from time to time of the Notes (as defined herein)
and the beneficial owners from time to time of the Underlying Common Stock (as
defined herein) issued upon conversion of the Notes (each of the foregoing a
"HOLDER" and together the "HOLDERS"), as follows:
Section 1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
"AFFILIATE" means with respect to any specified person, an "affiliate," as
defined in Rule 144, of such person.
"AMENDMENT EFFECTIVENESS DEADLINE DATE" has the meaning set forth in
Section 2(d) hereof.
"APPLICABLE CONVERSION PRICE" means, as of any date of determination, the
Conversion Price of the Notes then in effect as determined in accordance with
the terms of the Indenture or, if no Notes are then outstanding, the Conversion
Rate that would be in effect were Notes then outstanding.
"BUSINESS DAY" has the meaning assigned to such term in the Indenture.
"COMMON STOCK" has the meaning assigned to such term in the Indenture.
"COMPANY INDEMNIFIED PARTY" has the meaning set forth in Section 6(b)
hereof.
"CONVERSION PRICE" has the meaning assigned to such term in the Indenture.
"XXXXX" means the Electronic Data Gathering, Analysis, and Retrieval
system by which companies file forms with the SEC.
"EFFECTIVENESS DEADLINE DATE" has the meaning set forth in Section 2(a)
hereof.
"EFFECTIVENESS PERIOD" means a period that will terminate upon the
earliest of (1) the date on which all Registrable Securities held by
non-affiliates are eligible to be sold to the public pursuant to Rule 144(k)
under the Securities Act or any successor provision thereof, (2) the date when
each of the Registrable Securities covered by the Shelf Registration Statement
has been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement, (3) the date on which all
Registrable Securities have been resold pursuant to Rule 144 under the
Securities Act, (4) the date on which all the Notes and the Registrable
Securities cease to be outstanding and (5) 60 days after the date that is the
two year anniversary of the Issue Date.
"EVENT" has the meaning set forth in Section 2(e) hereof.
"EVENT DATE" has the meaning set forth in Section 2(e) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"FILING DEADLINE DATE" has the meaning set forth in Section 2(a) hereof.
"GUARANTOR" and "GUARANTORS" have the meanings set forth in the preamble
of this Agreement.
"HOLDER" has the meaning set forth in the third paragraph of this
Agreement.
"HOLDER INDEMNIFIED PARTY" has the meaning set forth in Section 6(a)
hereof.
"INDEMNIFIED PARTY" has the meaning assigned to such term in Section 6(c)
hereof.
"INDEMNIFYING PARTY" has the meaning set forth in Section 6(c) hereof.
"INDENTURE" means the Indenture, dated as of November 24, 2004, by and
among the Company, the Guarantors and The Bank of New York, a New York banking
corporation, as Trustee, pursuant to which the Notes are being issued.
"INITIAL SHELF REGISTRATION STATEMENT" has the meaning set forth in
Section 2(a) hereof.
"ISSUE DATE" means the first date of original issuance of the Notes.
"LIQUIDATED DAMAGES ACCRUAL PERIOD" has the meaning set forth in Section
2(e) hereof.
"LIQUIDATED DAMAGES" has the meaning set forth in Section 2(e) hereof.
"LIQUIDATED DAMAGES PAYMENT DATE" means each interest payment date under
the Indenture in the case of Notes, and each May 1 and November 1 in the case of
the Underlying Common Stock.
"MAKE-WHOLE PREMIUM" has the meaning assigned to such term in the
Indenture.
"MATERIAL EVENT" has the meaning set forth in Section 3(i) hereof.
2
"NOTES" means the Series A 6.5% Senior Convertible Notes due 2014 and the
Series B 6.5% Senior Convertible Notes due 2014, of the Company, to be purchased
pursuant to the Purchase Agreement.
"NOTICE AND QUESTIONNAIRE" means a written notice and questionnaire
delivered to the Company containing the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex A hereto.
"NOTICE HOLDER" means, on any date, any Holder that has delivered a Notice
and Questionnaire to the Company on or prior to such date, so long as all of
their Registrable Securities that have been registered for resale pursuant to a
Notice and Questionnaire have not been sold in accordance with a Shelf
Registration Statement.
"PURCHASE AGREEMENT" has the meaning set forth in the preamble hereof.
"PROCEEDING" has the meaning set forth in Section 6(c) hereof.
"PROSPECTUS" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 415 promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all materials incorporated
by reference or explicitly deemed to be incorporated by reference in such
Prospectus.
"PURCHASER" and "PURCHASERS" have the meaning set forth in the preamble of
this Agreement.
"RECORD HOLDER" means (i) with respect to any Liquidated Damages Payment
Date relating to any Notes as to which any such Liquidated Damages has accrued,
the holder of record of such Note on the record date with respect to the
interest payment date under the Indenture on which such Liquidated Damages
Payment Date shall occur and (ii) with respect to any Liquidated Damages Payment
Date relating to the Underlying Common Stock as to which any such Liquidated
Damages has accrued, the registered holder of such Underlying Common Stock 15
days prior to such Liquidated Damages Payment Date.
"REGISTRABLE SECURITIES" means the Underlying Common Stock and any
securities into or for which such Underlying Common Stock has been converted,
and any security issued with respect thereto upon any stock dividend, split or
similar event until, in the case of any such security, the Effectiveness Period.
"REGISTRATION EXPENSES" has the meaning set forth in Section 5 hereof.
"RULE 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
"RULE 144A" means Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
3
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"SHELF REGISTRATION STATEMENT" has the meaning set forth in Section 2(a)
hereof.
"SUBSEQUENT SHELF REGISTRATION STATEMENT" has the meaning set forth in
Section 2(b) hereof.
"SUSPENSION NOTICE" has the meaning set forth in Section 3(i) hereof.
"SUSPENSION PERIOD" has the meaning set forth in Section 3(i) hereof.
"TRUSTEE" means The Bank of New York, a New York banking corporation, the
Trustee under the Indenture.
"UNDERLYING COMMON STOCK" means the Common Stock issued or issuable upon
conversion or repurchase of the Notes, including any Common Stock issued or
issuable in connection with a Make-Whole Premium (as defined in the Indenture)
to be paid in accordance with Article VIII of the Indenture.
Section 2. Shelf Registration.
(a) The Company shall prepare and file or cause to be prepared and filed
with the SEC, as soon as practicable but in any event by the date (the "FILING
DEADLINE DATE") that is 180 days after the Issue Date, a registration statement
for an offering to be made on a delayed or continuous basis pursuant to Rule 415
of the Securities Act (a "SHELF REGISTRATION STATEMENT") registering the resale
from time to time by Holders thereof of all of the Registrable Securities (the
"INITIAL SHELF REGISTRATION STATEMENT"). The Initial Shelf Registration
Statement shall be on Form S-3 or another appropriate form permitting
registration of such Registrable Securities for resale by such Holders in
accordance with the reasonable methods of distribution elected by the Holders,
reasonably approved by the Company, and set forth in the Initial Shelf
Registration Statement. The Company shall not permit any securities other than
the Registrable Securities to be included in any Shelf Registration Statement.
