EXHIBIT 4.1
PROVIDIAN FINANCIAL CORPORATION
as Issuer
AND
BANK ONE TRUST COMPANY, N.A.
as Trustee
SECOND SUPPLEMENTAL INDENTURE
Dated as of February 15, 2001
Supplement to Indenture dated as of May 1, 1999
TABLE OF CONTENTS
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Page
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ARTICLE 1
Creation of the Notes
Section 1.01. Designation of Series........................................... 2
Section 1.02. Form of Notes................................................... 2
Section 1.03. Limit on Amount of Series....................................... 2
Section 1.04. Original Issue Discount; Calculation of Original Issue Discount. 2
Section 1.05. Certificate of Authentication................................... 3
Section 1.06. No Sinking Fund................................................. 3
Section 1.07. Issuance in Global Form......................................... 3
Section 1.08. Discharge of Indenture; Defeasance.............................. 3
Section 1.09. Other Terms of Notes............................................ 3
Section 1.10. Additional Definitions.......................................... 3
ARTICLE 2
Conversion of Notes
Section 2.01. Conversion Privilege............................................ 5
Section 2.02. Conversion Rate................................................. 7
Section 2.03. Exercise of Conversion Privilege................................ 7
Section 2.04. Fractions of Common Stock Shares................................ 8
Section 2.05. Adjustment of Conversion Rate................................... 9
Section 2.06. Notice of Adjustments of Conversion Rate........................ 15
Section 2.07. Notice of Certain Corporate Action.............................. 16
Section 2.08. Company to Reserve Common Stock................................. 17
Section 2.09. Taxes on Conversions............................................ 17
Section 2.10. Covenant as to Common Stock..................................... 17
Section 2.11. Cancellation of Converted Securities............................ 17
Section 2.12. Right of Holders to Convert..................................... 17
ARTICLE 3
Optional Tax Event Conversion to Semiannual Coupon Notes
Section 3.01. Optional Tax Event Conversion to Semiannual Coupon Notes........ 18
ARTICLE 4
Redemption of Notes
Section 4.01. Optional Redemption by the Company.............................. 19
Section 4.02. Applicability of Article........................................ 21
ARTICLE 5
Purchase of Notes by the Company at the Option of the Holders
Section 5.01. Purchase at Option of Holders on Specified Purchase Dates....... 21
Section 5.02. Purchase at Option of Holders Upon Change of Control............ 26
Section 5.03. Certain Article 5 Definitions................................... 29
ARTICLE 6
Events of Default
Section 6.01. Additional Events of Default.................................... 31
ARTICLE 7
Amendments, Supplements and Waivers
Section 7.01. With Consent of Holders......................................... 32
ARTICLE 8
Miscellaneous
Section 8.01. Application of Second Supplemental Indenture.................... 33
Section 8.02. Effective Date.................................................. 33
Section 8.03. Counterparts.................................................... 33
SECOND SUPPLEMENTAL INDENTURE, dated as of February 15, 2001 by and between
PROVIDIAN FINANCIAL CORPORATION, a Delaware corporation, as issuer (the
"Company"), and BANK ONE TRUST COMPANY, N.A., a national banking association
duly organized and existing under the laws of the United States of America, as
Trustee under the Indenture (as hereinafter defined) (the "Trustee").
RECITALS
WHEREAS, the Company and the Trustee, as successor in interest to The First
National Bank of Chicago, are parties to that certain Indenture dated as of May
1, 1999 (the "Indenture," all capitalized terms used and not otherwise defined
herein shall have the meanings set forth in the Indenture) providing for the
issuance by the Company of securities from time to time;
WHEREAS, the Company desires to issue a new series of Securities under the
Indenture, and has duly authorized the creation and issuance of such Securities
and the execution and delivery of this Second Supplemental Indenture to modify
the Indenture and provide certain additional provisions as hereinafter
described;
WHEREAS, the Company and the Trustee deem it advisable to enter into this
Second Supplemental Indenture for the purposes of establishing the terms of such
series of Securities;
WHEREAS, the execution and delivery of this Second Supplemental Indenture
has been authorized by a Board Resolution;
WHEREAS, concurrent with the execution hereof, the Company has delivered an
Officers' Certificate and has caused its counsel to deliver to the Trustee an
Opinion of Counsel; and
WHEREAS, all things necessary to make this Second Supplemental Indenture a
valid agreement of the Company in accordance with its terms have been done, and
the execution and delivery thereof have been in all respects duly authorized by
the parties hereto.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Notes (as hereinafter defined), as follows:
ARTICLE 1
Creation of the Notes
Section 1.01. Designation of Series. Pursuant to the terms hereof and
Section 301 of the Indenture, the Company hereby creates a series of Securities
designated as the "Zero Coupon Convertible Notes Due February 15, 2021" (the
"Notes"), which Notes shall be deemed "Securities" for all purposes under the
Indenture.
Section 1.02. Form of Notes. The definitive form of the Notes shall be
substantially in the form set forth in Exhibit A attached hereto, which is
incorporated herein and made part hereof. The Stated Maturity of the principal
amount at maturity of the Notes or, in the event of conversion of the Notes to
semiannual coupon Notes, the Restated Principal Amount, shall be February 15,
2021.
Section 1.03. Limit on Amount of Series. The Notes shall not exceed U.S.
$1,015,000,000 in aggregate principal amount at maturity, and may, upon the
execution and delivery of this Second Supplemental Indenture or from time to
time thereafter, be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Notes upon a Company Order and delivery of an Officers' Certificate and Opinion
of Counsel as contemplated by Section 303 of the Indenture.
Section 1.04. Original Issue Discount; Calculation of Original Issue
Discount. The Notes are Original Issue Discount Securities for United States
federal income tax purposes that are being offered at a substantial discount
from their principal amount at maturity. Except as described below, there will
not be periodic payments of interest on the Notes. The Notes will accrue
Original Issue Discount while they remain outstanding at a rate of 4.00% per
annum, calculated on a semiannual bond equivalent basis using a 360-day year
comprised of twelve 30-day months. The issue date for the Notes, and the
commencement date for the accrual of Original Issue Discount, will be February
15, 2001.
Maturity, conversion, purchase by the Company at the option of the Holder
or redemption of a Note will cause Original Issue Discount and interest, if any,
to cease to accrue on such Note. The Company can not reissue a Note that has
matured or been converted, purchased by the Company at the option of the Holder,
redeemed or otherwise cancelled, except for registration of transfer, exchange
or replacement of such Note.
The Company shall file with the Internal Revenue Service, the Trustee and
non-corporate U.S. Holders promptly after the end of each calendar year (i) a
written notice specifying the amount of Original Issue Discount (including daily
rates and accrual periods) accrued on outstanding Notes as of the end of such
year
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and (ii) such other specific information relating to such Original Issue
Discount as may then be required to be reported under the Internal Revenue Code
of 1986, as amended from time to time.
Section 1.05. Certificate of Authentication. The Trustee's certificate of
authentication to be borne on the Notes shall be substantially as provided in
the Form of Note attached hereto as Exhibit A.
Section 1.06. No Sinking Fund. No sinking fund will be provided with
respect to the Notes.
Section 1.07. Issuance in Global Form. The Notes shall be issued as one or
more Global Securities, representing the aggregate principal amount at maturity
of the Notes, and shall be deposited with the Trustee as custodian for the
Depositary. The Notes shall be registered in the name of Cede & Co., or other
nominee of the Depositary.
Section 1.08. Discharge of Indenture; Defeasance. The Notes shall not be
subject to the provisions of Article XIII of the Indenture.
Section 1.09. Other Terms of Notes.
The other terms of the Notes shall be as expressly set forth in Articles 2,
3, 4, 5, 6 and 7 hereof and Exhibit A hereto.
The words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Second Supplemental Indenture as a whole and not to any
particular Article, Section or other subdivision.
Section 1.10. Additional Definitions.
For purposes of this Second Supplemental Indenture, the following terms
shall have the following definitions:
"Accreted Conversion Price" as of any day means, per $1,000 principal
amount at maturity, the sum of the Issue Price plus accrued Original Issue
Discount to the date of determination, with such sum divided by the Conversion
Rate. If the Notes have been converted to semiannual coupon Notes following a
Tax Event, then Accreted Conversion Price shall mean the sum of the Issue Price
plus such Original Issue Discount as would have accrued to the date of
determination if the Notes had not been converted to semiannual coupon Notes,
with such sum divided by the Conversion Rate.
"Common Stock" means the Common Stock of the Company, par value $0.01 per
share
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"Conversion Rate" shall have the meaning as defined in Section 2.02 hereof.
"Issue Date" of any Note means the date on which the Note was originally
issued or deemed issued as set forth on the face of the Note.
"Issue Price" of any Note means, in connection with the original issuance
of the Note, the initial issue price per $1,000 principal amount at maturity at
which the Note is sold.
"Market Price" means the average of the Sale Prices of the Common Stock for
the five Trading Day period ending on the third Business Day prior to the
applicable Purchase Date or Change of Control Purchase Date (if the third
Business Day prior to the applicable Purchase Date or Change of Control Purchase
Date is a Trading Day, or if not, then on the last Trading Day prior to such
third Business Day), appropriately adjusted to take into account the occurrence,
during the period commencing on the first of such Trading Days during such five
Trading Day period and ending on such Purchase Date or Change of Control
Purchase Date (or other date in question, for the purpose of adjusting the
Conversion Rate), of any event described in Section 2.05(a), (b) or (c);
subject, however, to the conditions set forth in Sections 2.05(d) and (e).
"Option Exercise Date" is the date the Company exercises its option upon
the occurrence of a Tax Event to convert the Note to a debt security which
offers a semiannual coupon payment.
"Original Issue Discount" of any Note means the difference between the
Issue Price and the principal amount at maturity of the Note as set forth on the
face of the Note.
"Principal Amount at Maturity" or "principal amount at maturity" of a Note
means the principal amount at maturity as set forth on the face of the Note.
"Sale Price" of the Common Stock on any date means the closing per share
sale price (or, if no closing sale price is reported, the average of the bid and
ask prices or, if more than one in either case, the average of the average bid
and average ask prices) on such date as reported in the composite transactions
for the principal United States securities exchange on which the Common Stock is
traded or, if the Common Stock is not listed on a United States national or
regional securities exchange, as reported by the National Association of
Securities Dealers Automated Quotation System or the National Quotation Bureau
Incorporated. To the extent that the trading of Common Stock regular way
continues past 4:00 pm New York City time, the closing price of the Common Stock
shall be deemed to refer to the price at the time that is then customary for
determining the Trading
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Day's index levels for stocks traded on such national securities exchange or
automated quotation system.
