FIRST SUPPLEMENTAL INDENTURE
Exhibit 4.1
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of March 31, 2006,
between PAR PHARMACEUTICAL COMPANIES, INC. (f/k/a Pharmaceutical Resources, Inc.), a Delaware
corporation (the “Company”), and AMERICAN STOCK TRANSFER & TRUST COMPANY, as trustee under the
Indenture referred to below (the “Trustee”). Capitalized terms used herein but not otherwise
herein defined shall have the meanings ascribed to them in the Indenture.
W I T N E S S E T H :
WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the
“Indenture”), dated as of September 30, 2003, between the Company and the Trustee, pursuant to
which the Company issued its 2.875% Senior Subordinated Convertible Notes Due 2010 (the
“Securities”);
WHEREAS, Section 11.1(h) of the Indenture provides that the Company and the Trustee may amend
the Indenture without the consent of the holders of Securities to make any provisions with respect
to matters or questions arising under the Indenture that the Company may deem necessary or
desirable and that are not inconsistent with any of the provisions of the Indenture and will not
adversely affect the interests of the Holders of Securities in any material respect;
WHEREAS, the Board of Directors of the Company has determined that (i) it is in the best
interest of the Company to authorize and approve the amendments to the Indenture (the “Proposed
Amendments”) set forth in this Supplemental Indenture in order to establish the Company’s agreement
to satisfy 100% of the Conversion Obligation arising upon conversion of any of the Securities with
respect to the principal amount of any of the Securities converted solely in cash, with any
remaining amount of the Conversion Obligations to be satisfied, at the Company’s option, in cash,
shares of Common Stock or a combination of cash and Common Stock and (ii) such Proposed Amendments
do not adversely affect the interests of the Holders of the Securities in any material respect;
WHEREAS, the Company has been authorized, through a Board Resolution, to execute and deliver
this Supplemental Indenture and a copy of such Board Resolution, certified by the Secretary of the
Company, has been delivered to the Trustee in connection with the execution of this Supplemental
Indenture; and
WHEREAS, all other things necessary to make this Supplemental Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW, THEREFORE, for and in consideration of the premises, covenants and obligations set forth
herein and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree, for the equal and proportionate benefit of
all Holders of the Securities, as follows:
1. Amendments to the Indenture. (a) Section 1.1 of the Indenture is modified
by adding the following term and definition in the appropriate alphabetical location within such
Section:
“‘Original Principal Amount’ has the meaning set forth in Section 12.13(a).”
(b) Subsection (d) of Section 8.1 of the Indenture is modified by replacing it, in its
entirety, with the following language (modified text appears in blacklined form):
“(d) the Company fails to convert any portion of the principal amount of any
Security following the exercise by the Holder of the right to convert such
Security into Applicable Stock (or cash or a combination of Applicable Stock
and cash, if the Company so elects) cash pursuant to and in accordance with
Article XII;”
(c) Subsection (b) of Section 8.4 of the Indenture is modified by replacing it, in its
entirety, with the following language (modified text appears in blacklined form):
“(b) in respect of a failure to convert any securitySecurity into Common Stock
(or cash, (or a combination of Common Stockcash and cashCommon Stock, if wethe
Company so electelects) as provided in Article XII or elsewhere in this
Indenture; or”
(d) Subsections (a) – (c) of Section 12.2 of the Indenture are modified by replacing them,
in their entireties, with the following language (modified text appears in blacklined form):
“(a) Subject to Section 12.13, each Security shall be convertible at the office
of the Conversion Agent into fully paid and nonassessable shares of Common
Stock (calculated to the nearest 1/10,000th of a share).
The Conversion Agent shall notify the Company when it receives a Conversion
Notice. Pursuant to Section 12.13, the Company shall determine the amount of
cash and number of shares of Common Stock and/or the amount of cash, if any,
that the Holder that submitted the Conversion Notice is entitled toshall
receive upon surrender of the Securities covered by that Conversion Notice. If
the Company elects to settle in Common Stock onlyIn accordance with Section
12.13, the Company will settle the Original Principal Amount solely in cash.