The Company shall use its reasonable best efforts to cause the Initial Shelf
Registration Statement to be declared effective under the Securities Act as
promptly as is practicable but in any event by the date (the "EFFECTIVENESS
DEADLINE DATE") that is 360 days after the Issue Date, and to keep the Initial
Shelf Registration Statement (or any Subsequent Shelf Registration Statement)
continuously effective under the Securities Act until the expiration of the
Effectiveness Period. At the time the Initial Shelf Registration Statement is
declared effective, each Holder that became a Notice Holder on or prior to the
date that is five Business Days prior to such time of effectiveness shall be
named as a selling securityholder in the Initial Shelf Registration Statement
and the related Prospectus in such a manner as to permit such Holder to deliver
such Prospectus to purchasers of Registrable Securities in accordance with
applicable law.
(b) If the Initial Shelf Registration Statement or any Subsequent Shelf
Registration Statement ceases to be effective for any reason at any time during
the Effectiveness Period, the
4
Company shall use its reasonable best efforts to obtain the prompt withdrawal of
any order suspending the effectiveness thereof, and in any event shall within 10
days of such cessation of effectiveness amend the Shelf Registration Statement
in a manner reasonably expected to obtain the withdrawal of the order suspending
the effectiveness thereof, or file an additional Shelf Registration Statement
covering all of the securities that as of the date of such filing are
Registrable Securities (a "SUBSEQUENT SHELF REGISTRATION STATEMENT"). If a
Subsequent Shelf Registration Statement is filed, the Company shall use its
reasonable best efforts to cause the Subsequent Shelf Registration Statement to
become effective as promptly as is practicable after such filing and to keep
such Shelf Registration Statement (or subsequent Shelf Registration Statement)
continuously effective until the end of the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or as reasonably requested by the Purchasers
or Trustee on behalf of the Holders covered by such Shelf Registration
Statement.
(d) Each Holder agrees that if such Holder wishes to sell Registrable
Securities pursuant to a Shelf Registration Statement and related Prospectus, it
will do so only in accordance with this Section 2(d) and Section 3(i). Each
Holder wishing to sell Registrable Securities pursuant to a Shelf Registration
Statement and related Prospectus agrees to deliver a completed and executed
Notice and Questionnaire to the Company prior to any attempted or actual
distribution of Registrable Securities under the Shelf Registration Statement;
provided that (A) the Company shall send the Notice and Questionnaire to each
Holder as soon as practicable, but not later than 30 Business Days prior to the
Filing Deadline Date and (B) Holders shall have at least 20 Business Days from
the date on which the Notice and Questionnaire is first sent to such Holders by
the Company to complete and return the Notice and Questionnaire to the Company.
From and after the date the Initial Shelf Registration Statement is declared
effective, the Company shall, as promptly as practicable after the date a Notice
and Questionnaire is delivered, and in any event within the later of (x) five
Business Days after such date or (y) five Business Days after the expiration of
any Suspension Period (1) in effect when the Notice and Questionnaire is
delivered or (2) put into effect within five Business Days of such delivery
date, (i) if required by applicable law, file with the SEC a post-effective
amendment to the Shelf Registration Statement or, if required by applicable law,
prepare and file a supplement to the related Prospectus or a supplement or
amendment to any document incorporated therein by reference or file any other
required document so that the Holder delivering such Notice and Questionnaire is
named as a selling securityholder in the Shelf Registration Statement and the
related Prospectus in such a manner as to permit such Holder to deliver such
Prospectus to purchasers of the Registrable Securities in accordance with
applicable law and, if the Company shall file a post-effective amendment to the
Shelf Registration Statement, use its reasonable best efforts to cause such
post-effective amendment to be declared effective under the Securities Act as
promptly as is practicable, but in any event by the date (the "AMENDMENT
EFFECTIVENESS DEADLINE DATE") that is 45 days after the date such post-effective
amendment is required by this clause to be filed; (ii) provide such Holder a
reasonable number of copies of any documents filed pursuant to Section 2(d)(i);
and (iii) notify such Holder as promptly as practicable after the effectiveness
under the Securities Act of any post-effective amendment filed pursuant to
Section 2(d)(i); provided that if such Notice and Questionnaire is delivered
during a Suspension Period,
5
or a Suspension Period is put into effect within five Business Days after such
delivery date, the Company shall so inform the Holder delivering such Notice and
Questionnaire and shall take the actions set forth in clauses (i), (ii) and
(iii) above within ten Business Days after expiration of the Suspension Period
in accordance with Section 3(i). Notwithstanding anything contained herein to
the contrary, the Company shall be under no obligation to name any Holder that
is not a Notice Holder as a selling securityholder in any Shelf Registration
Statement or related Prospectus; provided, however, that any Holder that becomes
a Notice Holder pursuant to the provisions of this Section 2(d) (whether or not
such Holder was a Notice Holder at the time the Shelf Registration Statement was
declared effective) shall be named as a selling securityholder in the Shelf
Registration Statement or related Prospectus in accordance with the requirements
of this Section 2(d).
(e) The parties hereto agree that the Holders of Registrable Securities
will suffer damages, and that it would not be feasible to ascertain the extent
of such damages with precision, if (i) the Initial Shelf Registration Statement
has not been filed on or prior to the Filing Deadline Date, (ii) the Initial
Shelf Registration Statement has not been declared effective under the
Securities Act on or prior to the Effectiveness Deadline Date or (iii) the
Initial Shelf Registration Statement is filed and declared effective but shall
thereafter cease to be effective (without being succeeded immediately by an
additional registration statement filed and declared effective) or usable for
the offer and sale of Registrable Securities for a period of time (including any
Suspension Period) which shall exceed 45 days in the aggregate in any
three-month period or 90 days in the aggregate in any 12-month period (each of
the events of a type described in any of the foregoing clauses (i) through (iii)
are individually referred to herein as an "EVENT," and the Filing Deadline Date
in the case of clause (i), the Effectiveness Deadline Date in the case of clause
(ii), the date on which the duration of the ineffectiveness or unusability of
the Initial Shelf Registration Statement in any period exceeds the number of
days permitted by clause (iii) hereof in the case of clause (iii), being
referred to herein as an "EVENT DATE"). Events shall be deemed to continue until
the following dates with respect to the respective types of Events: the date the
Initial Shelf Registration Statement is filed in the case of an Event of the
type described in clause (i), the date the Initial Shelf Registration Statement
is declared effective under the Securities Act in the case of an Event of the
type described in clause (ii), and the date the Initial Shelf Registration
Statement becomes effective or usable again in the case of an Event of the type
described in clause (iii).
