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FIRST SUPPLEMENTAL INDENTURE
between
SUN HEALTHCARE GROUP, INC.
and
THE BANK OF NEW YORK
Dated as of _________
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITION OF TERMS. . . . . . . . . . . . . . . . . . . 2
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE CONVERTIBLE DEBENTURES
SECTION 2.1. DESIGNATION AND PRINCIPAL AMOUNT . . . . . . . . . . . . 5
SECTION 2.2. MATURITY . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.3. FORM AND PAYMENT . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.4. GLOBAL DEBENTURE . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.5. INTEREST . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REDEMPTION OF THE CONVERTIBLE DEBENTURES
SECTION 3.1. SPECIAL EVENT REDEMPTION . . . . . . . . . . . . . . . . 8
SECTION 3.2. OPTIONAL REDEMPTION BY COMPANY . . . . . . . . . . . . . 8
SECTION 3.3. NO SINKING FUND. . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. EXTENSION OF INTEREST PAYMENT PERIOD . . . . . . . . . . 10
SECTION 4.2. NOTICE OF EXTENSION. . . . . . . . . . . . . . . . . . . 10
SECTION 4.3. LIMITATION OF TRANSACTIONS . . . . . . . . . . . . . . . 11
ARTICLE V
EXPENSES
SECTION 5.1. PAYMENT OF EXPENSES. . . . . . . . . . . . . . . . . . . 11
SECTION 5.2. PAYMENT UPON RESIGNATION OR REMOVAL. . . . . . . . . . . 12
ARTICLE VI
COVENANT TO LIST ON EXCHANGE
SECTION 6.1. LISTING ON AN EXCHANGE . . . . . . . . . . . . . . . . . 12
ARTICLE VII
CONVERSION OF CONVERTIBLE DEBENTURES
SECTION 7.1. CONVERSION RIGHTS. . . . . . . . . . . . . . . . . . . . 13
SECTION 7.2. CONVERSION PROCEDURES. . . . . . . . . . . . . . . . . . 13
SECTION 7.3. CONVERSION PRICE ADJUSTMENTS . . . . . . . . . . . . . . 15
SECTION 7.4. MERGER, CONSOLIDATION, OR SALE OF ASSETS . . . . . . . . 20
SECTION 7.5. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. . . . . . . . 22
SECTION 7.6. PRIOR NOTICE OF CERTAIN EVENTS . . . . . . . . . . . . . 22
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Page
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SECTION 7.7. DIVIDEND OR INTEREST REINVESTMENT PLANS. . . . . . . . . 23
SECTION 7.8. CERTAIN ADDITIONAL RIGHTS. . . . . . . . . . . . . . . . 24
SECTION 7.9. TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION
PRICE OR ADJUSTMENTS . . . . . . . . . . . . . . . . . . . 24
ARTICLE VIII
FORM OF CONVERTIBLE DEBENTURE
SECTION 8.1. FORM OF CONVERTIBLE DEBENTURE. . . . . . . . . . . . . . 25
ARTICLE IX
ORIGINAL ISSUE OF CONVERTIBLE DEBENTURES
SECTION 9.1. ORIGINAL ISSUE OF CONVERTIBLE DEBENTURES . . . . . . . . 36
ARTICLE X
MISCELLANEOUS
SECTION 10.1. RATIFICATION OF INDENTURE; FIRST SUPPLEMENTAL
INDENTURE CONTROLS. . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.2. TRUSTEE NOT RESPONSIBLE FOR RECITALS. . . . . . . . . . 36
SECTION 10.3. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.4. SEPARABILITY. . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.5. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . 37
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FIRST SUPPLEMENTAL INDENTURE, dated as of _________ (the "First
Supplemental Indenture"), between Sun Healthcare Group, Inc., a Delaware
corporation (the "Company"), and The Bank of New York, as trustee (the
"Trustee") under the Indenture dated as of ______ between the Company and the
Trustee (the "Indenture").