If the Company elects, in its sole discretion, to settle the Excess Amount (as
defined in Section 12.13(a)), if any, in cash, Common Stock or a combination of
cash and Common Stock, the cash and/or a certificate for the number of full
shares of Common Stock into which the Securities relating to the applicable
portion of the Excess Amount are converted (and cash in lieu of fractional
shares) will be delivered to such Holder, assuming all of the other
requirements have been satisfied by such Holder, as soon as practicable after
the Company issues its notification of its chosen method of settlement, in
accordance with Section 12.13. If the Company elects to settle in cash or a
combination of cash and Common Stock, the cash and, if applicable, a
certificate for the number of full shares of Common Stock into which the
Securities are converted (and cash in lieu of fractional shares) will be
delivered to such Holder, assuming all of the other requirements have been
satisfied by such Holder, in accordance with Section 12.13. Notwithstanding
the foregoing, the Company shall not be required to deliver certificates for
Common Stock while the stock transfer books for such stock or the security
register are duly closed for any purpose, but certificates for Common Stock
shall be issued and delivered as soon as practicable after the opening of such
books or security register.
No cash payment of accrued and unpaid interest or Additional Interest will be
paid by the Company on a converted Security, except as described in Section
12.9. Accrued and unpaid interest and Additional Interest, if any, will be
deemed to be paid in full with the cash paid (and shares of Common Stock issued
or cash paid, if applicable) upon conversion, rather than deemed cancelled,
extinguished or forfeited.
If the Common Stock, cash or the combination of cash and Common Stock and cash
received upon conversion of a Security pursuant to this Article XII does not
include cash sufficient to comply with the U.S. federal withholding tax
obligations imposed by the Code with respect to accrued and unpaid interest on
the Securities payable to the beneficial owner of such Security, the Company
may, to the extent required by applicable law, recoup or set-off such liability
against either the Common Stock tothat may be issued upon conversion to such
beneficial owner or any actual cash dividends or distributions subsequently
made with respect to such Common Stock to such beneficial owner.
In the event of a Fundamental Change, if a Holder has submitted any or all of
its Securities for repurchase, a Holder’s conversion rights on the Securities
so subject to repurchase will expire at 5:00 p.m., New York City time, on the
Business Day immediately preceding the Fundamental Change Repurchase Date.
Notwithstanding the foregoing, a Security in respect of which a Holder has
delivered a Fundamental Change Repurchase Notice exercising such Holder’s right
to require the Company to repurchase such Security may be converted only if
such Fundamental Change Repurchase Notice is withdrawn in accordance with
Section 4.2 prior to 5:00 p.m., New York City time, on the Business Day
immediately preceding the Fundamental Change Repurchase Date.
(b) BeforeSubject to Section 12.13, before any Holder shall be entitled to
convert the same into Common Stock, such Holder shall, in the case of Global
Securities, comply with the Applicable Procedures of the Depositary in effect
at that time, and in the case of Certificated Securities, surrender such
Securities, duly
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endorsed to the Company or in blank, at the office of the
Conversion Agent, and shall give written notice to the Company at said office
or place in the form of the Conversion Notice attached to the Security (the
“Conversion Notice”) that such Holder elects to convert the same and shall
state in writing therein the principal amount of Securities to be converted (in
whole or in part so long as the principal amount to be converted is in
multiples of $1,000 principal amount) 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 or Additional Interest, if any, on the Securities, as
provided in Section 12.9, and all taxes or duties, if any, as provided in
Section 12.8.
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 that shallmay be
delivered upon conversion, pursuant to Section 12.13, shall be computed on the
basis of the aggregate principal amount of the Securities (or specified
portions thereof to the extent permitted hereby) so surrendered.
If Common Stock to be issued upon conversion of a Restricted Security are to be
issued in the name of a Person other than the Holder of such Restricted
Security, such Holder must deliver to the Conversion Agent a certification in
substantially the form set forth in a Transfer Certificate dated the date of
surrender of such Restricted Security and signed by such Holder, as to
compliance with the restrictions on transfer applicable to such Restricted
Security. TheSubject to Section 12.13, the Company shall not be required to
issue Common Stock upon conversion of any such Restricted Security to a Person
other than the Holder if such Restricted Security is not so accompanied by a
properly completed certification, and the Registrar shall not be required to
register Common Stock upon conversion of any such Restricted Security in the
name of a Person other than the Holder if such Restricted Security is not so
accompanied by a properly completed certification.
(c) A Security shall be deemed to have been converted immediately prior to 5:00
p.m., New York City time, on the date on which all of the conversion
requirements set forth in this Section 12.2(c) have been satisfied, and the
person or persons entitled tothat receive theany shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
Holder or Holders of such Common Stock as of 5:00 p.m., New York City time, on
such date.”