Accordingly, commencing on (and including) any Event Date and ending
on (but excluding) the next date on which there are no Events that have occurred
and are continuing (a "LIQUIDATED DAMAGES ACCRUAL PERIOD"), the Company and the
Guarantors severally agree to pay, as liquidated damages and not as a penalty,
("LIQUIDATED DAMAGES") at the rate described below, payable periodically on each
Liquidated Damages Payment Date to Record Holders of Notes that are Registrable
Securities and of shares of Underlying Common Stock issued upon conversion of
Notes that are Registrable Securities, as the case may be, to the extent of, for
each such Liquidated Damages Payment Date, accrued and unpaid Liquidated Damages
to (but excluding) such Liquidated Damages Payment Date (or, if the Liquidated
Damages Accrual Period shall have ended prior to such Liquidated Damages Payment
Date, to the date of the end of the Liquidated Damages Accrual Period); provided
that any Liquidated Damages accrued with respect to any Note or portion thereof
called for redemption on a redemption date or converted into Underlying Common
Stock on a conversion date prior to the Liquidated Damages Payment
6
Date, shall, in any such event, be paid instead to the Holder who submitted such
Note or portion thereof for redemption or conversion on the applicable
redemption date or conversion date, as the case may be, on such date (or
promptly following the conversion date, in the case of conversion). Liquidated
Damages shall accrue at a rate per annum equal to (1) 0.25% for the first 90-day
period from the Event Date and (2) 0.50% thereafter of (i) the aggregate
principal amount of such Notes or, without duplication, (ii) in the case of
Notes that have been converted into Underlying Common Stock, the Applicable
Conversion Price of such shares of Underlying Common Stock, as the case may be,
in each case determined as of the Business Day immediately preceding the next
Liquidated Damages Payment Date. Notwithstanding the foregoing, no Liquidated
Damages shall accrue as to any Registrable Security from and after the earlier
of (x) the date such security is no longer a Registrable Security and (y)
expiration of the Effectiveness Period. The rate of accrual of Liquidated
Damages with respect to any period shall not exceed the rate provided for in
this paragraph notwithstanding the occurrence of multiple concurrent Events.
Following the cure of all Events requiring the payment by the Company or any
Guarantor of Liquidated Damages to the Holders of Registrable Securities
pursuant to this Section, the accrual of Liquidated Damages shall cease (without
in any way limiting the effect of any subsequent Event requiring the payment of
Liquidated Damages by the Company or any Guarantor).
The Trustee shall be entitled, on behalf of Holders of Notes, to seek any
available remedy for the enforcement of this Agreement, including for the
payment of any Liquidated Damages. Notwithstanding the foregoing, the parties
agree that the sole monetary damages payable for a violation of the terms of
this Agreement with respect to which liquidated damages are expressly provided
shall be such liquidated damages. Nothing shall preclude a Holder from pursuing
or obtaining a specific performance or equitable relief with respect to this
Agreement.
All of the Company's and each Guarantor's obligations set forth in this
Section 2(e) that are outstanding with respect to any Registrable Security at
the time such security ceases to be a Registrable Security shall survive until
such time as all such obligations with respect to such security have been
satisfied in full (notwithstanding termination of this Agreement pursuant to
Section 8(k)).
The parties hereto agree that the liquidated damages provided for in this
Section 2(e) constitutes a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.
Section 3. Registration Procedures. In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:
(a) Prepare and file with the SEC a Shelf Registration Statement or Shelf
Registration Statements on Form S-3 or any other appropriate form under the
Securities Act available for the sale of the Registrable Securities by the
Holders thereof in accordance with the intended method or methods of
distribution thereof, and use its reasonable best efforts to cause each such
Shelf Registration Statement to become effective and remain effective as
provided herein; provided that before filing any Shelf Registration Statement or
Prospectus or any amendments or
7
supplements thereto with the SEC, the Company shall furnish to the Holders and
counsel for the Holders copies of all such documents proposed to be filed which
documents (other than a prospectus supplement filed solely to update the selling
stockholder information in the Prospectus) will be subject to the review of such
counsel for a period of no less than ten Business Days prior to the initial
filing of the Shelf Registration Statement or any post-effective amendment
thereto or no less than three Business Days prior to the filing of a
pre-effective amendment to the Shelf Registration Statement, and the Company
will not file the Shelf Registration Statement or Prospectus or any amendment or
supplement thereto (other than documents incorporated by reference) to which
such counsel shall reasonably object within three Business Days after the
receipt thereof.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement as may be necessary to keep such
Shelf Registration Statement continuously effective until the expiration of the
Effectiveness Period; cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act; and
use its reasonable best efforts to comply with the provisions of the Securities
Act applicable to it with respect to the disposition of all securities covered
by such Shelf Registration Statement during the Effectiveness Period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Shelf Registration Statement as so amended or such Prospectus as
so supplemented.
(c) As promptly as practicable give notice to the Notice Holders, the
Purchasers and counsel to the Holders (i) when any Prospectus, Prospectus
supplement, Shelf Registration Statement or post-effective amendment to a Shelf
Registration Statement has been filed with the SEC and, with respect to a Shelf
Registration Statement or any post-effective amendment, when the same has been
declared effective, (ii) of any request, following the effectiveness of the
Initial Shelf Registration Statement under the Securities Act, by the SEC or any
other federal or state governmental authority for amendments or supplements to
any Shelf Registration Statement or related Prospectus or for additional
information, (iii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of any
Shelf Registration Statement or the initiation or threatening of any proceedings
for that purpose, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (v) after the
effective date of any Shelf Registration Statement filed pursuant to this
Agreement of the occurrence of (but not the nature of or details concerning) a
Material Event and (vi) of the determination by the Company that a
post-effective amendment to a Shelf Registration Statement will be filed with
the SEC, which notice may, at the discretion of the Company (or as required
pursuant to Section 3(i)), state that it constitutes a Suspension Notice, in
which event the provisions of Section 3(i) shall apply.
(d) Use its reasonable best efforts to prevent the issuance of, and, if
issued, to obtain the withdrawal of any order suspending the effectiveness of a
Shelf Registration Statement or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction in which they have been qualified for
sale, in
8
either case at the earliest possible moment, and provide prompt notice to each
Notice Holder and the Purchasers of the withdrawal of any such order.
(e) If requested by the Purchasers or any Notice Holder, as promptly as
practicable incorporate in a Prospectus supplement or post-effective amendment
to a Shelf Registration Statement such information as the Purchasers or such
Notice Holder shall, on advice from counsel, determine to be required to be
included therein by applicable law and make any required filings of such
Prospectus supplement or such post-effective amendment; provided that the
Company shall not be required to take any actions under this Section 3(e) that,
on advice from counsel for the Company, the Company determines would not be in
compliance with applicable law.
(f) As promptly as practicable furnish to each Notice Holder, counsel for
the Holders and for the Purchasers, without charge, at least one conformed copy
of the Shelf Registration Statement and any amendment thereto, including
financial statements but excluding schedules, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits, which
obligation shall be deemed satisfied if such information is available through
XXXXX or on or through the Company's website.
(g) During the Effectiveness Period, deliver to each Notice Holder, the
Purchasers and counsel for the Holders, in connection with any sale of
Registrable Securities pursuant to a Shelf Registration Statement, without
charge, as many copies of the Prospectus or Prospectuses relating to such
Registrable Securities (including each preliminary prospectus) and any amendment
or supplement thereto as such Notice Holder and the Purchasers may reasonably
request; and the Company hereby consents (except during such periods that a
Suspension Notice is outstanding and has not been revoked) to the use of such
Prospectus or each amendment or supplement thereto by each Notice Holder, in
connection with any offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto in the manner set forth
therein.