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of the Company's unsecured junior
subordinated debt securities to be issued from time to time in one or more
series as might be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered as
provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Securities to be known
as its [__]% Convertible Junior Subordinated Debentures (the "Convertible
Debentures"), the form and substance of such Convertible Debentures and the
terms, provisions and conditions thereof to be set forth as provided in the
Indenture and this First Supplemental Indenture;
WHEREAS, Sun Financing I, a Delaware statutory business trust ( the
"Trust"), has offered to the public $________ aggregate liquidation amount of
its ___% Trust Convertible Preferred Securities (the "Convertible Preferred
Securities"), representing undivided beneficial interests in the assets of the
Trust and proposes to invest the proceeds from such offering, together with the
proceeds of the issuance and sale by the Trust to the Company of $______
aggregate liquidation amount of its Common Securities, in $_______ aggregate
principal amount of the Convertible Debentures; and
WHEREAS, the Company has requested that the Trustee execute and
deliver this First Supplemental Indenture and all requirements necessary to make
this First Supplemental Indenture a valid instrument in accordance with its
terms, and to make the Convertible Debentures, when executed by the Company and
authenticated and delivered by the Trustee, the valid obligations of the
Company, have been performed, and the execution and delivery of this First
Supplemental Indenture has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance of the
Convertible Debentures by the Holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the Convertible
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITION OF TERMS.
For all purposes of this First Supplemental Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms which are defined in the Indenture have the same
meanings when used in this First Supplemental Indenture;
(b) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(c) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(d) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States of America, and, except as otherwise herein
expressly provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United States of
America at the date of such computation;
(e) a reference to a Section or Article is to a Section or
Article of this First Supplemental Indenture;
(f) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this First Supplemental Indenture as a whole
and not to any particular Article, Section or other subdivision;
(g) headings are for convenience of reference only and do not
affect interpretation; and
(h) the following terms have the meanings given to them in the
Declaration: (i) Business Day; (ii) Clearing Agency; (iii) Common Stock;
(iv) Convertible Preferred Security Certificate; (v) Delaware Trustee; (vi)
Dissolution Tax Opinion; (vii) DTC; (viii) Institutional Trustee; (ix)
Investment Company Event; (x) No-Recognition Opinion; (xi) Redemption Tax
Opinion; (xii) Regular Trustees; (xiii) Special Event; (xiv) Tax Event; and
(xv) Underwriting Agreement.
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"ADDITIONAL INTEREST" has the meaning specified in Section 2.5.
"APPLICABLE PRICE" means (i) in the event of a Non-Stock Fundamental
Change in which the holders of Common Stock receive only cash, the amount of
cash received by a holder of one share of Common Stock and (ii) in the event of
any other Fundamental Change, the average of the daily Closing Price for one
share of Common Stock during the 10 Trading Days immediately prior to the record
date for the determination of the holders of Common Stock entitled to receive
cash, securities, property or other assets in connection with such Fundamental
Change or, if there is no such record date, prior to the date upon which the
holders of Common Stock shall have the right to receive such cash, securities,
property or other assets.
"CLOSING PRICE" of any common stock on any day shall mean the last
reported sale price regular way on such day or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices regular
way of such common stock, in each case on the NYSE Composite Tape or, if the
common stock is not listed or admitted to trading on such exchange, on the
principal national securities exchange on which such common stock is listed or
admitted to trading, or, if not listed or admitted to trading on any national
securities exchange, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board of Directors of the Company for that purpose or, if not so
available in such manner, as otherwise determined in good faith by the Board of
Directors.
"COMMON STOCK FUNDAMENTAL CHANGE" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consists of common stock that, for the 10 Trading Days immediately prior
to such Fundamental Change, has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on The Nasdaq National Market; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change unless either (i) the
Company continues to exist after the occurrence of such Fundamental Change and
the outstanding Convertible Debentures continue to exist as outstanding
Convertible Debentures, or (ii) not later than the occurrence of such
Fundamental Change, the outstanding Convertible Debentures are converted into or
exchanged for debentures of a corporation succeeding to the business of the
Company, which debentures have terms substantially similar to those of the
Convertible Debentures.
"COMPOUNDED INTEREST" has the meaning specified in SECTION 4.1.