"Tax Event" means that the Company shall have received an opinion from
independent tax counsel experienced in such matters to the effect that as a
result of: (1) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein or (2) any
amendment to, or change in, an interpretation or application of such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority, in each case which amendment or change is enacted, promulgated,
issued or announced or which interpretation is issued or announced or which
action is taken, on or after February 8, 2001, there is more than an
insubstantial risk that interest (including Original Issue Discount, if any)
payable on the Notes either: (a) would not be deductible on a current accrual
basis or (b) would not be deductible under any other method, in either case in
whole or in part, by the Company (by reason of deferral, disallowance, or
otherwise) for United States federal income tax purposes.
"Trading Day" means a day on which the security, the closing price of which
is being determined, (a) is not suspended from trading on any national or
regional securities exchange or association or over-the-counter-market at the
close of business and (b) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of such security.
ARTICLE 2
Conversion of Notes
Section 2.01. Conversion Privilege. Subject to and upon compliance with
the provisions of this Article 2, at the option of the Holder thereof, any Note
or any portion of the principal amount at maturity thereof which is $1,000 or an
integral multiple of $1,000, and which has not previously been redeemed pursuant
to Article 4 hereof or purchased pursuant to Article 5 hereof, may be converted
into fully paid and nonassessable shares of Common Stock at any time following
the issuance of the Notes and prior to the close of business on February 15,
2021.
(a) Except as provided for in Section 2.01(b) below, if the Sale Price on
at least 20 Trading Days of the 30 Trading Days prior to the conversion is (i)
less than 100% of the Accreted Conversion Price, then the Holder electing to
exercise its conversion right on that date will receive, in lieu of Common
Stock, cash in an amount, per $1,000 principal amount at maturity of the Notes
surrendered for conversion, equal to 95% of the product of the Conversion Rate
and such Sale Price on the Trading Day immediately preceding the conversion
date, (ii) greater than or equal to 100% of the
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Accreted Conversion Price but less than 110% of the Accreted Conversion Price,
the Holder will receive, in lieu of Common Stock, cash in an amount, per $1,000
principal amount at maturity of the Notes surrendered for conversion, equal to
the sum of the Issue Price of the Notes plus accrued Original Issue Discount to
the date of conversion, or (iii) greater than or equal to 110% of the Accreted
Conversion Price, the Holder will receive, per $1,000 principal amount at
maturity of the Notes surrendered for conversion, a number of shares of Common
Stock equal to the then applicable Conversion Rate. For the purposes of this
Section 2.01(a), the Sale Price during the 30 Trading Days prior to the
conversion shall be appropriately adjusted in a manner determined by the Board
of Directors (which determination shall be conclusive) to take into account the
occurrence of any event described in Section 2.05(a), (b) or (c), subject to the
conditions set forth in Sections 2.05(d) and (e).
(b) The provisions of Section 2.01(a) shall not apply in the following
instances:
(i) if the Notes being surrendered for conversion have been
previously called for redemption but not yet redeemed by the Company
pursuant to Section 4.01 hereof, then the Holder will receive, per
$1,000 principal amount at maturity of the Notes surrendered for
conversion, a number of shares of Common Stock equal to the then
applicable Conversion Rate.
(ii) if the Company is party to a consolidation, merger or binding
share exchange pursuant to which the Company's Common Stock will be
converted into cash, securities or other property, then:
(A) during the period beginning 15 days prior to the
anticipated effective date of such transaction and ending
immediately prior to the effective time of such transaction, a
Holder will receive, per $1,000 principal amount at maturity of
the Notes surrendered for conversion, a number of shares of
Common Stock equal to the then applicable Conversion Rate; or
(B) during the period beginning at the effective time of
such transaction and ending 15 days after the actual effective
date of such transaction, a Holder surrendering Notes for
conversion will receive the kind and amount of cash, securities
or other property that such Holder would have received
immediately prior to such transaction, if such Holder had
converted such Notes immediately prior to such transaction.
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(iii) if an Event of Default (other than a default in a cash payment
upon conversion of the Notes) has occurred and is continuing, the
Company shall not pay cash upon conversion of any Note (other than
cash in lieu of fractional shares). In such instance, a Holder will
receive, per $1,000 principal amount at maturity of any Notes
surrendered for conversion, a number of shares of Common Stock equal
to the then applicable Conversion Rate.
(iv) for calculation purposes as required by certain provisions of
this Second Supplemental Indenture, the number of shares of Common
Stock or other value a Holder would have received if such Holder had
converted Notes as of that date, per $1,000 principal amount at
maturity of such Holder's Notes being considered, shall be equal to
the Conversion Rate applicable on such date.
A Note for which a Holder has delivered a Purchase Notice or a Change of Control
Purchase Notice pursuant to Section 5.01 or 5.02 hereof may be converted only if
such Purchase Notice or a Change of Control Purchase Notice is withdrawn in
accordance with the terms of such Section, unless the Company defaults in the
payment of the applicable Purchase Price or Change of Control Purchase Price.
If the Company calls a Note for redemption, a Holder may convert a Note into
Common Stock only until the close of business on the redemption date, unless the
Company defaults on payment of the Redemption Price.
Section 2.02. Conversion Rate. The rate at which shares of Common Stock
shall be delivered upon conversion (the "Conversion Rate") shall be initially
6.2240 shares of Common Stock for each $1,000 principal amount at maturity of
Notes. The Conversion Rate shall be adjusted in certain instances as provided
in Section 2.05 hereof. However, the Conversion Rate will not be adjusted for
accrued Original Issue Discount. All calculations under this Article 2 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.
Section 2.03. Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the Holder of any Note to be converted shall surrender
such Note, duly endorsed or assigned to the Company or in blank, at the
Corporate Trust Office of the Trustee, located at 00 Xxxx Xxxxxx, 0xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attn: Corporate Trust Administration, accompanied by a
duly signed and completed written notice to the Company at the Corporate Trust
Office that the Holder elects to convert such Note. In the case of Notes which
have been converted to semiannual coupon Notes pursuant to Article 3 hereof,
Holders of Notes surrendered for conversion during the period from the close of
business on
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any Record Date immediately preceding any Interest Payment Date to the opening
of business on such Interest Payment Date shall (except in the case of Notes or
portions thereof which have been called for redemption or in respect of which a
Purchase Notice or Change of Control Purchase Notice delivered by the Holder has
not been withdrawn, the conversion rights of which would terminate during the
period between such Record Date and the close of business on such Interest
Payment Date) be entitled to receive the interest payable on such Interest
Payment Date on the Restated Principal Amount of Notes being surrendered for
conversion. Such Notes which have been converted to semiannual coupon Notes that
are surrendered for conversion during the period from the close of business on
any Record Date immediately preceding any Interest Payment Date to the opening
of business on such Interest Payment Date shall (except in the case of Notes or
portions thereof which have been called for redemption or in respect of which a
Purchase Notice or Change of Control Purchase Notice delivered by the Holder has
not been withdrawn, the conversion rights of which would terminate during the
period between such Record Date and the close of business on such Interest
Payment Date) be accompanied by payment in immediately available funds or other
funds acceptable to the Company of an amount equal to the interest payable on
such Interest Payment Date on the Restated Principal Amount of Notes being
surrendered for conversion. On conversion, Original Issue Discount accrued on
the Notes surrendered for conversion from the Issue Date through the date of
conversion is not canceled, extinguished or forfeited, but rather shall be
deemed to be paid in full to the Holder through receipt of the Common Stock
issued upon conversion. Except as set forth above, no payment or adjustment
shall be made upon any conversion on account of any interest accrued on the
Notes surrendered for conversion from the Interest Payment Date preceding the
day of conversion, or on account of any dividends on the Common Stock issued
upon conversion. In addition, Holders shall not be entitled to receive any
dividends payable to holders of Common Stock as of any record date before the
close of business on the conversion date. Notes shall be deemed to have been
converted immediately prior to the close of business on the day of surrender of
such Notes for conversion in accordance with the foregoing provisions, and at
such time the rights of the Holders of such Notes as Holders shall cease, and
the Person or Persons entitled to receive the Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock at such time. As promptly as practicable on or after the
conversion date, the Company shall issue and shall deliver to the Trustee at its
Corporate Trust Office a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion, together with payment in lieu
of any fraction of a share thereof, as provided in Section 2.04 hereof, and the
Trustee shall forward such certificate or certificates at the addresses set
forth in the written notices sent to the Company by the Holders electing to
convert their Notes.
Section 2.04. Fractions of Common Stock Shares. No fractional shares of
Common Stock shall be issued upon conversion of the Notes. If more than one
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Note shall be surrendered for conversion at one time by the same Holder, the
number of full shares which shall be issuable upon conversion thereof shall be
computed on the basis of the aggregate principal amount at maturity of the Notes
so surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Note or Notes, the Company shall
pay a cash adjustment in respect of such fraction in an amount equal to the same
fraction of the Sale Price on the Trading Day immediately preceding the date of
conversion.
Section 2.05. Adjustment of Conversion Rate.
For the purposes of this Section 2.05, "Time of Determination" means the
time and date of the earlier of (i) the determination of stockholders entitled
to receive rights, warrants or options or a distribution, in each case, to which
Section 2.05(b) or 2.05(c) applies and (ii) the time ("Ex-Dividend Time")
immediately prior to the commencement of "ex-dividend" trading for such rights,
warrants or options or distribution on the New York Stock Exchange or such other
national or regional exchange or market on which the Common Stock is then listed
or quoted.
"Average Sale Price" means the average of the Sale Prices of the Common
Stock for the shorter of:
(i) 30 consecutive Trading Days ending on the last full Trading Day prior
to the Time of Determination with respect to the rights, warrants or options or
distribution in respect of which the Average Sale Price is being calculated, or
(ii) the period (x) commencing on the date next succeeding the first
public announcement of (a) the issuance of rights, warrants or options or (b)
the distribution, in each case, in respect of which the Average Sale Price is
being calculated and (y) proceeding through the last full Trading Day prior to
the Time of Determination with respect to the rights, warrants or options or
distribution in respect of which the Average Sale Price is being calculated
(excluding days within such period, if any, which are not Trading Days), or
(iii) the period, if any, (x) commencing on the date next succeeding the
Ex-Dividend Time with respect to the next preceding (a) issuance of rights,
warrants or options or (b) distribution, in each case, for which an adjustment
is required by the provisions of Section 2.05(a)(iv), 2.05(b) or 2.05(c) and (y)
proceeding through the last full Trading Day prior to the Time of Determination
with respect to the rights, warrants or options or distribution in respect of
which the Average Sale Price is being calculated (excluding days within such
period, if any, which are not Trading Days).
In the event that the Ex-Dividend Time (or in the case of a subdivision,
combination or reclassification, the effective date with respect thereto) with
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respect to a dividend, subdivision, combination or reclassification to which
Section 2.05(a)(i), (ii), (iii) or (v) applies occurs during the period
applicable for calculating the "Average Sale Price" pursuant to the definition
in the preceding paragraph, the "Average Sale Price" shall be calculated for
such period in a manner determined by the Board of Directors (whose
determination shall be conclusive) to reflect the impact of such dividend,
subdivision, combination or reclassification on the Sale Price of the Common
Stock during such period.