(h) Prior to any public offering of the Registrable Securities pursuant to
the Shelf Registration Statement, use its reasonable best efforts to register or
qualify or cooperate with the Notice Holders in connection with the registration
or qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Notice Holder reasonably
requests in writing (which request may be included in the Notice and
Questionnaire); and prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, use its reasonable best efforts to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period in connection with such Notice Holder's offer
and sale of Registrable Securities pursuant to such registration or
qualification (or exemption therefrom) and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of such Registrable Securities in the manner set forth in the
relevant Shelf Registration Statement and the related Prospectus; provided that
the Company will not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Agreement or (ii) take any action that would
subject it to general service of process in suits or to taxation in any such
jurisdiction where it is not then so subject.
9
(i) Upon (A) the issuance by the SEC of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact as a result of which any Shelf Registration Statement shall contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any Prospectus shall contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (C) the occurrence or existence of any pending
corporate development (a "MATERIAL EVENT") that, in the reasonable discretion of
the Company, makes it appropriate to suspend the availability of the Shelf
Registration Statement and the related Prospectus, (i) in the case of clause (B)
or (C) above, subject to the next sentence, as promptly as practicable, prepare
and file, if necessary pursuant to applicable law, a post-effective amendment to
such Shelf Registration Statement or a supplement to the related Prospectus or
any document incorporated therein by reference or file any other required
document that would be incorporated by reference into such Shelf Registration
Statement and Prospectus so that such Shelf Registration Statement does not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and such Prospectus does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that the Company may rely on
information provided by each Notice Holder with respect to such Notice Holder),
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, and, in the case of a post-effective amendment to a Shelf
Registration Statement, subject to the next sentence, use its reasonable best
efforts to cause it to be declared effective as promptly as is practicable, and
(ii) give notice to the Notice Holders and counsel for the Holders and for the
Purchasers (or, if applicable, separate counsel for the Holders) that the
availability of the Shelf Registration Statement is suspended (a "SUSPENSION
NOTICE") and, upon receipt of any Suspension Notice, each Notice Holder agrees
not to sell any Registrable Securities pursuant to such Shelf Registration
Statement until such Notice Holder's receipt of copies of the supplemented or
amended Prospectus provided for in clause (g) above, or until it is advised in
writing by the Company that the Prospectus may be used, and has received copies
of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such Prospectus. The Company will use its
reasonable best efforts to ensure that the use of the Prospectus may be resumed
(x) in the case of clause (A) above, as promptly as is practicable, (y) in the
case of clause (B) above, as soon as, in the reasonable judgment of the Company,
the Shelf Registration Statement does not contain any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and the Prospectus
does not contain any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and (z) in the
case of clause (C) above, as soon as, in the reasonable discretion of the
Company, such suspension is no longer appropriate. The period during which the
availability of the Shelf Registration Statement and any Prospectus may be
suspended (the "SUSPENSION PERIOD") without the Company incurring any obligation
to pay liquidated damages pursuant to Section 2(e) shall not exceed 30 days in
any three-month period and 90 days in any 12-month period; provided, however,
that if the use
10
of the Shelf Registration Statement or any Prospectus is suspended by the
Company pursuant to clause (C) above and the subject Material Event relates to a
previously undisclosed proposed or pending material business transaction, the
disclosure of which would impede the Company's ability to consummate such
transaction or cause the Company to violate any non-disclosure agreement or
confidentiality agreement in any contract relating to such transaction, the
Company may extend a Suspension Period from 30 days to 45 days.
(j) Make available for inspection during normal business hours by
representatives for the Notice Holders of such Registrable Securities, and any
investment banks, attorneys and accountants retained by such Notice Holders, all
relevant financial and other records and pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the appropriate
officers, directors and employees of the Company and its subsidiaries to make
available for inspection during normal business hours all relevant information
reasonably requested by such representatives for the Notice Holders, or any such
investment banks, attorneys or accountants in connection with such disposition,
in each case as is customary for similar "due diligence" examinations; provided,
however, that such persons shall, at the Company's request, first agree in
writing with the Company that any information that is reasonably and in good
faith designated by the Company in writing as confidential at the time of
delivery of such information shall be kept confidential by such persons and
shall be used solely for the purposes of exercising rights under this Agreement,
unless (i) disclosure of such information is required by court or administrative
order or is necessary to respond to inquiries of regulatory authorities, (ii)
disclosure of such information is required by law (including any disclosure
requirements pursuant to federal securities laws in connection with the filing
of any Shelf Registration Statement or the use of any Prospectus referred to in
this Agreement), (iii) such information becomes generally available to the
public other than as a result of a disclosure or failure to safeguard by any
such person or (iv) such information becomes available to any such person from a
source other than the Company and such source is not bound by a confidentiality
agreement or is not otherwise under a duty of trust to the Company, and provided
that the foregoing inspection and information gathering shall, to the greatest
extent possible, be coordinated on behalf of all the Notice Holders.
(k) Cooperate with each Notice Holder to facilitate the timely preparation
and delivery of certificates representing Registrable Securities sold pursuant
to a Shelf Registration Statement, which certificates shall not bear any
restrictive legends, and cause such Registrable Securities to be registered in
such names as such Notice Holder may request in writing at least three Business
Days prior to any sale of such Registrable Securities.
(l) Provide the Trustee and the transfer agent for the Common Stock with
certificates for the Registrable Securities that are in a form eligible for
deposit with The Depository Trust Company.
(m) Comply with all applicable rules and regulations of the SEC and make
generally available to its securityholders earning statements (which need not be
audited) satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) commencing on
11
the first day of the first fiscal quarter of the Company commencing after the
effective date of a Registration Statement, which statements shall cover said
12-month periods.
(n) Upon (i) the filing of the Initial Registration Statement and (ii) the
effectiveness of the Initial Registration Statement, announce the same, in each
case by press release to a nationally recognized wire service.
(o) Provide a CUSIP number for all Registrable Securities covered by each
Registration Statement not later than the effective date of such Registration
Statement and provide the Trustee and the transfer agent for the Common Stock
with printed certificates for the Registrable Securities that are in a form
eligible for deposit with The Depository Trust Company.
(p) Cause all shares of Common Stock issuable upon conversion of the
Securities to be reserved for listing on each securities exchange or quotation
system on which the Common Stock is then listed no later than the date the
applicable Shelf Registration Statement is declared effective and, shall cause
all Common Stock to be so listed when issued.
(q) Use its reasonable best efforts to take all other steps necessary to
effect the registration of the Registrable Securities covered by the Shelf
Registration Statement contemplated hereby.
(r) Enter into such customary agreements and take all such other necessary
actions in connection therewith (including those requested by the holders of a
majority of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities.
(s) If the Registrable Securities are in certificated form, cooperate with
the Holders to facilitate the timely preparation and delivery of certificates
representing the Registrable Securities sold pursuant to any Shelf Registration
Statement free of any restrictive legends and, with respect to any Notes, in
such denominations permitted by the Indenture and registered in such names as
Holders may request at least two Business days prior to settlement of sales of
Registrable Securities pursuant to such Shelf Registration Statement.
(t) Subject to the exceptions contained in clauses (i) and (ii) of Section
3(h) above, use its reasonable best efforts to cause the Registrable Securities
covered by the applicable Shelf Registration Statement to be registered with or
approved by such other federal, state and local governmental agencies or
authorities, and self-regulatory organizations in the United States as may be
necessary to enable the Holders to consummate the disposition of such
Registrable Securities as contemplated by the Shelf Registration Statement.