(e) Subsection (l) of Section 12.3 of the Indenture is modified by replacing it, in its
entirety, with the following language (modified text appears in blacklined form):
“(l) To the extent that the Company has a Rights Plan in effect upon the
conversion of the Securities into Common Stock only or a combination of cash
and Common Stock, with respect to, and the Company elects to pay the Excess
Amount of the conversion consideration payable in Common Stock or a combination
of cash and Common Stock, a Holder will receive, in addition to the Common
Stock, the rights under the Rights Plan, whether or not the rights have
separated from the Common Stock. To the extent that the Company has a Rights
Plan in effect upon conversion of the Securities into cash, with respect to the
conversion consideration payable in cash, a Holder will not receive any rights
under the Rights Plan or other consideration in respect thereof.”
(f) The heading and subsections (a) and (b) of Section 12.13 of the Indenture are modified
by replacing them, in their entireties, with the following language (modified text appears in
blacklined form):
“Section 12.13. Option to SatisfySatisfaction of Conversion Obligation with
Cash, Common Stock or Combination Thereof .
(a) If the Company receives any Holder’s Conversion Notice on or prior to the
day that is 31 Trading Days prior to the Stated Maturity (the “Final Notice
DateFINAL NOTICE DATE”), then the Company shall notify the Holder through the
Trustee, at any time on or before the date that is three Trading Days following
receipt of the Conversion Notice required pursuant to Section 12.2 (such
period, the “Settlement Notice
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Settlement amounts will be computed as follows (subject to the provisions of
the second and third paragraph of Section 12.1(a) in connection with
conversions upon satisfaction of the Note Price Conditions prior to
satisfaction of the Common Stock Price Condition and conversions during a
Registration Default Period):
| i. |
(1) athe number equal to (x) the aggregate original principal amountOriginal
Principal Amount of Securities to be converted divided by 1,000, multiplied by
(y) the Conversion Rate, and
(2) the arithmetic average of the Closing Prices of Common Stock during the
Cash Settlement Averaging Period; and
| ii. |
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| portion of the Conversion Obligation in Common Stock, computed pursuant to clause (3) below, the Company will deliver to such Holder: |
(1) cash equal to the CashOriginal Principal Amount equal to the aggregate
principal amount of Securities to be converted multiplied by the percentage of
such principal amount to be satisfied in cash, and if greater than zero,of the
Securities surrendered for conversion; plus
(2) cash equal to the product of (x) the difference between the amount of cash
that would otherwise be paid pursuant to clause (iii) above minus the aggregate
principal amountOriginal Principal Amount of the Securities surrendered for
conversion and (y) the percentage of the Excess Amount to be satisfied in cash;
plus
(23) the number of shares of Common Stock equal to (x) the number of shares of
Common Stock that would be issued pursuant to clause (i) aboveOriginal
Principal Amount of the Securities to be converted divided by 1,000, multiplied
by the Conversion Rate, minus (y) the number of shares of Common Stock equal to
the quotient of the Cash Amount divided by the arithmetic average of the
Closing Prices of the Common Stock during the Cash Settlement Averaging Period.
Notwithstanding the foregoing, a Security in respect of which a Holder has
delivered a Fundamental Change Repurchase Notice exercising such Holder’s right
to require the Company to repurchase such Security may be converted as
described in this Section 12.13(a) only if such notice of exercise is withdrawn
in accordance with Section 4.2 prior to 5:00 p.m., New York City time, on the
Business Day immediately preceding the Fundamental Change Repurchase Date.
(b) The Company shall settle all of its Conversion Obligations arising after
the Final Notice Date in the same manner. On or prior to the Final Notice
Date, the Company shall notify the Holders through the Trustee of the method it
chooses to settle the Excess Amount of any Conversion Obligations arising after
the Final Notice Date. If the Company elects to settle the Excess Amount of
any Conversion Obligations arising after the Final Notice Date in a combination
of cash and Common Stock, the Company shall specify both the percentage of the
principal amount of Securities surrendered for conversion that it will pay in
cash and the percentage of the Excess Amount that it will pay in cash. The
remainder of the Excess Amount of any Conversion Obligations arising after the
Final Notice Date shall be settled in shares of Common Stock (except that cash
will be paid in lieu of issuing any fractional shares). The Original
Principal Amount of any Conversion Obligations arising after the Final Notice
Date shall be settled in cash only. All Conversion Notices received after the
Final Notice Date shall be irrevocable.