"CONVERSION PRICE" means $___ as of the date hereof and may be
adjusted from time to time as set forth in Section 7.3.
"CONVERTIBLE PREFERRED SECURITIES" has the meaning specified in the
recitals to this First Supplemental Indenture.
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"DECLARATION" means the Amended and Restated Declaration of Trust of
Sun Financing I, a Delaware statutory business trust, dated as of ______.
"DEFERRED INTEREST" has the meaning specified in Section 4.1.
"DISSOLUTION EVENT" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration, and the Convertible Debentures held by the Institutional
Trustee are to be distributed to the holders of the Trust Securities issued by
the Trust pro rata in accordance with the Declaration.
"EXTENDED INTEREST PAYMENT PERIOD" has the meaning specified in
Section 4.1.
"FUNDAMENTAL CHANGE" means the occurrence of any transaction or event
or series of transactions or events pursuant to which all or substantially all
of the Common Stock shall be exchanged for, converted into, acquired for or
shall constitute solely the right to receive cash, securities, property or other
assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of any such series of transactions or
events, for purposes of adjustment of the Conversion Price, such Fundamental
Change shall be deemed to have occurred when substantially all of the Common
Stock shall have been exchanged for, converted into or acquired for, or shall
constitute solely the right to receive, such cash, securities, property or other
assets, but the adjustment shall be based upon the consideration that the
holders of Common Stock received in the transaction or event as a result of
which more than 50% of the Common Stock outstanding shall have been exchanged
for, converted into or acquired for, or shall constitute solely the right to
receive, such cash, securities, property or other assets.
"GLOBAL DEBENTURE" has the meaning specified in Section 2.4.
"MATURITY DATE" means the date on which the Convertible Debentures
mature and on which the principal shall be due and payable together with all
accrued and unpaid interest thereon including Compounded Interest and Additional
Interest, if any.
"NON BOOK-ENTRY CONVERTIBLE PREFERRED SECURITIES" has the meaning
specified in Section 2.4.
"NON-STOCK FUNDAMENTAL CHANGE" means any Fundamental Change other than
a Common Stock Fundamental Change.
"OPTIONAL REDEMPTION PRICE" has the meaning specified in Section 3.2.
"PURCHASER STOCK PRICE" means, with respect to any Common Stock
Fundamental Change, the average of the daily Closing Price for one share of the
common stock received by holders of Common Stock in such Common Stock
Fundamental Change during
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the 10 Trading Days immediately prior to the date fixed for the determination
of the holders of Common Stock entitled to receive such common stock or, if
there is no such date, prior to the date upon which the holders of Common
Stock shall have the right to receive such common stock.
"REFERENCE MARKET PRICE" initially means $__ and, in the event of any
adjustment to the Conversion Price other than as a result of a Fundamental
Change, the Reference Market Price shall also be adjusted so that the ratio of
the Reference Market Price to the Conversion Price after giving effect to any
such adjustment shall always be the same as the ratio of the initial Reference
Market Price to the initial Conversion Price of $__ per share.
"TRADING DAY" shall mean a day on which any securities are traded on
the national securities exchange or quotation system used to determine the
Closing Price.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE CONVERTIBLE DEBENTURES
SECTION 2.1. DESIGNATION AND PRINCIPAL AMOUNT.
There is hereby authorized a series of Debentures designated the "__%
Convertible Junior Subordinated Debentures", limited in aggregate principal
amount to $_________, which amount shall be as set forth in any written order of
the Company for the authentication and delivery of Convertible Debentures
pursuant to Section 3.3 of the Indenture.
SECTION 2.2. MATURITY.
The Maturity Date is _______.
SECTION 2.3. FORM AND PAYMENT.
Except as provided in Section 2.4, the Convertible Debentures shall be
issued in fully registered certificated form without Coupons, in denominations
of $50 in principal amount and integral multiples thereof. Principal and
interest on the Convertible Debentures issued in certificated form will be
payable, the transfer of such Convertible Debentures will be registrable and
such Convertible Debentures will be exchangeable for Convertible Debentures
bearing identical terms and provisions at the office or agency of the Trustee;
PROVIDED, HOWEVER, that payment of interest may be made at the option of the
Company by check mailed to the Holder at such address as shall appear in the
Debenture Register. Notwithstanding the foregoing, so long as the Holder of any
Convertible Debentures is the Institutional Trustee, the payment of the
principal of and interest (including Compounded Interest and Additional
Interest, if any) on such Convertible Debentures held by the Institutional
Trustee will be made at such place and to such account as may be designated by
the Institutional Trustee.