Section 4. Holder's Obligations. Each Holder agrees, by acquisition of the
Registrable Securities, that no Holder shall be entitled to sell any of such
Registrable Securities pursuant to a Shelf Registration Statement or to receive
a Prospectus relating thereto, unless such Holder has furnished the Company with
a Notice and Questionnaire as required pursuant to Section 2(d) hereof
(including the information required to be included in such Notice and
Questionnaire) and the information set forth in the next sentence. Each Notice
Holder agrees promptly to furnish to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Notice Holder not misleading and any
12
other information regarding such Notice Holder and the distribution of such
Registrable Securities as the Company may from time to time reasonably request.
Any sale of any Registrable Securities by any Holder shall constitute a
representation and warranty by such Holder that the information relating to such
Holder and its plan of distribution is as set forth in the Prospectus delivered
by such Holder in connection with such disposition, that such Prospectus does
not as of the time of such sale contain any untrue statement of a material fact
relating to or provided by such Holder or its plan of distribution and that such
Prospectus does not as of the time of such sale omit to state any material fact
relating to or provided by such Holder or its plan of distribution necessary in
order to make the statements in such Prospectus, in the light of the
circumstances under which they were made, not misleading.
Section 5. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under Section 2 and 3 of this Agreement whether or not any of the
Shelf Registration Statements are declared effective. Such fees and expenses
("REGISTRATION EXPENSES") shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(x) with respect to filings required to be made with the New York Stock
Exchange, and (y) of compliance with federal and state securities or Blue Sky
laws, (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities in a form eligible for deposit
with The Depository Trust Company), (iii) duplication and mailing expenses
relating to copies of any Shelf Registration Statement or Prospectus delivered
to any Holders hereunder, (iv) fees and disbursements of counsel for the Company
and the fees and disbursements of one counsel chosen by the Holders of a
majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Notes deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such Notes are or would be convertible, not including,
for this purpose only, any shares of Common Stock payable as a Make-Whole
Premium (as defined in the Indenture) upon conversion of any Note) in connection
with the Shelf Registration Statement, and (v) fees and disbursements of the
Trustee and its counsel and of the registrar and transfer agent for the Common
Stock. In addition, the Company shall pay the internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing by the
Company of the Registrable Securities on any securities exchange on which
similar securities of the Company are then listed and the fees and expenses of
any person, including special experts, retained by the Company.
Section 6. Indemnification; Contribution.
(a) The Company and the Guarantors severally agree to indemnify and hold
harmless each Holder and its directors, officers, employees, members,
representatives and agents and each person, if any, who controls any Holder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act (each, a "HOLDER INDEMNIFIED PARTY"), from and against (i) any
loss, damage, expense, liability or claim (including the reasonable cost of
investigation) which such Holder Indemnified Party may incur under the
Securities Act, the Exchange Act or otherwise, as incurred, insofar as such
loss, damage, expense, liability or claim arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Shelf Registration Statement or Prospectus or in any amendment or supplement
thereto or in any
13
preliminary prospectus, or arises out of or is based upon any omission or
alleged omission to state a material fact required to be stated in any Shelf
Registration Statement or in any amendment or supplement thereto or necessary to
make the statements therein not misleading, or arises out of or is based upon
any omission or alleged omission to state a material fact necessary in order to
make the statements made in any Prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, in the light of the circumstances
under which they were made, not misleading, except insofar as any such loss,
damage, expense, liability or claim arises out of or is based upon any untrue
statement or omission or alleged untrue statement or omission of a material fact
contained in, or omitted from, and in conformity with information required to be
included in any Shelf Registration Statement or the related Prospectus pursuant
the Securities Act furnished in writing by or on behalf of any Holder to the
Company, (ii) any and all loss, liability, claim, damage and expense whatsoever,
as incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission;
provided that any such settlement is effected with the written consent of the
Company; and (iii) any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by any indemnified party), reasonably
incurred in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under subparagraph (i) or (ii) above; provided,
however, that as to any preliminary prospectus, this indemnity agreement shall
not inure to the benefit of any Holder Indemnified Party on account of any loss,
claim, damage, liability or action arising from the sale of the Registrable
Securities sold pursuant to the Shelf Registration Statement to any person by
such Holder Indemnified Party if (i) that Holder Indemnified Party failed to
send or give a copy of the Prospectus, as the same may be amended or
supplemented, to that person within the time required by the Securities Act
(other than as a result of a failure by the Company to timely deliver copies of
the Prospectus to such Holder Indemnified Party) and (ii) the untrue statement
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact in such preliminary prospectus was corrected in the
Prospectus or a supplement or amendment thereto, as the case may be. This
indemnity agreement will be in addition to any liability that the Company or any
Guarantor may otherwise have.
(b) Each Holder, severally and not jointly, agrees to indemnify, defend
and hold harmless the Company and the Guarantors, and their directors, officers,
employees, members, representatives and agents and each person, if any, who
controls the Company or any Guarantor within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act (each, a "COMPANY
INDEMNIFIED PARTY") from and against any loss, damage, expense, liability or
claim (including the reasonable cost of investigation) which such Company
Indemnified Party may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, damage, expense, liability or claim arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in information furnished in writing by or on behalf of
such Holder to the Company required to be included in any Shelf Registration
Statement or the related Prospectus pursuant the Securities Act, or arises out
of or is based upon any omission or alleged omission to state a material fact
required to be stated in any Shelf Registration Statement or in any amendment or
supplement thereto or necessary to make the statements therein not
14
misleading, or arises out of or is based upon any omission or alleged omission
to state a material fact necessary in order to make the statements in any
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, in the light of the circumstances under which they were made, not
misleading, in connection with such information; provided, however, that no such
Holder shall be liable for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Registrable Securities
pursuant to such Shelf Registration Statement.
(c) If any action, suit or proceeding (each, a "PROCEEDING") is brought
against any person in respect of which indemnity may be sought pursuant to
either subsection (a) or (b) of this Section 6, such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing of the institution of such
Proceeding and the Indemnifying Party shall assume the defense of such
Proceeding with counsel reasonably satisfactory to the Indemnified Party and
shall pay the fees and expenses of such counsel; provided, however, that failure
to so notify the Indemnifying Party shall not relieve such Indemnifying Party
from any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may otherwise have than on account of this indemnity agreement. Such Indemnified
Party shall have the right to employ its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnified Party is a Holder of Notes representing not less than 33% of the
aggregate principal amount of the then outstanding Notes, (ii) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the contrary,
(iii) the Indemnifying Party has failed within a reasonable time after receipt
of notice to assume defense of a Proceeding to retain counsel reasonably
satisfactory to the Indemnified Party or (iv) the named parties in any such
Proceeding (including any impleaded parties) include both the Indemnifying Party
and the Indemnified Party, the Indemnifying Party proposes to have the same
counsel represent it and the Indemnified Party, and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
may, in connection with any Proceeding or related Proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Parties in accordance
with the foregoing sentence, and that all such fees and expenses actually
incurred shall be promptly reimbursed as incurred upon delivery to the
Indemnifying Party of reasonable documentation therefor setting forth such
expenses in reasonable detail. The Indemnifying Party shall not be liable for
any settlement of any Proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify and hold harmless any Indemnified Party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Party
shall have requested the Indemnifying Party to reimburse the Indemnified Party
as contemplated by this paragraph, the Indemnifying Party agrees that it shall
be liable for any settlement of any Proceeding effected without its consent if
(i) such settlement is entered into more than 60 Business Days after receipt by
the Indemnifying Party of the aforesaid request, (ii) such indemnifying party
shall not have reimbursed the Indemnified Party in accordance with such request
prior to the date of such settlement and (iii) such Indemnified Party shall have
given such Indemnifying Party at least 30 days' prior notice of its intention to
settle. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened Proceeding
in respect of which any Indemnified Party is a party,
15
unless such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such
Proceeding and without admission of fault by the Indemnified Party.