Settlement of Conversion Obligations arising after the Final Notice Date in
Common Stock will occur in accordance with Section 12.2(a). Subject to
Sections 12.13((b) and (c), settlement of Conversion Obligations arising after
the Final Notice Date in cash or in a combination of cash and Common Stock will
occur at the Stated Maturity. The settlement amount of Common Stock, cash or
combination of cash and Common Stock in satisfaction of Conversion Obligations
arising after the Final Notice Date will be computed in the same manner as set
forth in Section 12.13(a), except that the “Cash Settlement Averaging Period”
will be the 20 Trading Day period beginning on the date that is the 23rd
Trading Day prior to the Stated Maturity.”
(g) Section 7 of Exhibit A of the Indenure is modified by replacing it, in its entirety,
with the following language (modified text appears in blacklined form):
Conversion.
Subject to and in compliance with the provisions of the Indenture (including,
without limitation, the conditions to conversion set forth in Section 12.1
thereof), a Holder is entitled, at such Holder’s option, to convert the
Holder’s Security (or any portion of the principal amount thereof that is
$1,000 or an integral multiple $1,000), into, subject to Section 12.13 thereof
and except in connection with conversions following satisfaction of the Note
Price Conditions under the circumstances described below and except in
connection with conversions during a Registration Default Period following
satisfaction of any of the conditions to
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conversion as described below, fully
paid and nonassessable shares of Common Stock at the Conversion Rate in effect
on the date of conversion. As provided in Section 12.13 of the Indenture, upon
conversion, the Company may choose, subject to Section 12.13(a) of the
Indenture, to deliver in lieu ofcash, Common Stock, cash or a combination of
cash and Common Stock in accordance with the Indenture.
The initial Conversion Rate is 11.2660 shares of Common Stock per $1,000
principal amount of Securities and is subject to adjustment in certain events
as provided in the Indenture.
With respect to any conversion of a Security following satisfaction of the Note
Price Conditions prior to the satisfaction of the Common Stock Price Condition,
a Holder shall be entitled to, subject to Section 12.13 of the Indenture, a
number of shares of Common Stock equal to the lesser of (a) the product of the
principal amount of such Security divided by 1,000 multiplied by the Conversion
Rate then in effect or (b) the quotient obtained by dividing the principal
amount of such Security by the Sale Price of the Common Stock on the Trading
Day immediately before the date of conversion.
With respect to any conversion of a Security during a Registration Default
Period following satisfaction of any of the conditions to conversion described
in Section 12.1 of the Indenture (and during the prescribed time periods in
respect thereof), a Holder shall be entitled to, subject to Section 12.13, 103%
of the number of shares of Common Stock that the Holder would have otherwise be
entitled to upon conversion.
The Company will notify Holders of any satisfaction of the conditions to
conversion triggering the right to convert the Securities as specified above in
accordance with the Indenture.
To surrender a Security for conversion, a Holder must, in the case of Global
Securities, comply with the Applicable Procedures of the Depositary in effect
at that time, and in the case of Certificated Securities, (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 all funds required, if any,
relating to interest or Additional Interest, if any, and any transfer or
similar tax or duties, if required.
No fractional share of Common Stock shall be issued upon conversion of any
Security. Instead, the Company shall pay a cash adjustment as provided in the
Indenture.
Except as provided in Section 1 hereof, upon conversion, no cash payment will
be made for accrued and unpaid interest or Additional Interest, if any.
Accrued and unpaid interest and Additional Interest, if any, will be deemed to
be paid in full with the shares of Common Stock issued or cash paid or
combination of cash paid and shares of Common Stock issued or cash paid upon
conversion, rather than deemed cancelled, extinguished or forfeited.
Except as described in Section 12.3 of the Indenture, no payment or other
adjustment for distributions or dividends on any Common Stock issued upon
conversion of the Securities will be made.
A Security in respect of which a Holder has delivered a Fundamental Change
Repurchase Notice exercising the right of such Holder to require the Company to
repurchase such Security may be converted only if such Fundamental Change
Repurchase Notice is withdrawn in accordance with the terms of the Indenture.