(a) Adjustment for Change in Capital Stock. If, after the Issue Date of
the Notes, the Company:
(i) pays a dividend or makes a distribution on its Common Stock in
Common Stock;
(ii) subdivides its outstanding Common Stock into a greater number
of shares;
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares;
(iv) pays a dividend or makes a distribution on its Common Stock in
shares of its capital stock (other than Common Stock or
rights, warrants or options for its capital stock); or
(v) issues by reclassification of its Common Stock any shares of
its capital stock (other than rights, warrants or options for
its capital stock);
then the conversion privilege and the Conversion Rate in effect immediately
prior to such action shall be adjusted so that the Holder of a Note thereafter
converted may receive the number of shares of capital stock of the Company which
such Holder would have owned immediately following such action if such Holder
had converted the Note immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Note upon conversion of such Note may
receive shares of two or more classes of capital stock of the Company, the
Conversion Rate shall thereafter be subject to adjustment upon the occurrence of
an action taken with respect to any such class of capital stock as is
contemplated by this Article 2 with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article 2, and for such
purposes references to
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Common Stock herein shall thereafter be deemed to refer to such classes of
capital stock.
(b) Adjustment for Rights Issue. If after the Issue Date of the Notes,
the Company distributes any rights, warrants or options to all holders of its
Common Stock entitling them, for a period expiring within 60 days after the
record date for such distribution, to purchase Common Stock at a price per share
less than the Sale Price as of the Time of Determination, the Conversion Rate
shall be adjusted in accordance with the formula:
R' = R x (O + N)
--------------
(O + (N x P)/M)
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
O = the number of shares of Common Stock outstanding on the record
date for the distribution to which this Section 2.05(b) is being
applied.
N = the number of additional shares of Common Stock offered
pursuant to the distribution.
P = the offering price per share of the additional shares.
M = the Average Sale Price, minus, in the case of (i) a
distribution to which Section 2.05(a)(iv) applies or (ii) a
distribution to which Section 2.05(c) applies, for which, in each
case, (x) the record date shall occur on or before the record date for
the distribution to which this Section 2.05(b) applies and (y) the
ex-dividend time shall occur on or after the date of the Time of
Determination for the distribution to which this Section 2.05(b)
applies, the fair market value (on the record date for the
distribution to which this Section 2.05(b) applies) of the:
(1) capital stock of the Company distributed in respect of each share
of Common Stock in such Section 2.05(a)(iv) distribution, and
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(2) assets of the Company or debt securities or any rights, warrants
or options to purchase securities of the Company distributed in
respect of each share of Common Stock in such Section 2.05(c)
distribution.
The Board of Directors shall reasonably determine fair market values for
the purposes of this Section 2.05(b) (and such determination shall be
conclusive), except as Section 2.05(c) otherwise provides in the case of a spin-
off.
The adjustment shall become effective immediately after the record date for
the determination of shareholders entitled to receive the rights, warrants or
options to which this Section 2.05(b) applies. If all of the Common Stock
subject to such rights, warrants or options have not been issued when such
rights, warrants or options expire, then the Conversion Rate shall promptly be
readjusted to the Conversion Rate which would then be in effect had the
adjustment upon the issuance of such rights, warrants or options been made on
the basis of the actual number of shares of Common Stock issued upon the
exercise of such rights, warrants or options.
No adjustment shall be made under this Section 2.05(b) if the application
of the formula stated above in this Section 2.05(b) would result in a value of
R' that is equal to or less than the value of R.
(c) Adjustments for Other Distributions. If, after the Issue Date of the
Notes, the Company distributes to all holders of its Common Stock any of its
assets (including capital stock of any of its subsidiaries), or debt securities
or any rights, warrants or options to purchase securities of the Company
(including securities or cash, but excluding (x) distributions of capital stock
referred to in Section 2.05(a) and distributions of rights, warrants or options
referred to in Section 2.05(b) and (y) cash dividends or other cash
distributions that are paid out of consolidated current net earnings or earnings
retained in the business as shown on the books of the Company unless such cash
dividends or other cash distributions are Extraordinary Cash Dividends) the
Conversion Rate shall be adjusted, subject to the provisions of the last
paragraph of this Section 2.05(c), in accordance with the formula:
R' = R x M
------
M-F
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
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M = the Average Sale Price, minus, in the case of a distribution to
which Section 2.05(a)(iv) applies, for which (i) the record date shall
occur on or before the record date for the distribution to which this
Section 2.05(c) applies and (ii) the ex-dividend time shall occur on
or after the date of the time of determination for the distribution to
which this Section 2.05(c) applies, the fair market value (on the
record date for the distribution to which this Section 2.05(c)
applies) of any capital stock of the Company distributed in respect of
each share of Common Stock on a per share basis in such Section
2.05(a)(iv) distribution.
F = the fair market value (on the record date for the distribution
to which this Section 2.05(c) applies) of the assets, securities,
rights, warrants or options to be distributed in respect of each share
of Common Stock on a per share basis in the distribution to which this
Section 2.05(c) is being applied (including, in the case of cash
dividends or other cash distributions giving rise to an adjustment,
all such cash distributed concurrently).
The Board of Directors shall reasonably determine fair market values for
the purposes of this Section 2.05(c), (and such determination shall be
conclusive), except that in respect of a dividend or other distribution of
shares of capital stock of any class or series, or similar equity interests, of
or relating to a subsidiary or other business unit, division or operation of the
Company (a "Spin-off"), the fair market value of the securities to be
distributed shall equal the average of the Sale Prices of those securities for
the five consecutive Trading Days commencing on and including the sixth day of
trading of those securities after the effectiveness of the Spin-off. In the
event, however, that a bona fide underwritten initial public offering to the
public generally of the securities in the Spin-off occurs simultaneously with
the Spin-off, the fair market value of the securities distributed in the Spin-
off shall mean the initial public offering price of such securities.
The adjustment shall become effective immediately after the record date for
the determination of shareholders entitled to receive the distribution to which
this Section 2.05(c) applies, except that an adjustment related to a Spin-off
shall become effective at the earlier to occur of (i) six Trading Days after the
effective date of the Spin-off and (ii) the initial public offering of the
securities distributed in the Spin-off. If any Holder exercises its conversion
right with respect to its Notes during the six Trading Days after the effective
date of the Spin-off not involving a simultaneous bona fide underwritten initial
public offering, the Company shall issue Common Stock to such Holder at the end
of such six day period based on the Conversion Rate in existence on the date of
exercise or the Conversion Rate in existence at the end of the six Trading Day
period, whichever results in the Holder receiving more shares of Common Stock
upon conversion.
13
For purposes of this Section 2.05(c), the term "Extraordinary Cash
Dividend" shall mean any cash dividend with respect to the Common Stock the
amount of which, together with the aggregate amount of cash dividends on the
Common Stock to be aggregated with such cash dividend in accordance with the
provisions of this paragraph, equals or exceeds the threshold percentage set
forth in the following paragraph. For purposes of the following paragraph, the
"Measurement Period" with respect to a cash dividend on the Common Stock shall
mean the 365 consecutive day period (or a 366 consecutive day period for those
years that include February 29) ending on the date prior to the Ex-Dividend Time
with respect to such cash dividend, and the "Relevant Cash Dividends" with
respect to a cash dividend on the Common Stock shall mean the cash dividends on
the Common Stock with Ex-Dividend Times occurring in the Measurement Period.
If, upon the date prior to the Ex-Dividend Time with respect to a cash
dividend on the Common Stock, the aggregate amount of such cash dividend
together with the amounts of all Relevant Cash Dividends exceeds on a per share
basis 10% of the Sale Price of the Common Stock on the last Trading Day
preceding the date of declaration by the Board of Directors of the cash dividend
with respect to which this provision is being applied, then such cash dividend
together with all Relevant Cash Dividends, shall be deemed to be an
Extraordinary Cash Dividend and for purposes of applying the formula set forth
above in this Section 2.05(c), the value of "F" shall be equal to (y) the
aggregate amount of such cash dividend together with the amount of all Relevant
Cash Dividends, minus (z) the aggregate amount of all Relevant Cash Dividends
for which a prior adjustment in the Conversion Rate was previously made under
this Section 2.05(c).
In making the determinations required by the preceding paragraph, the
amount of cash dividends paid on a per share basis and the amount of any
Relevant Cash Dividends specified in the preceding paragraph, shall be
appropriately adjusted to reflect the occurrence during such period of any event
described in Section 2.05(a).
(d) No adjustment in the Conversion Rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(d)) would require an increase or decrease of at least 1.0% in such rate;
provided, however, that any adjustments which by reason of this paragraph (d)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment.
(e) No adjustment need be made for a transaction referred to in Section
2.05(a), (b) or (c) if Holders are to participate in the transaction without
conversion on a basis and with notice that the Board of Directors determines to
be fair and appropriate in light of the basis and notice on which holders of
Common
14
Stock participate in the transaction and the Holder is not economically harmed
by such transaction and the failure to make an adjustment. Such participation by
Holders may include participation in the transaction upon conversion of their
Note by the Holder provided that an adjustment shall be made at such time as the
Holder is not entitled to participate on the basis described in the prior
sentence. No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan in the ordinary course of business for reinvestment
of dividends or interest.
No adjustment need be made for a change in the par value or no par value of
the Common Stock.
To the extent the Notes become convertible pursuant to this Article 2 in
whole or in part into cash, no adjustment need be made thereafter as to the
cash. Interest will not accrue on the cash.
(f) The Company may make such increases in the Conversion Rate, in
addition to those required by this Section 2.05, as it considers to be advisable
in order to avoid or diminish any income tax to any holders of shares of Common
Stock resulting from any dividend or distribution of stock or issuance of rights
or warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes or for any other reasons. The Company shall have the
power to resolve any ambiguity or correct any error in this paragraph (f) and
its decisions in so doing shall be final and conclusive.
(g) To the extent permitted by applicable law, the Company from time to
time may increase the Conversion Rate by any amount for any period of time if
the period is at least 20 days, the increase is irrevocable during such period,
and the Board of Directors shall have made a determination that such increase
would be in the best interests of the Company, which determination shall be
conclusive. Whenever the Conversion Rate is increased pursuant to the preceding
sentence, the Company shall give notice of the increase to the Holders in the
manner provided for in Section 106 of the Indenture at least 15 days prior to
the date the increased Conversion Rate takes effect, and such notice shall state
the increased Conversion Rate and the period during which it will be in effect.