(d) If the indemnification provided for in this Section 6 is unavailable
to an Indemnified Party under subsections (a) and (b) of this Section 6 in
respect of any losses, damages, expenses, liabilities or claims referred to
therein, then each applicable Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, damages, expenses, liabilities or
claims, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Holders on the
other hand from the offering of the Registrable Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of the Holders on the other in connection with the statements
or omissions which resulted in such losses, damages, expenses, liabilities or
claims, as well as any other relevant equitable considerations. Notwithstanding
the provisions of this Section 6, neither any of the Purchasers nor any Holder
shall be required to indemnify or contribute any amount in excess of the amount
by which the total price at which the Registrable Securities sold by such Holder
or Purchaser, as the case may be, exceeds the amount of any damages that such
Holder or Purchaser has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. The relative fault
of the Company on the one hand and of the Holders on the other shall be
determined by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the Company or by the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, damages, expenses, liabilities and claims
referred to above shall be deemed to include any reasonable legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any Proceeding.
(e) The Company, the Guarantors and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in subsection (d) above. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders' respective
obligations to contribute pursuant to this Section 6 are several in proportion
to the respective amount of Registrable Securities they have sold pursuant to a
Shelf Registration Statement, and not joint. The remedies provided for in this
Section 6 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 6
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Holder or any person controlling any Holder, or the Company or Guarantors,
or the Company's or any Guarantor's officers or directors or any
16
person controlling the Company or any Guarantor and (iii) the sale of any
Registrable Security by any Holder.
(g) Section 6 of this Agreement may not be amended except by an instrument
in writing signed by the Indemnified Party affected hereto.
Section 7. Information Requirements.
(a) The Company covenants that, if at any time before the end of the
Effectiveness Period it is not subject to the reporting requirements of the
Exchange Act, it will cooperate with any Holder and take such further action as
any Holder may reasonably request in writing, all to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144, Rule 144A, Regulation S and Regulation D under the
Securities Act and customarily taken in connection with sales pursuant to such
exemptions. Upon the written request of any Holder, the Company shall deliver to
such Holder a written statement as to whether it has complied with such filing
requirements, unless such a statement has been included in the Company's most
recent report filed with the SEC pursuant to Section 13 or Section 15(d) of
Exchange Act. Notwithstanding the foregoing, nothing in this Section 7 shall be
deemed to require the Company to register any of its securities (other than the
Common Stock) under any section of the Exchange Act.
(b) The Company shall file the reports required to be filed by it under
the Exchange Act and shall comply with all other requirements set forth in the
instructions to Form S-1 or Form S-3, as the case may be, in order to allow the
Company to be eligible to file registration statements on Form S-1 or Form S-3.
Section 8. Miscellaneous.
(a) No Contrary Agreements. The Company is not, as of the date hereof, a
party to, nor shall it, on or after the date of this Agreement, enter into, any
agreement with respect to its securities that violates the rights granted to the
Holders of Registrable Securities in this Agreement. The Company represents and
warrants that the rights granted to the Holders of Registrable Securities
hereunder do not in any way violate the rights granted to the holders of such
Company's securities under any other agreements. Notwithstanding the foregoing,
the Holders acknowledge that the Company is obligated, and may obligate itself
from time to time in the future, to register its securities for other holders.
(b) Amendments and Waivers. Except as otherwise provided in Section 6(g),
the provisions of this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of a majority of the then outstanding Underlying
Common Stock constituting Registrable Securities (with Holders of Notes deemed
to be the Holders, for purposes of this Section, of the number of outstanding
shares of Underlying Common Stock into which such Notes are or would be
convertible as of the date on which such consent is requested excluding, for
this purpose only, any shares of Common Stock payable as a Make-Whole Premium
(as defined in the Indenture)
17
upon conversion of any Note). Notwithstanding the foregoing, a waiver or consent
to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Shelf Registration Statement and that does not
directly or indirectly affect the rights of other Holders of Registrable
Securities may be given by Holders of at least a majority of the Registrable
Securities being sold by such Holders pursuant to such Shelf Registration
Statement; provided that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence. Each Holder at the time of any such amendment,
modification, supplement, waiver or consent or thereafter shall be bound by any
such amendment, modification, supplement, waiver or consent effected pursuant to
this Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:
(i) if to a Holder, at the most current address given by such Holder
to the Company in the Purchase Agreement or upon any transfer of the
Notes;
with a copy (for informational purposes only) to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
and
Sidley Xxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000.0000
Facsimile: (000) 000.0000
Attention: Xxxxxx Xxxxxxx, Esq.
(ii) if to the Company, to:
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Chief Executive Officer
18
with a copy (for informational purposes only) to:
Xxxxxxx Xxxxx LLP
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: G. Xxxxxxx X'Xxxxx
or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) Approval of Holders. Whenever the consent or approval of Holders is
required hereunder, Notes held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(e) Successors and Assigns. Any person who purchases any Notes or
Registrable Securities from the Purchasers or any Holder shall be deemed, for
purposes of this Agreement, to be an assignee of the Purchasers or such Holder,
as the case may be. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties and shall inure to the
benefit of and be binding upon each Holder. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
by this Agreement.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. To the fullest extent
permitted by applicable law, the Company and the Guarantors hereby irrevocably
submit to the non-exclusive jurisdiction of any New York State court or Federal
court sitting in the County of New York in respect of any suit, action or
proceeding arising out of or relating to the provisions of this Agreement and
irrevocably agree that all claims in respect of any such suit, action or
proceeding may be heard and determined in any such court. The parties hereto
hereby waive, to the fullest extent permitted by applicable law, any objection
that they may now or hereafter have to the laying of venue of any such suit,
action or proceeding brought in any such court, and any claim that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
19
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby.
(j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and the registration rights granted by the
Company with respect to the Registrable Securities. Except as provided in the
Purchase Agreement, there are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
the registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and undertakings
among the parties with respect to such registration rights.
(k) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Section 4, 5 or 6 hereof and the
obligations to make payments of and provide for liquidated damages under Section
2(e) hereof to the extent such liquidated damages accrues prior to the end of
the Effectiveness Period, each of which shall remain in effect in accordance
with its terms.
(SIGNATURE PAGES FOLLOW)
20
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
COMPANY:
INTEGRATED ELECTRICAL SERVICES,
INC.