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SECTION 2.4. GLOBAL DEBENTURE.
(a) In connection with a Dissolution Event,
(i) the Convertible Debentures in certificated form may be presented
to the Trustee by the Institutional Trustee in exchange for a global
Debenture in an aggregate principal amount equal to the aggregate principal
amount of all outstanding Convertible Debentures (a "Global Debenture"), to
be registered in the name of DTC, or its nominee, and delivered by the
Trustee to DTC for crediting to the accounts of its participants pursuant
to the instructions of the Regular Trustees. The Company upon any such
presentation shall execute a Global Debenture in such aggregate principal
amount and deliver the same to the Trustee for authentication and delivery
in accordance with the Indenture and this First Supplemental Indenture.
Payments on the Convertible Debentures issued as a Global Debenture will be
made to DTC; and
(ii) if any Convertible Preferred Securities are held in non book-
entry certificated form, any Convertible Preferred Security Certificate
which represents Convertible Preferred Securities other than Convertible
Preferred Securities held by the Clearing Agency or its nominee ("Non
Book-Entry Convertible Preferred Securities") will be deemed to represent
beneficial interests in Convertible Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Non
Book-Entry Convertible Preferred Securities until such Convertible
Preferred Security Certificates are presented to the Debenture Registrar
for transfer or reissuance at which time such Convertible Preferred
Security Certificates will be cancelled and a Debenture, registered in the
name of the holder of the Convertible Preferred Security Certificate or the
transferee of the holder of such Convertible Preferred Security
Certificate, as the case may be, with an aggregate principal amount equal
to the aggregate liquidation amount of the Convertible Preferred Security
Certificate cancelled, will be executed by the Company and delivered to the
Trustee for authentication and delivery in accordance with the Indenture
and this First Supplemental Indenture. On issue of such Convertible
Debentures, Convertible Debentures with an equivalent aggregate principal
amount that were presented by the Institutional Trustee to the Trustee will
be deemed to have been cancelled.
(b) A Global Debenture may be transferred, in whole but not in
part, only to another nominee of DTC, or to a successor depositary selected
or approved by the Company or to a nominee of such successor depositary.
SECTION 2.5. INTEREST.
(a) Each Convertible Debenture will bear interest at the rate of
__% per annum (the "Coupon Rate") from ________ until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the Coupon Rate,
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compounded quarterly, payable (subject to the provisions of Article IV)
quarterly in arrears on ________, __________, ________ and _______ of each
year (each, an "Interest Payment Date"), commencing on __________, to the
Person in whose name such Convertible Debenture or any predecessor
Convertible Debenture is registered, at the close of business on the Regular
Record Date for such interest installment, which, in respect of (i)
Convertible Debentures of which the Institutional Trustee is the Holder and
the related Convertible Preferred Securities are in book-entry only form or
(ii) a Global Debenture, shall be the close of business on the Business Day
next preceding that Interest Payment Date; provided, that if the Interest
Payment Date is a Redemption Date, then the record date for the interest
payment shall be as of the opening of business on such day for the purpose of
permitting the Holder of a Convertible Debenture to convert on such record
date while continuing to be the record holder for the interest payment and
therefore entitled to receive the interest payment on the Interest Payment
Date notwithstanding conversion on the record date. Notwithstanding the
foregoing sentence, if (i) the Convertible Debentures are held by the
Institutional Trustee and the Convertible Preferred Securities are no longer
in book-entry only form or (ii) the Convertible Debentures are not
represented by a Global Debenture, the Company may select a Regular Record
Date for such interest installment which shall be any date at least one
Business Day before an Interest Payment Date.
(b) The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable for any
period shorter than a full quarterly period for which interest is computed,
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the
Convertible Debentures is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date.