Section 2.6. Notice of Adjustments of Conversion Rate. Whenever the
Conversion Rate is adjusted as herein provided: (a) the Company shall compute
the adjusted Conversion Rate in accordance with Section 2.05 hereof and shall
prepare an Officers' Certificate, one of the signatories of which shall be the
Treasurer or Chief Financial Officer of the Company, setting forth the adjusted
Conversion Rate (certified by the Company's independent public accountants or
other certified public accountant) and showing in reasonable detail the facts
upon which such adjustment is based, and such certificate shall forthwith be
filed with the Trustee at each office or agency maintained for the purpose of
conversion of
15
Securities pursuant to Section 2.03 hereof; and (b) a notice stating that the
Conversion Rate has been adjusted and setting forth the adjusted Conversion Rate
shall forthwith be required, and as soon as practicable after it is required,
such notice shall be given by the Company to the Trustee and all Holders in the
manner provided for in Sections 105 and 106 of the Indenture. The Trustee shall
not be deemed to have notice of any change in the Conversion Rate unless and
until it receives the Officers' Certificate provided for in the foregoing clause
(a) setting forth such change.
In the event the independent public accountant, called upon to certify the
Officers' Certificate containing the adjusted Conversion Rate, requires the
Trustee to agree to the calculations performed in deriving the adjusted
Conversion Rate, the Trustee shall so agree only if directed in writing by the
Company to do so; it being understood and agreed that the Trustee will deliver
such letter of agreement in conclusive reliance upon the direction of the
Company and the Trustee makes no independent inquiry as to, and shall have no
obligation or liability in respect of, the validity or correctness of such
calculations.
Section 2.07. Notice of Certain Corporate Action. In case: (a) the Company
shall declare a dividend or make any other distribution that would require any
adjustment pursuant to Section 2.05 hereof; or (b) the Company shall authorize
the granting to the holders of its Common Stock of rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of any
other rights; or (c) of any reclassification of the Common Stock of the Company,
or of any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or a consolidation,
merger or share exchange described in Section 2.01(b)(ii), then the Company
shall cause to be filed at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 2.03 hereof, and shall cause to be
mailed to all Holders at their last addresses as they shall appear in the
register for the Securities, at least 20 days prior to the applicable record or
effective date hereinafter specified, a notice (which notice shall also be sent
by release to Reuters Economic Services and Bloomberg Business News) stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distribution, rights or warrants are to be determined, or (y) the date
on which such reclassification, consolidation, merger or share exchange is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger or share exchange. Neither the failure
to give such notice nor any defect therein shall affect the legality or validity
of the proceedings described in clauses (a) through (c) of this Section 2.07. If
at the time the Trustee shall not be the conversion agent, a copy of such notice
shall also forthwith be filed by the
16
Company with the Trustee. The Company shall cause to be filed at the Corporate
Trust Office and each office or agency maintained for the purpose of conversion
of Notes pursuant to Section 305 of the Indenture, and shall cause to be
provided to all Holders in accordance with Section 106 of the Indenture, notice
of any tender offer by the Company or any Subsidiary for all or any portion of
the Common Stock at or about the time that such notice of tender offer is
provided to the public generally.
Section 2.08. Company to Reserve Common Stock. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of Notes, the full number of shares of Common Stock then issuable
upon the conversion of all outstanding Notes.
Section 2.09. Taxes on Conversions. The Company will pay any and all taxes
that may be payable in respect of the issue or delivery of shares of Common
Stock on conversion of Notes pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that of
the Holder of the Note or Notes to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.
Section 2.10. Covenant as to Common Stock. The Company covenants that all
shares of Common Stock which may be issued upon conversion of Notes will upon
issue be fully paid and nonassessable and, except as provided in Section 2.09
hereof, the Company will pay all taxes, liens and charges with respect to the
issue thereof.
The Company will endeavor promptly to comply with all Federal and state
securities laws regulating the issuance and delivery of shares of Common Stock
upon conversion of Notes, if any, and will use its best efforts to list or cause
to have quoted all such shares of Common Stock on each United States national
securities exchange or over-the-counter or other domestic market on which the
Common Stock is then listed or quoted.
Section 2.11. Cancellation of Converted Securities. All Notes delivered
for conversion shall be delivered to the Trustee to be canceled by or at the
direction of the Trustee, which shall dispose of the same as provided in Section
309 of the Indenture.
Section 2.12. Right of Holders to Convert. The limitations set forth in
Section 507 of the Indenture shall not apply to the right of a Holder to bring a
suit
17
for the enforcement of such Holder's right to convert Notes pursuant to this
Article 2.
ARTICLE 3
Optional Tax Event Conversion to Semiannual Coupon Notes
Section 3.01. Optional Tax Event Conversion to Semiannual Coupon Notes.
From and after (i) the date of the occurrence of a Tax Event (the "Tax Event
Date") and (ii) the date the Company exercises such option, whichever is later
(the "Option Exercise Date"), at the option of the Company, regular cash
interest, in lieu of future Original Issue Discount, shall accrue on the Notes
at the rate of 4.00% per annum on a restated principal amount per $1,000
original Principal Amount at Maturity of the Notes (the "Restated Principal
Amount") equal to the Issue Price plus Original Issue Discount accrued to the
Option Exercise Date and shall be payable on each February 15 and August 15 of
each year prior to Maturity of the Notes (each an "Interest Payment Date") to
Holders of record at the close of business on the February 1 or August 1 (each a
"Regular Record Date") immediately preceding such Interest Payment Date.
Interest will be computed on the basis of a 360-day year comprised of twelve 30-
day months and will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from the Option Exercise Date. Within 15
days of the occurrence of a Tax Event, the Company shall transmit a written
notice of such Tax Event by facsimile and first-class mail to the Trustee and
within 15 days of the Option Exercise Date the Company shall transmit a written
notice of its election hereunder by facsimile and first-class mail to the
Trustee and by first class mail to the Holders of the Notes. From and after the
Option Exercise Date, (i) the Company shall be obligated to pay at Maturity, in
lieu of the Principal Amount at Maturity of a Note, the Restated Principal
Amount thereof and (ii) except with respect to the definition of Accreted
Conversion Price, "Issue Price and accrued Original Issue Discount," "Issue
Price plus Original Issue Discount" or similar words, as used herein, shall mean
Restated Principal Amount plus accrued and unpaid interest with respect to any
Note. Notes authenticated and delivered after the Option Exercise Date may, and
shall if required by the Trustee, bear a notation in a form approved by the
Trustee as to the conversion of the Notes to semiannual coupon Notes.
18
ARTICLE 4
Redemption of Notes
Pursuant to Section 301(7) of the Indenture, so long as any of the Notes
are outstanding, the following provisions shall be applicable to the Notes:
Section 4.01. Optional Redemption by the Company. At any time on or after
February 15, 2006, the Notes may be redeemed at the option of the Company for
cash, in whole or in part, upon notice as set forth in Section 1104 of the
Indenture, at the Issue Price per Note plus accrued Original Issue Discount to
the date of redemption (the "Redemption Price") at a rate of 4.00% per annum,
calculated on a semiannual bond equivalent basis using a 360-day year comprised
of twelve 30-day months. The date of any such redemption is known as the
"Redemption Date".
The table below shows the Redemption Prices for the Notes at February 15,
2006, at each following February 15 prior to Stated Maturity and at Stated
Maturity. The prices reflect accrued Original Issue Discount calculated through
each such date. The Redemption Price of a Note redeemed between the dates
indicated in the table would include an additional amount reflecting the
additional Original Issue Discount accrued since the next preceding date in the
table. Notes called for redemption may be surrendered for conversion from the
date of notice of the redemption until the close of business on the redemption
date.
19
(1) (2) (3)
Note Accrued Original Redemption Price
Issue Price Issue Discount (1) + (2)
Redemption Date
---------------
February 15:
2006 $452.89 $ 99.18 $ 552.07
2007 452.89 121.48 574.37
2008 452.89 144.69 597.58
2009 452.89 168.83 621.72
2010 452.89 193.95 646.84
2011 452.89 220.08 672.97
2012 452.89 247.27 700.16
2013 452.89 275.56 728.45
2014 452.89 304.99 757.88
2015 452.89 335.60 788.49
2016 452.89 367.46 820.35
2017 452.89 400.60 853.49
2018 452.89 435.08 887.97
2019 452.89 470.96 923.85
2020 452.89 508.28 961.17
At Stated Maturity 452.89 547.11 $1,000.00
If converted to a semiannual coupon Note following the occurrence of a
Tax Event, a Note will be redeemable at the Restated Principal Amount plus
accrued and unpaid interest from the date of such conversion through the
applicable Redemption Date.
If the Company redeems fewer than all of the outstanding Notes, the
Trustee will select the Notes to be redeemed in accordance with the provisions
of Section 1103 of the Indenture.
If the Trustee selects a portion of a Holder's Notes for partial
redemption and the Holder converts a portion of the same Notes, the converted
portion will be deemed to be from the portion selected for redemption. The
Notes will be redeemed in multiple integrals of $1,000 principal amount at
maturity.
In no event will any Note be redeemable before February 15, 2006.
20
Section 4.02. Applicability of Article. Redemption of the Notes at the
election of the Company or otherwise, as permitted or required by any provision
of the Notes or this Second Supplemental Indenture, shall be made in accordance
with such provision, Article XI of the Indenture and this Article 4.
ARTICLE 5
Purchase of Notes by the Company at the Option of the Holders
So long as any of the Notes are outstanding, the following provisions shall
be applicable to the Notes:
Section 5.01. Purchase at Option of Holders on Specified Purchase Dates.
(a) At the option of the Holder thereof, Notes shall be purchased by
the Company on February 15, 2006, 2011 and 2016 (each, a "Purchase Date") at the
purchase prices per $1,000 principal amount at maturity of Notes set forth below
(each, a "Purchase Price"):
Purchase Date Purchase Price
------------- --------------
February 15, 2006 $552.07
February 15, 2011 $672.97
February 15, 2016 $820.35
If prior to a Purchase Date, the Notes have been converted to semiannual
coupon Notes following the occurrence of a Tax Event, the Purchase Price on such
Purchase Date will be equal to the Restated Principal Amount plus accrued and
unpaid interest from the Option Exercise Date to the applicable Purchase Date.
Purchases of Notes hereunder shall be made upon:
(1) delivery to the Paying Agent by the Holder of a written notice
of purchase (a "Purchase Notice") at any time from the opening of business
on the date that is 20 Business Days prior to the applicable Purchase Date
until the close of business on the applicable Purchase Date; and
(2) delivery of the Notes to be purchased to the Paying Agent prior
to, on or after the Purchase Date (together with all necessary
21
endorsements) at the offices of the Paying Agent, such delivery being a
condition to receipt by the Holder of the Purchase Price therefor;
provided, however, that such Purchase Price shall be so paid only if the
Notes so delivered to the Paying Agent shall conform in all respects to the
description thereof in the related Purchase Notice, as determined by the
Company.