If the Common Stock, cash or combination of cash and Common Stock and cash
received from the Company upon conversion of a Security does not include cash
sufficient to comply with the U.S. federal withholding tax obligations imposed
by the Code with respect to accrued and unpaid interest on the Securities
payable to the beneficial owner of such Security, the Company may, to the
extent required by applicable law, recoup or set-off such liability against
either the Common Stock tothat may be issued upon conversion to such beneficial
owner or any actual cash dividends or distributions subsequently made with
respect to such Common Stock to such beneficial owner.
If the Company (i) reclassifies the Common Stock, (ii) is a party to a
consolidation, merger or binding share
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exchange or (iii) sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
the properties and assets of the Company and its Subsidiaries on a consolidated
basis to any Person or group of affiliated Persons, the right to convert a
Security into cash (or shares of Common Stock, subject to Section 12.13 of the
Indenture) may be changed into a right to convert it into cash or securities or
cash of the Company or such other Person, in each case in accordance with the
Indenture.”
(h) The first two lines of the Conversion Notice of Exhibit A of the Indenture are
modified by replacing them, in their entirety, with the following language (modified text appears
in blacklined form):
“To convert this Security into Common Stock (or cash or a combination of Common
Stockcash and cash,Common Stock if the Company so elects) of the Company, check
the box o”
2. Trust Indenture Act Controls. If any provision of this Supplemental Indenture
limits, qualifies, or conflicts with the duties imposed by Section 318(c) of the TIA, such section
of the TIA shall control. If any provision of this Supplemental Indenture expressly modifies or
excludes any provision of the TIA that may be so modified or excluded, the Supplemental Indenture
provision so modifying or excluding such provision of the TIA shall, to the extent permitted by the
TIA, be deemed to apply.
3. Separability. In case any provision in this Supplemental Indenture shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired thereby.
4. Effectiveness. This Supplemental Indenture will become operative and binding
upon each of the Company, the Trustee and the Holders of the Securities as of the day and year
first above written.
5. References to and Effect on the Indenture. On and after the date hereof, each
reference in the Indenture to “this Indenture,” “hereunder,” “hereof”, “hereby” or “herein” shall
mean and be a reference to the Indenture as supplemented and amended by this Supplemental Indenture
unless the context otherwise clearly requires. Except as specifically supplemented and amended by
this Supplemental Indenture, the Indenture shall remain in full force and effect in accordance with
the provisions thereof and is in all respects hereby ratified and confirmed.
6. Trustee Acceptance. The Trustee accepts the amendment of the Indenture effected
by this Supplemental Indenture, but only upon the terms and conditions set forth in the Indenture,
as hereby supplemented, including the terms and provisions defining and limiting the liabilities
and responsibilities of the Trustee in the performance of its duties and obligations under the
Indenture, as hereby supplemented. Without limiting the generality of the foregoing, the Trustee
has no responsibility for the correctness of the recitals of fact herein contained that shall be
taken as the statements of the Company, and makes no representations as to the validity,
sufficiency or enforceability of this Supplemental Indenture.
5. Successors and Assignees. This Supplemental Indenture shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and permitted assigns.
6. Headings. The headings of the sections of this Supplemental Indenture have been
inserted for convenience of reference only and are not to be considered part of this Supplemental
Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
7. Counterparts and Method of Execution. This Supplemental Indenture may be
executed in counterparts (including by facsimile), both of which together shall constitute one
agreement binding on the parties hereto, notwithstanding that both parties hereto have not signed
the same counterpart.
8. Governing Law. This Supplemental Indenture shall be governed by and construed
in accordance with the laws of the State of New York.
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9. Notice. Following the effectiveness of this Supplemental Indenture, the
Company will mail to the Holders notice describing the amendments to the Indenture set forth
herein; provided, however, that the parties hereto acknowledge that, in accordance
with Section 11.1 of the Indenture, failure to give notice to all the Holders, or any defect in the
notice, will not impair or affect the validity of the amendments to the Indenture set forth herein.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed as of the day and year first above written.
| PAR PHARMACEUTICAL COMPANIES, INC. | ||||||
| By: | /s/ Xxxxx Xxxxxxx | |||||
| Name: | Xxxxx Xxxxxxx | |||||
| Title: | President and Chief Executive Officer | |||||
| AMERICAN STOCK TRANSFER & TRUST COMPANY, as Trustee | ||||||
| By: | /s/ Xxxx Xxxxxx | |||||
| Name: | Xxxxxxx X. Xxxxxx | |||||
| Title: | Vice President | |||||
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