By: ______________________________
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
GUARANTORS:
EACH OF THE GUARANTORS NAMED ON
SCHEDULE II HERETO
By: ______________________________
Name: Xxxxxxx X. Xxxxx
Acting in his capacity as (i) the Chief
Executive Officer of the Guarantors
listed in Part I of Schedule II and
(ii) Sole Manager and Chief Executive
Officer of the general partner of each
of the Guarantors listed in Part II of
Schedule II (such general partners
acting on behalf of such Guarantors).
By: ______________________________
Name: Xxxxxx Xxxx
Acting in his capacity as the President
of the Guarantors listed in Part III of
Schedule II.
By: ______________________________
Name: Xxxx Xxxx
Acting in his capacity as the Manager
of the Guarantors listed in Part IV of
Schedule II.
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
PURCHASERS:
AMULET LIMITED
By: Amaranth Advisors L.L.C., its
Trading Advisor
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
PURCHASERS:
MARATHON GLOBAL CONVERTIBLE MASTER
FUND, LTD.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
ANNEX A
INTEGRATED ELECTRICAL SERVICES, INC.
FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE
To be named as a selling securityholder in the prospectus, beneficial owners
shall complete and deliver this Notice and Questionnaire within 20 business days
after the date of the written request therefore by Integrated Electrical
Services, Inc. (the "COMPANY" or "REGISTRANT"). Beneficial owners that do not
complete this Notice and Questionnaire and deliver it to the Company within such
20 business day period will not be eligible to he named as selling
securityholders in the prospectus and therefore will not be permitted to sell
any Registrable Securities (as defined below) pursuant to the Shelf Registration
Statement (as defined below).
The undersigned beneficial owner of Series A 6.5% Senior Convertible Notes due
2014 (the "NOTES") of the Company or common stock of the Company, $0.01 par
value (the "common stock" or the "REGISTRABLE SECURITIES"), understands that the
Registrant has filed or intends to file with the Securities and Exchange
Commission a registration statement on Form S-1 or Form S-3 (the "SHELF
REGISTRATION STATEMENT") for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), of the Registrable
Securities, in accordance with the terms of the Registration Rights Agreement,
dated as of November 24, 2004 (the "REGISTRATION RIGHTS AGREEMENT"), between the
Company, the Guarantors (as defined therein) and the purchasers named therein. A
copy of the Registration Rights Agreement is available from the Company upon
request at the address set forth below. All capitalized terms not otherwise
defined herein shall have the meaning ascribed thereto in the Registration
Rights Agreement.
Each beneficial owner of Registrable Securities is entitled to the benefits of
the Registration Rights Agreement. In order to sell or otherwise dispose of any
Registrable Securities pursuant to the Shelf Registration Statement, a
beneficial owner of Registrable Securities generally will be required to be
named as a selling securityholder in the related prospectus, deliver a
prospectus to purchasers of Registrable Securities and be bound by those
provisions of the Registration Rights Agreement applicable to such beneficial
owner (including certain indemnification provisions, as described below).
Beneficial owners that do not complete this Notice and Questionnaire and deliver
it to the Company within the 20 business day period described in the first
paragraph of this Notice and Questionnaire will not be named as selling
securityholders in the prospectus and therefore will not be permitted to sell
any Registrable Securities pursuant to the Shelf Registration Statement.
Beneficial owners are encouraged to complete and timely deliver this Notice and
Questionnaire so that such beneficial owners may be named as selling
securityholders in the related prospectus at the time of effectiveness. Upon
receipt of a completed (if timely delivered) Notice and Questionnaire from a
beneficial owner following the effectiveness of the Shelf Registration
Statement, the Company will, as promptly as practicable but in any event within
five business days of such receipt, file such amendments to the Shelf
Registration Statement or supplements to the related prospectus as are necessary
to permit such holder to deliver such prospectus to purchasers of Registrable
Securities. The Company has agreed to pay liquidated damages pursuant to the
Registration Rights Agreement under certain circumstances as set forth therein.
A-1
Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and the related prospectus. Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Shelf Registration Statement
and the related prospectus.
NOTICE
The undersigned beneficial owner (the "SELLING SECURITYHOLDER") of Registrable
Securities hereby gives notice to the Company of its intention to sell or
otherwise dispose of Registrable Securities beneficially owned by it and listed
below in Item 3 (unless otherwise specified under such Item 3) pursuant to the
Shelf Registration Statement. The undersigned, by signing and returning this
Notice and Questionnaire, understands that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Registration Rights
Agreement.
Pursuant to the Registration Rights Agreement, the undersigned has agreed to
indemnify and hold harmless the Company's directors and officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), from and against certain losses arising in
connection with statements concerning the undersigned made in the Shelf
Registration Statement or the related prospectus in reliance upon the
information provided in this Notice and Questionnaire.
If the Selling Securityholder transfers all or any portion of the Registrable
Securities listed in Item 3 below after the date on which such information is
provided to the Company, the Selling Securityholder agrees to notify the
transferee(s) at the time of the transfer of its rights and obligations under
this Notice and Questionnaire and the Registration Rights Agreement.
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate and complete:
QUESTIONNAIRE
1. (a) Full Legal Name of Selling Securityholder:
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(b) Full Legal Name of Registered Holder (if not the same as (a) above)
through which Registrable Securities Listed in Item 3 below are
held:
------------------------------------------------------------------
(c) Full Legal Name of DTC participant (if applicable and if not the
same as (b) above) through which Registrable Securities listed in
Item 3 below are held:
------------------------------------------------------------------
A-2
2. Address for Notices to Selling Securityholder:
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Telephone:
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Fax:
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Contact Person:
3. Beneficial Ownership of Registrable Securities:
(a) Type and Principal Amount or Number of Shares of Registrable
Securities beneficially owned:
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(b) CUSIP No(s). of such Registrable Securities beneficially owned:
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4. Beneficial Ownership of Other Securities of the Company Owned by the
Selling Securityholder.
Except as set forth below in this Item 4, the undersigned is not the
beneficial or registered owner of any securities of the Company other than
the Registrable Securities listed above in Item 3.
(a) Type and Amount of Other Securities beneficially owned by the
Selling Securityholder:
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(b) CUSIP No(s). of such Other Securities beneficially owned:
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A-3
5. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (owners of 5%
of more of the equity securities of the undersigned) has held any position
or office or has had any other material relationship with the Company (or
its predecessors or affiliates) during the past three years.
State any exceptions here:
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6. Broker-Dealers and their Affiliates
(a) Is the Selling Securityholder a broker-dealer or an affiliate of a
broker-dealer:
Yes ____ No ____
If so, please answer the remaining question in this section.
(i) Please advise whether the notes were received by the Selling
Securityholder as compensation for investment banking services
or as investment shares, and if so please describe the
circumstances.
Note that in general we may be required to identify any registered
broker-dealer as an underwriter in the prospectus.
(ii) Except as set forth below, if the Selling Securityholder is a
registered broker-dealer, the Selling Securityholder does not
plan to make a market in the Registrable Securities. If the
Selling Securityholder plans to make a market in the
Registrable Securities, please indicate whether the Selling
Securityholder plans to use the prospectus relating to the
Registrable Securities as a market-making prospectus.