(b) In connection with any purchase of Notes, the Company shall mail a
written notice to each Holder at their addresses shown in the Security Register
of the Registrar (and to beneficial owners as required by applicable law) on a
date not less than 20 Business Days prior to each Purchase Date setting forth
the following:
(i) whether the Company will pay the Purchase Price of Notes in
cash or Common Stock or any combination thereof, specifying
the percentages of each;
(ii) if the Company elects to pay in Common Stock, the method of
calculating the Market Price of the Common Stock; and
(iii) the procedures that Holders must follow to require the Company
to purchase their Notes.
(c) The Purchase Notice given by each Holder electing to have the
Company purchase some or all of the Notes held by such Holder must state:
(i) the certificate numbers of the Holder's Notes to be delivered
for purchase;
(ii) the portion of the principal amount at maturity of Notes to be
purchased, which must be $1,000 or an integral multiple of
$1,000;
(iii) that the Notes are to be purchased by the Company pursuant
to the terms and conditions specified in Article 5; and
(iv) in the event the Company elects, pursuant to the notice
referred to in Section 5.01(b) to pay the Purchase Price in
Common Stock, in whole or in part, but the Purchase Price is
ultimately to be paid to the Holder entirely in cash because
any of the conditions to payment of the Purchase Price or
portion of the Purchase Price in Common Stock is not satisfied
prior to the close of business on the Purchase Date, as
described below, whether the Holder elects:
22
(A) to withdraw the Purchase Notice as to some
or all of the Notes to which it relates, or
(B) to receive cash in respect of the entire
Purchase Price for all Notes or portions of
Notes subject to such Purchase Notice.
(d) If a Holder, in such Holder's Purchase Notice and in any written
notice of withdrawal delivered by such Holder, fails to indicate such Holder's
choice with respect to the election set forth in Section 5.01(c)(iv) above, such
Holder shall be deemed to have elected to receive cash in respect of the entire
Purchase Price for all Notes subject to such Purchase Notice in the
circumstances set forth in such Section 5.01(c)(iv).
(e) Notwithstanding anything herein to the contrary, any Holder
delivering a Purchase Notice to the Paying Agent shall have the right to
withdraw such Purchase Notice at any time prior to the close of business on the
Purchase Date by delivery of a written notice of withdrawal to the Paying Agent.
The notice will specify:
(i) the principal amount at maturity being withdrawn;
(ii) the certificate numbers of the Notes being withdrawn; and
(iii) the principal amount at maturity, if any, of the Notes
that remain subject to the Purchase Notice (which number
must be $1000 or an integral multiple of $1,000).
(f) The Company may, at the Company's option, elect to pay all or a
portion of the Purchase Price of the Notes in shares of Common Stock. The
number of shares of Common Stock to be delivered in the event of such election
shall equal the quotient obtained by dividing (i) the amount of cash to which
the Holders would have been entitled had the Company elected to pay all or such
specified percentage, as the case may be, of the Purchase Price of such Notes in
cash by (ii) the Market Price of a share of Common Stock, subject to the next
succeeding paragraph.
The Company will not issue a fractional share of Common Stock in payment of
the Purchase Price. Instead the Company will pay cash in lieu of fractional
shares in an amount equal to the same fraction of the Market Price per share of
Common Stock. It is understood that if a Holder elects to have more than one
Note purchased, the number of shares of Common Stock shall be based on the
aggregate amount of Notes to be purchased.
23
(g) Upon determination of the actual number of shares of Common Stock
to be issued for each $1,000 principal amount at maturity of Notes pursuant to
this Section 5.01, the Company will publish such information on its web site on
the World Wide Web or through such other public medium as the Company may use at
such time.
(h) The Company's right to exercise its election to purchase Notes
through the issuance of Common Stock pursuant to this Section 5.01 shall be
conditioned upon:
(i) prior to issuance of the Common Stock, listing such Common
Stock on the principal United States securities exchange on which the
Common Stock is traded or, if the Common Stock is not listed on a United
States national or regional securities exchange, on the National
Association of Securities Dealers Automated Quotation System or its
reasonable equivalent in the United States;
(ii) the Company having given notice pursuant to Section 5.01(b)
of its election to purchase all or a specified percentage of the Notes with
Common Stock as provided herein;
(iii) the registration of such Common Stock under the Securities
Act, and the Exchange Act, in each case, if required;
(iv) any necessary qualification or registration under
applicable securities laws or the availability of an exemption from such
qualification and registration; and
(v) the receipt by the Trustee of an Officers' Certificate and
an Opinion of Counsel each stating that (A) the terms of the issuance of
the Common Stock are in conformity with this Indenture and (B) the Common
Stock to be issued by the Company in payment of the Purchase Price in
respect of Notes has been duly authorized and, when issued and delivered
pursuant to the terms of this Indenture in payment of the Purchase Price in
respect of the Notes, will be validly issued, fully paid and non-assessable
and, to the best of such counsel's knowledge, free from preemptive rights,
and, in the case of such Officers' Certificate, stating that the conditions
(i) and (ii) above and the condition set forth in the second succeeding
sentence have been satisfied and, in the case of such Opinion of Counsel,
stating that the conditions (iii) and (iv) above has been satisfied.
Such Officers' Certificate shall also set forth the number of shares of
Common Stock to be issued for each $1,000 principal amount at maturity of Notes
and the Sale Price of a share of Common Stock on each Trading Day during the
period commencing on the first Trading Day of the period during which the
24
Market Price is calculated and ending on February 15, 2006, February 15, 2011,
and February 15, 2021, as the case may be. The Company may pay the Purchase
Price (or any portion thereof) in Common Stock only if the information necessary
to calculate the Market Price is published in a daily newspaper of national
circulation in the United States. If the foregoing conditions are not satisfied
with respect to a Holder or Holders prior to the close of business on the
Purchase Date whether or not the Company has elected to purchase the Notes
through the issuance of Common Stock, the Company shall pay the entire Purchase
Price of the Notes of such Holder or Holders in cash.
Once the conditions of as described in this Section 5.01(h) have been
satisfied and the Company has given Holders notice pursuant to Section 5.01(b)
with respect to its election, the Company may not change the form or components
or percentages of components of consideration to be paid for the Notes.
(i) The Company shall to the extent applicable: (i) comply with the
provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the
Exchange Act which may then be applicable; (ii) file the related Schedule TO (or
any successor schedule, form or report) or any other required schedule under the
Exchange Act; and (iii) otherwise comply with all applicable securities laws.
(j) The Company shall (i) accept for payment Notes or portions thereof
validly tendered pursuant to the Purchase Notice, (ii) deposit with the Paying
Agent (no later than 10:00 A.M. New York City time on the Purchase Date) money,
in immediately available funds, or fully paid and nonassessable shares of Common
Stock, or any combination thereof in accordance with the Company's election
under Section 5.01(b) hereof, sufficient to pay the Purchase Price of all Notes
or portions thereof so tendered and accepted and (iii) deliver to the Trustee
the Notes so accepted together with an Officers' Certificate setting forth the
Notes or portions thereof tendered to and accepted for payment by the Company.
The Paying Agent shall promptly mail or deliver to the Holders of Notes so
accepted payment in an amount equal to the portion of the Purchase Price to be
paid in cash, and deliver shares of Common Stock sufficient to cover the portion
of the Purchase Price to be paid in Common Stock, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Note equal in principal
amount at maturity to any unpurchased portion to the Notes surrendered; provided
that each such new Note shall be issued in an original principal amount at
maturity in denominations of $1,000 and integral multiples thereof. Any Notes
not validly tendered and not accepted by the Company shall be promptly mailed or
delivered by the Company to the Holder thereof.
(k) If the Paying Agent holds money sufficient to pay the Purchase Price
on the Business Day following the applicable Purchase Date, in accordance with
the terms of the Indenture, then immediately after the Purchase Date, Original
Issue Discount on such Note (or in the case of Notes converted to semiannual
25
coupon Notes, interest) will cease to accrue, whether or not the Note is
delivered to the Paying Agent. Thereafter, all other rights of the Holder shall
terminate, other than the right to receive the Purchase Price upon delivery of
the Note.
(l) There shall be no purchase of any Notes pursuant to this Section 5.01
if there has occurred and is continuing an Event of Default (other than a
default in the payment of the Purchase Price). The Paying Agent will promptly
return to the respective Holders thereof of any Notes: (i) with respect to which
a Purchase Notice has been withdrawn in compliance with the Indenture or (ii)
held by it during the continuance of an Event of Default (other than a default
in the payment of the Purchase Price) in which case, upon such return, the
Purchase Notice with respect thereto shall be deemed to have been withdrawn.
Section 5.02. Purchase at Option of Holders Upon Change of Control.
(a) Upon the occurrence of a Change of Control on or prior to February
15, 2006 (the date of such occurrence, the "Change of Control Date"), the
Company shall notify the Holders of the Notes in writing of such occurrence in
accordance with paragraph (b) below, and shall make an offer to purchase (a
"Change of Control Offer"), and shall purchase, on a Business Day (a "Change of
Control Purchase Date") that is 35 Business Days following the Change of Control
Date all of the then outstanding Notes validly tendered at a purchase price in
cash per $1,000 principal amount at maturity equal to the Issue Price thereof
plus accrued Original Issue Discount to the Change of Control Purchase Date (the
"Change of Control Purchase Price").
If prior to a Change of Control Purchase Date a Note has been converted to
a semiannual coupon Note following the occurrence of a Tax Event, the
Change of Control Purchase Price shall be equal to the Restated Principal Amount
plus accrued and unpaid interest from the date of conversion to the Change of
Control Purchase Date.
(b) Notice of a Change of Control Offer (a "Change of Control Notice")
shall be sent, by first-class mail, postage prepaid, by the Company within 15
Business Days after the Change of Control Date to the Holders of the Notes at
their addresses shown in the Security Register of the Registrar (and to
beneficial owners as required by applicable law) with a copy to the Trustee and
the Paying Agent (and shall also be given by release made to Reuters Economic
Services and Bloomberg Business News). The Change of Control Offer shall remain
open from the time of delivery of the Change of Control Notice for at least 15
Business Days and until 5:00 p.m., New York City time, on the Business Day prior
to the Change of Control Purchase Date. The Change of Control Notice, which
shall govern the terms of the Change of Control Offer, shall include such
disclosures as are required by law and shall state:
26
(i) briefly, the events causing a Change of Control and the
date of such Change of Control;
(ii) the date by which the Change of Control Purchase Notice
pursuant to this Section 5.02 must be delivered to the Paying Agent and
other persons;
(iii) the Change of Control Purchase Price;
(iv) the Change of Control Purchase Date;
(v) the name and address of the Paying Agent and the
Conversion Agent;
(vi) the Conversion Rate and any adjustments thereto;
(vii) that Notes as to which a Change of Control Purchase Notice
has been given may be converted if they are otherwise convertible pursuant
to Article 2 hereof only if the Change of Control Purchase Notice has been
withdrawn in accordance with the terms of this Indenture;
(viii) that Notes must be surrendered to the Paying Agent to
collect payment;
(ix) that the Change of Control Purchase Price for any Note as
to which a Change of Control Purchase Notice has been duly given and not
withdrawn will be paid promptly following the later of the Change of
Control Purchase Date and the time of surrender of such Note as described
in Section 5.02(e);
(x) briefly, the procedures the Holder must follow to
exercise rights under this Section 5.02(b);
(xi) the procedures for withdrawing a Change of Control
Notice;
(xii) that, unless the Company defaults in making payment of
such Change of Control Purchase Price, Original Issue Discount, and
interest if any, on Notes surrendered for purchase by the Company will
cease to accrue on and after the Change of Control Purchase Date; and
(xiii) the CUSIP number of the Notes.