(c) If, at any time while the Institutional Trustee is the Holder
of any Convertible Debentures, the Trust or the Institutional Trustee is
required to pay any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States,
or any other taxing authority, then, in any such case, the Company will pay
as additional interest ("Additional Interest") on the Convertible Debentures
held by the Institutional Trustee, such additional amounts as shall be
required so that the net amounts received and retained by the Trust and the
Institutional Trustee after paying such taxes, duties, assessments or other
governmental charges will be equal to the amounts the Trust and the
Institutional Trustee would have received had no such taxes, duties,
assessments or other government charges been imposed.
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ARTICLE III
REDEMPTION OF THE CONVERTIBLE DEBENTURES
SECTION 3.1. SPECIAL EVENT REDEMPTION.
If a Special Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Regular Trustees
shall have been informed by tax counsel rendering the Dissolution Tax
Opinion that a No-Recognition Opinion cannot be delivered to the Trust,
then, notwithstanding Section 3.2(a) but subject to Section 3.2(b), the
Company shall have the right upon not less than 30 days nor more than 60 days
notice to the Holders of the Convertible Debentures to redeem the Convertible
Debentures, in whole or in part, for cash within 90 days following the
occurrence of such Tax Event (the "90-Day Period") at a redemption price
equal to 100% of the principal amount to be redeemed plus any accrued and
unpaid interest (including Compounded and Additional Interest) thereon to the
date of such redemption (the "Redemption Price"), provided that if at the
time there is available to the Company or the Trust the opportunity to
eliminate, within the 90-Day Period, the Tax Event by taking some ministerial
action ("Ministerial Action"), such as filing a form or making an election,
or pursuing some other similar reasonable measure which has no adverse effect
on the Company, the Trust or the Holders of the Trust Securities issued by
the Trust, the Company shall pursue such Ministerial Action in lieu of
redemption, and, provided, further, that the Company shall have no right to
redeem the Convertible Debentures while the Trust is pursuing any Ministerial
Action pursuant to its obligations under the Declaration. The Redemption
Price shall be paid prior to 12:00 noon, New York time, on the date of such
redemption or such earlier time as the Company determines, provided that the
Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price prior to the redemption date.
SECTION 3.2. OPTIONAL REDEMPTION BY COMPANY.
(a) Subject to the provisions of Section 3.2(b) and to the
provisions of Article XI of the Indenture, except as otherwise may be
specified in Section 3.1 or elsewhere in this First Supplemental Indenture,
the Company shall have the right to redeem the Convertible Debentures, in
whole or in part, from time to time, on or after _______. Any redemption
pursuant to this paragraph will be made upon not less than 30 days nor more
than 60 days notice to the Holder of the Convertible Debentures, at the
following prices (expressed as percentages of the principal amount of the
Convertible Debentures) (the "Optional Redemption Price") together with
accrued and unpaid interest, including Compounded and Additional Interest to,
but excluding, the Redemption Date, if redeemed during the 12-month period
beginning _____:
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YEAR REDEMPTION PRICE
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and 100% if redeemed on or after _______.
If Convertible Debentures are redeemed on any _______, ________,
________, or _______, accrued and unpaid interest shall be payable to holders
of record on the relevant record date.
So long as the corresponding Convertible Preferred Securities are
outstanding, the proceeds from the redemption of any of the Convertible
Debentures will be used to redeem Convertible Preferred Securities.
If the Convertible Debentures are only partially redeemed pursuant
to this Section 3.2, the Convertible Debentures will be redeemed pro rata or
by lot or by any other method utilized by the Trustee. The Optional
Redemption Price shall be paid prior to 12:00 noon, New York time, on the
Redemption Date or at such earlier time as the Company determines provided
that the Company shall deposit with the Trustee an amount sufficient to pay
the Optional Redemption Price by 10:00 a.m., New York time, on the date such
Optional Redemption Price is to be paid.
(b) If a partial redemption of the Convertible Debentures would
result in the delisting of the Convertible Preferred Securities issued by the
Trust from any national securities exchange or other organization on which
the Convertible Preferred Securities are then listed, the Company shall not
be permitted to effect such partial redemption and may only redeem the
Convertible Debentures in whole.