(b) Affiliation with Broker-Dealers
Is the Selling Securityholder an affiliate(1) of a registered
broker-dealer?
Yes ____ No ____
If so, please answer the remaining question in this section.
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(1) An "affiliate" of a specified person or entity means a person or entity
that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person or entity
specified.
A-4
(i) Please describe the affiliation between the Selling
Securityholder and any registered broker-dealer.
(ii) If the notes were purchased by the Selling Securityholder
other than in the ordinary course of business, please describe
the circumstances.
(iii) Please advise whether the notes were received by the Selling
Securityholder as compensation for investment banking services
or as investment shares, and if so please describe the
circumstances.
(iv) If the Selling Securityholder, at the time of its purchase of
Registrable Securities, had any agreements or understandings,
directly or indirectly, with any person to distribute the
Registrable Securities, please describe such agreements or
undertakings.
Note that if the Selling Securityholder is an affiliate of a broker-dealer
and did not purchase its notes in the ordinary course of business or at
the time of the purchase had any agreements or understandings, directly or
indirectly, to distribute the securities, we may be required to identify
the Selling Securityholder as an underwriter in the prospectus.
(c) Beneficial Ownership by Natural Persons:
If the Selling Securityholder is an entity, does any natural person have
voting or investing power over the Registrable Securities held by the
Selling Securityholder?(2)
If so, please state the person's or persons' name(s):
7. Beneficial Ownership by Natural Persons or by a Board or Committee
Is the Selling Securityholder a reporting entity with the Securities and
Exchange Commission?
Yes ____ No ____
If the Selling Securityholder is a majority owned subsidiary of a
reporting entity, identify the majority stockholder that is a
reporting entity.
If No, please answer the remaining questions in this section.
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(2) Please answer "Yes" if any natural person, directly or indirectly, through
any contract, arrangement, understanding, relationship, or otherwise has
or shares: (a) voting power which includes the power to vote, or to direct
the voting of, such security; and/or, (b) investment power which includes
the power to dispose, or to direct the disposition of, the Registrable
Securities held by the Selling Securityholder.
A-5
(i) Please name the natural person or person(s) having voting
and/or investment control over the Selling Securityholder.3
(ii) If the voting and/or investment control over the Selling
Securityholder is held by board or committee, please state the
name of the natural person or person(s) on such board or
committee.
8. Plan of Distribution:
Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the Registrable Securities listed above in
Item 3 pursuant to the Shelf Registration Statement only as follows (if at
all): Such Registrable Securities may be sold from time to time directly
by the undersigned or, alternatively, through underwriters, broker dealers
or agents. If the Registrable Securities are sold through underwriters,
broker dealers or agents, the Selling Securityholder will be responsible
for underwriting discounts or commissions or agents' commissions. Such
Registrable Securities may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at varying prices
determined at the time of sale or at negotiated prices. Such sales may be
effected in transactions (which may involve block transactions) (i) on any
national securities exchange or quotation service on which the Registrable
Securities may be listed or quoted at the time of sale, (ii) in the over
the counter market, (iii) in transactions otherwise than on such exchanges
or services or in the over the counter market, or (iv) through the writing
of options. In connection with sales of the Registrable Securities or
otherwise, the undersigned may enter into hedging transactions with broker
dealers, which may in turn engage in short sales of the Registrable
Securities in the course of hedging positions they assume. The undersigned
may also sell Registrable Securities short and deliver Registrable
Securities to close out short positions, or loan or pledge Registrable
Securities to broker dealers that in turn may sell such securities.
State any exceptions here:
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Note: In no event will such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior written
agreement of the Company.
The undersigned acknowledges its obligation to comply with the provisions of the
Exchange Act and the rules thereunder relating to stock manipulation,
particularly Regulation M thereunder (or any successor rules or regulations), in
connection with any offering of Registrable Securities
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(3) Please include any natural person that, directly or indirectly, through
any contract, arrangement, understanding, relationship, or otherwise has
or shares: (a) voting power which includes the power to vote, or to direct
the voting of, such security; and/or, (b) investment power which includes
the power to dispose, or to direct the disposition of, the Registrable
Securities held by the Selling Securityholder.
A-6
pursuant to the Registration Rights Agreement. The undersigned agrees that
neither it nor any person acting on its behalf will engage in any transaction in
violation of such provisions.
The Selling Securityholder hereby acknowledges its obligations under the
Registration Rights Agreement to indemnify and hold harmless certain persons as
set forth therein.
Pursuant to the Registration Rights Agreement, the Company has agreed under
certain circumstances to indemnify the Selling Securityholder against certain
liabilities.
In accordance with the undersigned's obligation under the Registration Rights
Agreement to provide such information as may be required by law for inclusion in
the Shelf Registration Statement, the undersigned agrees to promptly notify the
Company of any inaccuracies or changes in the information provided herein that
may occur subsequent to the date hereof at any time while the Shelf Registration
Statement remains effective.
All notices hereunder and pursuant to the Registration Rights Agreement shall be
made in writing by hand delivery, first class mail or air courier guaranteeing
overnight delivery to the address set forth below.
By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 8 and the inclusion of such
information in the Shelf Registration Statement and the related prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Shelf Registration
Statement and the related prospectus.
Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company, the terms of this Notice and Questionnaire, and the
representations and warranties contained herein, shall be binding on, shall
inure to the benefit of and shall be enforceable by the respective successors,
heirs, personal representatives and assigns of the Company and the Selling
Securityholder with respect to the Registrable Securities beneficially owned by
such Selling Securityholder and listed in Item (3) above. This Agreement shall
be governed in all respects by the laws of the State of New York.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
Dated: ___________________________ Beneficial Owner:________________
By: ___________________________
Name: _________________________
Title: ________________________
A-7
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO
INTEGRATED ELECTRICAL SERVICES, INC.
Integrated Electrical Services, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Chief Executive Officer
A-8
SCHEDULE I
PURCHASERS
AMULET LIMITED
MARATHON GLOBAL CONVERTIBLE MASTER FUND, LTD.
SCHEDULE II
GUARANTORS
PART I:
NAME STATE OF INCORPORATION
---- ----------------------
`
Pan American Electric, Inc. Tennessee
Xxxxxxx-Xxxxxxxx Electric Holdings III, Inc. Delaware
Xxxxx Electrical Contractors, Inc. Delaware
PART II:
NAME STATE OF ORGANIZATION GENERAL PARTNER
---- --------------------- ---------------
Xxxxxxx-Xxxxxxxx Electrical Contractors LP Texas Xxxxxxx-Xxxxxxxx Management LLC, an
Arizona limited liability company
Xxxxx Electric LP Texas Xxxxx Management LLC, an Arizona limited
liability company
PART III:
NAME STATE OF ORGANIZATION
---- ---------------------
Xxxxxxx-Xxxxxxxx Holdings LLC Arizona
Xxxxx Electrical Holdings LLC Arizona
PART IV:
NAME STATE OF ORGANIZATION
---- ---------------------
Xxxxxxx-Xxxxxxxx Holdings II LLC Delaware
Xxxxx Electrical Holdings II LLC Delaware