(c) To exercise a purchase right pursuant to this Section 5.02, a Holder
shall deliver to the Paying Agent a written notice (a "Change of Control
Purchase Notice") of such Holder's exercise of such right, in accordance with
the terms and
27
conditions set forth in the Change of Control Notice. The notice (which must be
delivered to the Paying Agent prior to the close of business on the Change of
Control Purchase Date) shall state:
(i) the certificate numbers of the Holder's Notes to be
delivered for purchase;
(ii) the portion of the principal amount at maturity of Notes
to be purchased, which portion must be $1,000 or an integral multiple
thereof; and
(iii) that such Notes shall be purchased pursuant to the terms
and conditions specified in Article 5.
Upon receipt by the Paying Agent of a Change of Control Purchase Notice, the
Holder of the Note in respect of which such Change of Control Purchase Notice
was given shall (unless such Change of Control Purchase Notice is withdrawn)
thereafter be entitled to receive solely the Change of Control Purchase Price
with respect to such Note.
(d) Notwithstanding anything herein to the contrary, a Holder shall have
the right to withdraw any Change of Control Purchase Notice at any time prior to
the close of business on the Change of Control Purchase Date by delivery of a
written notice of withdrawal to the Paying Agent. The notice will specify:
(i) the principal amount at maturity being withdrawn;
(ii) the certificate numbers of the Notes being withdrawn; and
(iii) the principal amount at maturity, if any, of the Notes
that remain subject to the Purchase Notice (which number must be $1000 or
a multiple integral of $1,000).
Notes in respect of which a Change of Control Purchase Notice has been given by
the Holder thereof may not be converted into shares of Common Stock on or after
the date of the delivery of such Change of Control Purchase Notice, unless such
Change of Control Purchase Notice has first been validly withdrawn as set forth
in the foregoing paragraph, unless the Company has defaulted in the payment of
the Change of Control Purchase Price.
(e) On the Change of Control Purchase Date, the Company shall (i) accept
for payment Notes or portions thereof validly tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent (no later than 10:00 A.M. New
York City time on the Change of Control Purchase Date) money, in immediately
available funds, sufficient to pay the Change of Control Purchase
28
Price of all Notes or portions thereof so tendered and accepted and (iii)
deliver to the Trustee the Notes so accepted together with an Officers'
Certificate setting forth the Notes or portions thereof tendered to and accepted
for payment by the Company. The Paying Agent shall promptly mail or deliver to
the Holders of Notes so accepted for payment in an amount equal to the Change of
Control Purchase Price, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Note equal in principal amount at maturity to any
unpurchased portion to the Notes surrendered; provided that each such new Note
shall be issued in an original principal amount at maturity in denominations of
$1,000 and integral multiples thereof. Any Notes not validly tendered and not
accepted by the Company shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company will publicly announce the results of the Change
of Control Offer not later than the third Business Day following the Change of
Control Purchase Date.
(f) The Company shall to the extent applicable: (i) comply with the
provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the
Exchange Act which may then be applicable; (ii) file the related Schedule TO (or
any successor schedule, form or report) or any other required schedule under the
Exchange Act; and (iii) otherwise comply with all applicable securities laws.
(g) If the Paying Agent holds money sufficient to pay the Change of
Control Purchase Price on the Business Day following the Change of Control
Purchase Date, in accordance with the terms of the Indenture, then immediately
after the Change of Control Purchase Date, Original Issue Discount on such Note
(or in the case of Notes converted to semiannual coupon Notes, interest) will
cease to accrue, whether or not the Note is delivered to the Paying Agent.
Thereafter, all other rights of the Holder shall terminate, other than the right
to receive the Change of Control Purchase Price upon delivery of the Note.
(h) There shall be no purchase of any Notes pursuant to this Section 5.02
if there has occurred and is continuing an Event of Default (other than a
default in the payment of the Change of Control Purchase Price). The Paying
Agent will promptly return to the respective Holders thereof of any Notes: (i)
with respect to which a Change of Control Purchase Notice has been withdrawn in
compliance with the Indenture or (ii) held by it during the continuance of an
Event of Default (other than a default in the payment of the Change of Control
Purchase Price) in which case, upon such return, the Change of Control Purchase
Notice with respect thereto shall be deemed to have been withdrawn.
Section 5.03. Certain Article 5 Definitions.
For purposes of this Article 5:
29
(a) the term "Change of Control" means the occurrence of any of the
following events:
(i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person or group shall be deemed to have "beneficial ownership" of all
securities that such person or group has the right to acquire, whether such
right is exercisable immediately or only after the passage of time, upon
the happening of an event or otherwise), directly or indirectly, of more
than 50% of the total voting power of all Voting Stock of the Company;
(ii) the Company consolidates with, or merges with or into,
another person or sells, assigns, conveys, transfers, leases or otherwise
disposes of, all or substantially all of its assets to any Person, or any
Person consolidates with, or merges with or into, the Company, in any such
event pursuant to a transaction in which the outstanding Voting Stock of
the Company is converted into or exchanged for cash, securities or other
property, other than any such transaction where (A) the outstanding Voting
Stock of the Company is converted into or exchanged for Voting Stock (other
than Disqualified Capital Stock) of the surviving or transferee
corporation, and (B) immediately after such transaction no "person" or
"group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act), is the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a person or group shall be deemed
to have "beneficial ownership" of all securities that such person or group
has the right to acquire, whether such right is exercisable immediately or
only after the passage of time, upon the happening of an event or
otherwise), directly or indirectly, of more than 50% of the total voting
power of all Voting Stock of the surviving or transferee corporation;
(iii) at any time during any consecutive two-year period,
individuals who at the beginning of such period constituted the board of
directors of the Company (together with any new directors whose election
by such board of directors or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the board of
directors of the Company then in office; or
(iv) the Company is liquidated or dissolved or adopts a plan of
liquidation;
30
provided, however, that a Change of Control shall not be deemed to have occurred
if (I) the Sale Price of the Common Stock for any five Trading Days within the
period of 10 consecutive Trading Days ending immediately after the later of the
Change of Control or the public announcement of the Change of Control (in the
case of a Change of Control under clause (i) above) or the period of 10
consecutive Trading Days ending immediately before the Change of Control (in the
case of a Change of Control under clause (ii) above) shall, in the case of each
of such five Trading Days, equal or exceed 105% of the Accreted Conversion Price
of the Notes in effect on each of such five Trading Days or (II) all of the
consideration (excluding cash payments for fractional shares and cash payments
made pursuant to dissenters' appraisal rights) in a merger or consolidation
otherwise constituting a Change of Control under clause (i) and/or clause (ii)
above consists of shares of common stock traded on a national securities
exchange or quoted on the Nasdaq National Market (or will be so traded or quoted
immediately following such merger or consolidation) and as a result of such
merger or consolidation the Notes become convertible solely into such common
stock;
(b) the term "Voting Stock" means, with respect to any Person,
securities of any class or classes of capital stock in such Person entitling the
holders thereof to vote under ordinary circumstances in the election of members
of the board of directors or other governing body of such Person.
(c) the term "Disqualified Capital Stock" means any capital stock of a
Person which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the Stated Maturity of the
Notes, for cash or securities constituting indebtedness of such Person.
ARTICLE 6
Events of Default
Section 6.01. Additional Events of Default. Pursuant to Sections 301(17)
and 501(8) of the Indenture, so long as any of the Notes are outstanding, the
following shall be an Event of Default with respect to the Notes, in addition to
the Events of Default contained in Section 501 of the Indenture:
31
(a) The Company defaults in the payment at Maturity of the Principal
Amount at Maturity (or if applicable the Restated Principal Amount), Issue
Price, accrued Original Issue Discount (or accrued and unpaid regular cash
interest, if any), Redemption Price, Purchase Price or Change of Control
Purchase Price with respect to any Note when such becomes due and payable.
(b) The Company defaults in payment of any interest which becomes payable
after the Notes have been converted to semiannual coupon Notes pursuant to
Article 3 hereof, which default continues for 30 days.
(c) The Company fails to convert any portion of the principal amount of a
Note in accordance with its terms following exercise by the Holder of the right
to convert such Note.
ARTICLE 7
Amendments, Supplements and Waivers
Section 7.01. With Consent of Holders. Pursuant to Section 301 (and
subject to Section 902) of the Indenture, so long as any of the Notes are
outstanding, without the consent of each Holder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 513 of the
Indenture, may not (in addition to the events described in paragraphs (1)
through (9) of Section 901 of the Indenture):
(a) make any change that impairs or adversely affects the right to convert
any Notes into Common Stock;
(b) impair or adversely affect the right of a Holder to institute suit for
the enforcement of any payment with respect to, or conversion of, the Notes;
(c) make any change that adversely affects the right to require the
Company to purchase the Notes pursuant to and in accordance with Article 5
hereof; or
(d) reduce or impair or adversely affect the right of a Holder to receive
the applicable Redemption Price set forth in Section 4.01 hereof or the Purchase
Price or Change of Control Purchase Price pursuant to Article 5 hereof.
32
ARTICLE 8
Miscellaneous
Section 8.01. Application of Second Supplemental Indenture. Each and every
term and condition contained in this Second Supplemental Indenture that
modifies, amends or supplements the terms and conditions of the Indenture shall
apply only to the Notes created hereby and not to any future series of
Securities established under the Indenture. Except as specifically amended and
supplemented by, or to the extent inconsistent with, this Second Supplemental
Indenture, the Indenture shall remain in full force and effect and is hereby
ratified and confirmed.
Section 8.02. Effective Date. This Second Supplemental Indenture shall be
effective as of the date first above written and upon the execution and delivery
hereof by each of the parties hereto.
Section 8.03. Counterparts. This Second Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
33
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Indenture to be duly executed by their respective officers hereunto duly
authorized, all as of the day and year first above written.
PROVIDIAN FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
and Chief Financial Officer
BANK ONE TRUST COMPANY, N.A., as Trustee
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
[FORM OF FACE OF SECURITY] Exhibit A
FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE, THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT WITH RESPECT TO EACH $1,000 OF PRINCIPAL AMOUNT AT
MATURITY OF THIS SECURITY IS $547.11, THE ISSUE DATE IS FEBRUARY 15, 2001. THE
YIELD TO MATURITY IS 4.00%.
THIS SECURITY IS A BOOK-ENTRY SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY (AS
HEREINAFTER DEFINED) OR A NOMINEE OF THE DEPOSITARY OR A SUCCESSOR DEPOSITARY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED HEREIN AND IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED HEREIN AND IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), TO
PROVIDIAN FINANCIAL CORPORATION, AS 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 DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
PROVIDIAN FINANCIAL CORPORATION
ZERO COUPON CONVERTIBLE NOTES DUE FEBRUARY 15, 2021
REGISTERED
CUSIP: 74406A AB 8
ISSUE DATE: February 15, 2001
ISSUE PRICE: $452.89
(for each $1,000 principal amount at Maturity)
ORIGINAL ISSUE DISCOUNT: $547.11
(for each $1,000 principal amount at Maturity)
No. R-_ $______________
Providian Financial Corporation, a Delaware corporation (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co., or its registered assigns, the principal sum at final Maturity of
________________ United States Dollars (U.S. $____________) on February 15,
2021. This Security shall not bear cash interest except as specified on the
other side of this Security. Original Issue Discount will accrue as specified
on the other side of this Security.
Payment of the principal of (and premium, if any), interest, if any, Issue
Price and Original Issue Discount on this Security in connection with, among
other things, Redemption Prices, Purchase Prices, Change of Control Purchase
Prices and principal amount at Maturity will be made at the office or agency of
the Company maintained for that purpose in the Borough of Manhattan, The City of
New York, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest in
immediately available funds may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register or
by wire transfer to an account maintained by the payee located inside the United
States. In certain cases described in the Indenture the Company may make
payments in shares of its Common Stock rather than in cash.
All terms used in this Security which are defined in the Indenture and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or the Second
Supplemental Indenture hereinafter referred to or be valid or obligatory for any
purpose.
Any additional Notes issued subsequent to the date hereof pursuant to the
exercise of an overallotment option shall be deemed to be issued on the date of
the Second Supplemental Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: February 15, 2001
PROVIDIAN FINANCIAL CORPORATION
By: ___________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series designated therein referred to
in the within-mentioned Indenture.
BANK ONE TRUST COMPANY, N.A.
as Trustee
By: ___________________________
Authorized Signatory
[FORM OF REVERSE SIDE OF SECURITY]
Zero Coupon Convertible Notes Due February 15, 2021
1. Cash Interest; Original Issue Discount.
The Notes shall not bear cash interest unless they have been converted to
semiannual coupon Notes in accordance with paragraph 9 hereto.
Original Issue Discount (the difference between the Issue Price and the
Principal Amount at Maturity of the Notes), in the period during which a Note
remains outstanding, shall accrue at 4.00% per annum, on a semiannual bond
equivalent basis using a 360-day year comprised of twelve 30-day months, from
the Issue Date.
2. Method of Payment.
Subject to the terms and conditions of the Indenture, the Company will make
payments in respect of the principal of, premium, if any, and cash interest, if
any, on a Note and in respect of Redemption Prices, Purchase Prices and Change
of Control Purchase Prices to Holders who surrender Notes to a Paying Agent to
collect such payments in respect of the Notes. 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. Any payment required to be made on any
day that is not a Business Day will be made on the next succeeding Business Day.
3. Paying Agent, Conversion Agent and Registrar.
Initially, Bank One Trust Company, N.A. (as successor in interest to The
First National Bank of Chicago, in such capacity, together with its successors
in trust, the "Trustee"), will act as Paying Agent, Conversion Agent and
Registrar. The Company may appoint and change any Paying Agent, Conversion
Agent, Registrar or co-registrar without notice, other than notice to the
Trustee, except that the Company will maintain at least one Paying Agent in the
State of New York, City of New York, Borough of Manhattan, which shall initially
be an office or agency of the Trustee. The Company or any of its Subsidiaries or
any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or
co-registrar.
4. Indenture.
The Company issued the Notes under an Indenture dated as of May 1, 1999
(the "Indenture"), between the Company and the Trustee, as supplemented by a
Second Supplemental Indenture dated as of February 15, 2001 relating to the
Notes (the "Second Supplemental Indenture"). References herein to the Indenture
include
1
the Second Supplemental Indenture. The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as in effect from time to time (the "TIA"). Capitalized
terms used herein and not defined herein have the meanings ascribed thereto in
the Indenture. The Notes are subject to all such terms, and Holders are referred
to the Indenture and the TIA for a statement of those terms.
The Notes are general unsecured obligations of the Company limited to
$1,015,000,000 aggregate Principal Amount at Maturity (subject to Section 306 of
the Indenture). The Indenture does not limit other indebtedness of the Company,
secured or unsecured.
5. Redemption at the Option of the Company.
No sinking fund is provided for the Notes. Subject to the terms and
conditions of the Indenture, the Notes are redeemable as a whole, or from time
to time in part, at any time at the option of the Company at the Redemption
Prices set forth below, provided that the Notes are not redeemable prior to
February 15, 2006.
The table below shows Redemption Prices of a Note per $1,000 Principal
Amount at Maturity on the dates shown below and at Stated Maturity, which prices
reflect accrued Original Issue Discount calculated to each such date. The
Redemption Price of a Note redeemed between such dates shall include an
additional amount reflecting the additional Original Issue Discount accrued
since the next preceding date in the table.
(1) (2) (3)
Accrued Redemption
Redemption Date Issue Price Original Issue Price
Discount (1) + (2)
February 15, 2006............ $452.89 $ 99.18 $ 552.07
February 15, 2007............ $452.89 $121.48 $ 574.37
February 15, 2008............ $452.89 $144.69 $ 597.58
February 15, 2009............ $452.89 $168.83 $ 621.72
February 15, 2010............ $452.89 $193.95 $ 646.84
February 15, 2011............ $452.89 $220.08 $ 672.97
February 15, 2012............ $452.89 $247.27 $ 700.16
February 15, 2013............ $452.89 $275.56 $ 728.45
February 15, 2014............ $452.89 $304.99 $ 757.88
February 15, 2015............ $452.89 $335.60 $ 788.49
February 15, 2016............ $452.89 $367.46 $ 820.35
February 15, 2017............ $452.89 $400.60 $ 853.49
February 15, 2018............ $452.89 $435.08 $ 887.97
February 15, 2019............ $452.89 $470.96 $ 923.85
February 15, 2020............ $452.89 $508.28 $ 961.17
2
(1) (2) (3)
Accrued Redemption
Redemption Date Issue Price Original Issue Price
Discount (1) + (2)
At Stated Maturity........... $452.89 $547.11 $1,000.00
If converted to a semiannual coupon Note following the occurrence of a Tax
Event, a Note will be redeemable at the Restated Principal Amount plus accrued
and unpaid interest from the date of such conversion through the Redemption
Date.
In no event will any Note be redeemable before February 15, 2003.
6. Purchase By the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the Holder, the Notes held by
such Holder on the following Purchase Dates and at the following Purchase Prices
per $1,000 Principal Amount at Maturity, upon delivery of a Purchase Notice
containing the information set forth in the Indenture, at any time until the
close of business on such Purchase Date and upon delivery of the Notes to the
Paying Agent by the Holder as set forth in the Indenture.
Purchase Date Purchase Price
------------- --------------
February 15, 2006 $552.07
February 15, 2011 $672.97
February 15, 2016 $820.35
The Purchase Price may be paid, at the option of the Company, in cash or
shares of Common Stock or any combination thereof.
If prior to a Purchase Date the Notes have been converted to semiannual
coupon Notes following the occurrence of a Tax Event, the Purchase Price on such
Purchase Date will be equal to the Restated Principal Amount plus accrued and
unpaid interest from the Option Exercise Date to the Purchase Date.
At the option of the Holder and subject to the terms and conditions of the
Indenture, the Company shall become obligated to purchase all or a portion of
the Notes held by such Holder 35 Business Days after the occurrence of a Change
of Control of the Company occurring on or prior to February 15, 2006 for a
Change of Control Purchase Price equal to the Issue Price plus accrued Original
Issue Discount to the Change of Control Purchase Date, which Change of Control
Purchase Price shall be paid in cash. If prior to a Change of Control Purchase
Date
3
a Note has been converted to a semiannual coupon Note following the occurrence
of a Tax Event, the Change of Control Purchase Price shall be equal to the
Restated Principal Amount plus accrued and unpaid interest from the date of
conversion to the Change of Control Purchase Date.
Holders have the right to withdraw any Purchase Notice or Change of Control
Purchase Notice, as the case may be, by delivering to the Paying Agent a written
notice of withdrawal in accordance with the provisions of the Indenture.
If cash (and/or securities if permitted under the Indenture) sufficient to
pay the Purchase Price or Change of Control Purchase Price, as the case may be,
of all Notes or portions thereof to be purchased as of the Purchase Date or the
Change of Control Purchase Date, as the case may be, is deposited with the
Paying Agent on the Business Day following the Purchase Date or the Change of
Control Purchase Date, as the case may be, such Notes will cease to be
outstanding and Original Issue Discount and cash interest, if any, shall cease
to accrue on such Notes (or portions thereof) and will be deemed paid
immediately after such Purchase Date or Change of Control Purchase Date, as the
case may be, whether or not such Notes have been delivered to the Paying Agent,
and the Holder thereof shall have no other rights as such (other than the right
to receive the Purchase Price or Change of Control Purchase Price, as the case
may be, upon surrender of such Notes).
7. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the Redemption Date to each Holder of Notes to be redeemed at the
Holder's registered address. If money sufficient to pay the Redemption Price of
all Notes (or portions thereof) to be redeemed on the Redemption Date is
deposited with the Paying Agent prior to or on the Redemption Date, immediately
after such Redemption Date Original Issue Discount ceases to accrue on such
Notes or portions thereof. Notes in denominations larger than $1,000 Principal
Amount at Maturity may be redeemed in part but only in integral multiples of
$1,000 Principal Amount at Maturity.
8. Conversion.
Subject to and upon compliance with the provisions of Article 2 of the
Second Supplemental Indenture, at the option of the Holder thereof, any Note or
any portion of the principal amount at maturity thereof which is $1,000 or an
integral multiple of $1,000, and which has not previously been redeemed or
purchased pursuant to the Indenture, may be converted into Common Stock at any
time following the issuance of the Notes and prior to the close of business on
February 15, 2021.
Except as provided for in Section 2.01(b) of the Second Supplemental
Indenture (which excepts situations where the Notes have been called for
4
redemption, an Event of Default is continuing or the Company is party to certain
transactions), if the Sale Price of the Common Stock on at least 20 Trading Days
of the 30 Trading Days prior to the conversion is (i) less than 100% of the
Accreted Conversion Price, then the Holder electing to exercise its conversion
right on that date will receive, in lieu of Common Stock, cash in an amount, per
$1,000 principal amount at maturity of the Notes surrendered for conversion,
equal to 95% of the product of the Conversion Rate and such Sale Price on the
Trading Day immediately preceding the conversion date, (ii) greater than or
equal to 100% of the Accreted Conversion Price but less than 110% of the
Accreted Conversion Price, the Holder will receive, in lieu of Common Stock,
cash in an amount, per $1,000 principal amount at maturity of the Notes
surrendered for conversion, equal to the sum of the Issue Price plus accrued
Original Issue Discount to the date of conversion, or (iii) greater than or
equal to 110% of the Accreted Conversion Price, the Holder will receive, per
$1,000 principal amount at maturity of the Notes surrendered for conversion, a
number of shares of Common Stock equal to the then applicable Conversion Rate.
The initial Conversion Rate is 6.2240 shares of Common Stock per $1,000
Principal Amount at Maturity, subject to adjustment in certain events described
in the Indenture. The Company will deliver cash or a check in lieu of any
fractional share of Common Stock.
In the event the Company exercises its option pursuant to Article 3 of the
Second Supplemental Indenture to have interest in lieu of Original Issue
Discount accrue on the Note following a Tax Event, the Holder will be entitled
on conversion to receive the same number of shares of Common Stock such Holder
would have received if the Company had not exercised such option. In any event,
whether or not the Company exercises such option, such Notes surrendered for
conversion during the period from the close of business on any Regular Record
Date immediately preceding any Interest Payment Date to the opening of business
of such Interest Payment Date (except Notes to be redeemed on a date within such
period or on the next Interest Payment Date or in respect of which a Purchase
Notice or Change of Control Purchase Notice delivered by the Holder has not been
withdrawn, the conversion rights of which would terminate during the period
between such Record Date and the close of business on such Interest Payment
Date) must be accompanied by payment of an amount equal to the interest thereon
that the registered Holder is to receive. Except where Notes surrendered for
conversion must be accompanied by payment as described above, no interest on
converted Notes will be payable by the Company on any Interest Payment Date
subsequent to the date of conversion.
To convert a Note, 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 Note
to the Conversion Agent, (3) furnish appropriate endorsements and transfer
5
documents if required by the Conversion Agent, the Company or the Trustee and
(4) pay any transfer or similar tax, if required.
A Holder may convert a portion of a Note if the Principal Amount at
Maturity of such portion is $1,000 or an integral multiple of $1,000. On
conversion of a Note, that portion of accrued Original Issue Discount (or
interest if the Company has exercised its option provided for in paragraph 9
hereof) attributable to the period from the Issue Date (or, if the Company has
exercised the option referred to in paragraph 9 hereof, the later of (x) the
date of such exercise and (y) the date on which interest was last paid) through
the Conversion Date with respect to the converted Note shall not be cancelled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
Holder thereof through the delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Note being
converted pursuant to the terms of the Indenture; and the fair market value of
such shares of Common Stock (together with any such cash payment in lieu of
fractional shares) shall be treated as issued, to the extent thereof, first in
exchange for Original Issue Discount (or interest, if the Company has exercised
its option provided for in paragraph 9 hereof) accrued through the Conversion
Date, and the balance, if any, of such fair market value of such Common Stock
(and any such cash payment) shall be treated as issued in exchange for the Issue
Price of the Note being converted pursuant to the provisions hereof.
Pursuant to the terms and conditions described in the Indenture, the
Conversion Rate will be adjusted for dividends or distributions on Common Stock
payable in Common Stock or other capital stock of the Company; subdivisions,
combinations or certain reclassifications of Common Stock; distributions to all
holders of Common Stock of certain rights to purchase Common Stock for a period
expiring within 60 days at less than the Sale Price at the Time of
Determination; and distributions to such holders of assets or debt securities of
the Company or certain rights to purchase securities of the Company (excluding
certain cash dividends or distributions). However, no adjustment need be made if
Holders may participate in the transaction or in certain other cases. The
Company from time to time may voluntarily increase the Conversion Rate.
If the Company is a party to a consolidation, merger or binding share
exchange as described in the Indenture, the right to convert a Note into Common
Stock may be changed into a right to convert it into securities, cash or other
assets of the Company or another person.
9. Tax Event
(a) Pursuant to Article 3 of the Second Supplemental Indenture, from and
after (i) the date of the occurrence of a Tax Event (the "Tax Event Date") and
(ii) the date the Company exercises such option, whichever is later (the "Option
Exercise Date"), at the option of the Company, regular cash interest, in lieu of
6
future Original Issue Discount, shall accrue on the Notes at the rate of 4.00%
per annum on a restated principal amount per $1,000 Principal Amount at Maturity
of the Notes (the "Restated Principal Amount") equal to the Issue Price plus
Original Issue Discount accrued to the Option Exercise Date and shall be payable
on each February 15 and August 15 of each year prior to Maturity of the Notes
(each an "Interest Payment Date") to Holders of record at the close of business
on the February 1 or August 1 (each a "Regular Record Date") immediately
preceding such Interest Payment Date. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months and will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from the Option Exercise Date. Within 15 days of the occurrence of a Tax Event,
the Company shall transmit a written notice of such Tax Event by facsimile and
first-class mail to the Trustee and within 15 days of the Option Exercise Date
the Company shall transmit a written notice of its election under the Indenture
by facsimile and first-class mail to the Trustee and by first class mail to the
Holders of the Notes. From and after the Option Exercise Date, (i) the Company
shall be obligated to pay at Maturity, in lieu of the Principal Amount at
Maturity of a Note, the Restated Principal Amount thereof and (ii) except with
respect to the definition in the Second Supplemental Indenture of Accreted
Conversion Price, "Issue Price and accrued Original Issue Discount," "Issue
Price plus Original Issue Discount" or similar words, as used herein and in the
Indenture, shall mean Restated Principal Amount plus accrued and unpaid interest
with respect to any Note. Notes authenticated and delivered after the Option
Exercise Date may, and shall if required by the Trustee, bear a notation in a
form approved by the Trustee as to the conversion of the Notes to semiannual
coupon Notes.
Subject to the provisions of the Indenture, each Note delivered under the
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Note shall carry the rights to interest accrued and unpaid, and to accrue,
which were carried by such other Note.
(b) Cash interest on any Note that is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the person in
whose name that Note is registered at the close of business on the Regular
Record Date for such cash interest at the office or agency of the Company
maintained for such purpose.
(c) Except as otherwise specified with respect to the Notes, any Defaulted
Interest on any Note shall forthwith cease to be payable to the registered
Holder thereof on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company as provided for
in Section 307 of the Indenture.
10. Denominations; Transfer; Exchange.
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The Notes are in fully registered form, without coupons, in denominations
of $1,000 Principal Amount at Maturity and integral multiples of $1,000. A
Holder may transfer or exchange Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture.
11. Persons Deemed Owners.
The registered Holder of a Note may be treated as the owner of a Note for
all purposes.
12. Unclaimed Money or Securities.
The Trustee and the Paying Agent shall return to the Company upon written
request any money or securities held by them for the payment of any amount with
respect to the Notes that remains unclaimed for two years, subject to applicable
unclaimed property law. After return 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.
13. Amendment; Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the Second
Supplemental Indenture or the Notes may be amended with the written consent of
the Holders of at least 66b% in aggregate Principal Amount at Maturity of the
Notes at the time outstanding and (ii) certain Defaults may be waived with the
written consent of the Holders of a majority in aggregate Principal Amount at
Maturity of the Notes at the time outstanding. Subject to certain exceptions set
forth in the Indenture, without the consent of any Holder, the Company and the
Trustee may amend the Indenture or the Notes to cure any ambiguity, defect or
inconsistency, to add additional events of default, to provide for
uncertificated Notes in addition to or in place of certificated Notes or to make
any change that does not adversely affect the rights of any Holder in any
material respect.
14. Defaults and Remedies.
Under the Indenture, Events of Default include (i) default in the payment
of principal of or premium, if any, on any of the Securities of any series when
due; (ii) default in the payment of interest on any Security of any series when
due and continuance of such default for 30 days; (iii) default in the deposit of
any sinking fund payment on any Security of any series when due; (iv) default in
the performance, or breach, of any other covenant or warranty of the Company in
the Indenture (other than a covenant or warranty a default in the performance or
breach of which is otherwise addressed) with respect to any Security of any
series and continuance of such default or breach for 60 days after written
notice to the
8
Company by the Trustee or to the Company and the Trustee by holders of not less
than 25% in aggregate principal amount of the Securities of that series; (v) any
event of default under any mortgage, indenture or other instrument under which
any indebtedness for borrowed money in an aggregate principal amount exceeding
$5,000,000 of the Company or Providian National Bank shall become due and
payable, if such acceleration is not rescinded or annulled within 30 days after
written notice as provided by the Indenture; (vi) certain events of bankruptcy,
insolvency or reorganization of the Company; or (vii) any other event that may
be specified with respect to any Security of a series.
So long as any of the Notes are outstanding, the Second Supplemental
Indenture provides that additional Events of Default with respect to the Notes
shall include (i) any default by the Company in the payment at Maturity of the
Principal Amount at Maturity (or if applicable the Restated Principal Amount),
Issue Price, accrued Original Issue Discount (or accrued and unpaid regular cash
interest if any), Redemption Price, Purchase Price or Change of Control Purchase
Price with respect to any Note when such becomes due and payable; (ii) any
default by the Company in payment of any interest which becomes payable after
the Notes have been converted to semiannual coupon Notes in accordance with
paragraph 9 hereof, which default continues for 30 days; or (iii) failure by
the Company to convert any portion of the principal amount of a Note in
accordance with its terms following exercise by the Holder of such Note of the
right to convert such Note.
15. 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 Notes 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.
16. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability (except in the case of bad faith or willful misconduct)
for any obligations of the Company under the Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Note, each Holder waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Notes.
17. 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.
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18. Abbreviations.
Customary abbreviations may be used in the name of a Holder 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).
20. GOVERNING LAW.
THE INDENTURE AND THE NOTES WILL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
21. DEFEASANCE.
The provisions for defeasance and covenant defeasance set forth in Sections
1302 and 1303 of the Indenture, respectively, will not apply to the Notes.
-------------------
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture or a copy of the text of this Security in larger
type. Requests may be made to:
Providian Financial Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Treasurer
10
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
___________________________________________________________________________
___________________________________________________________________________
(Insert assignee's soc. sec. or tax ID no.)
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
______________________ agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
___________________________________________________________________________
Date: __________________ Your Signature: ________________________________
___________________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
CONVERSION NOTICE
To convert this Security into Common Stock of the Company, check the box:
[_]
To convert only part of this Security, state the Principal Amount at Maturity to
be converted (which must be $1,000 or an integral multiple of $1,000):
$_______________________________________________________________________________
If you want the stock certificate made out in another person's name, fill in the
form below:
________________________________________________________________________________
________________________________________________________________________________
(Insert other person's soc. sec. or tax ID no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type other person's name, address and zip code)
________________________________________________________________________________
Date: __________________ Your Signature: _____________________________________
________________________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