(c) The Company may not redeem fewer than all of the outstanding
Convertible Debentures unless all accrued and unpaid interest has been paid
on all of the outstanding Convertible Debentures.
SECTION 3.3. NO SINKING FUND.
The Convertible Debentures are not entitled to the benefit of any
sinking fund.
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ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. EXTENSION OF INTEREST PAYMENT PERIOD.
As long as an Event of Default under Section 5.1(a) of the Indenture
shall not have occurred and be continuing, the Company shall have the right,
at any time and from time to time during the term of the Convertible
Debentures, to defer payments of interest by extending the interest payment
period of such Convertible Debentures for a period not exceeding 20
consecutive quarters (the "Extended Interest Payment Period"), during which
Extended Interest Payment Period no interest shall be due and payable;
provided that no Extended Interest Payment Period may extend beyond the
Maturity Date or any earlier Redemption Date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of
the extension of the interest payment period pursuant to this Section 4.1,
will bear interest thereon at the Coupon Rate compounded quarterly for each
quarter of the Extended Interest Payment Period ("Compounded Interest"). At
the end of the Extended Interest Payment Period, the Company shall pay all
interest accrued and unpaid on the Convertible Debentures, including any
Additional Interest and Compounded Interest (together, "Deferred Interest")
that shall be payable to the Holders of Convertible Debentures in whose names
the Convertible Debentures are registered in the Debenture Register on the
first record date after the end of the Extended Interest Payment Period.
Before the termination of any Extended Interest Payment Period, the Company
may further extend such period, provided that such period together with all
such further extensions thereof shall not exceed 20 consecutive quarters, or
extend beyond the maturity date of the Convertible Debentures. Upon the
termination of any Extended Interest Payment Period and upon the payment of
all Deferred Interest then due, the Company may commence a new Extended
Interest Payment Period, subject to the foregoing requirements. No interest
shall be due and payable during an Extended Interest Payment Period, except
at the end thereof, but the Company may prepay at any time all or any portion
of the interest accrued during an Extended Interest Payment Period.
SECTION 4.2. NOTICE OF EXTENSION.
(a) If the Institutional Trustee is the only registered Holder of
the Convertible Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give written notice to the Regular
Trustees, the Institutional Trustee and the Trustee of its election of such
Extended Interest Payment Period one Business Day before the earlier of (i)
the next succeeding date on which Distributions on the Trust Securities
issued by the Trust are payable, or (ii) the date the Trust is required to
give notice of the record date, or the date such Distributions are payable,
to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of Convertible Preferred Securities issued by the
Trust, but in any event at least one Business Day before such record date.
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(b) If the Institutional Trustee is not the only Holder of the
Convertible Debentures at the time the Company elects an Extended Interest
Payment Period, the Company shall give the Holders of Convertible Debentures
and the Trustee written notice of its selection of such Extended Interest
Payment Period at least 10 Business Days before the earlier of (i) the next
succeeding Interest Payment Date, or (ii) the date the Company is required to
give notice of the record or payment date of such interest payment to the New
York Stock Exchange or other applicable self-regulatory organization or to
Holders of Convertible Debentures.
(c) The quarter in which any notice is given pursuant to
paragraphs (A) or (B) of this Section 4.2 shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period permitted
under Section 4.1.
SECTION 4.3. LIMITATION OF TRANSACTIONS.
If the Company shall exercise its right to defer payment of interest
as provided in Section 4.1, then (i) the Company shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital
stock (other than (A) purchases or acquisitions of shares of its common stock
in connection with the satisfaction by the Company of its obligations under
any employee benefit plans, (B) as a result of a reclassification of its
capital stock or the exchange or conversion of one class or series of its
capital stock for another class or series of its capital stock or, (C) the
purchase of fractional interests in shares of its capital stock pursuant to
the conversion or exchange provisions of such capital stock or security being
converted or exchanged), (ii) the Company shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company which rank PARI PASSU with or junior to
the Convertible Debentures and (iii) the Company shall not make any guarantee
payment with respect to the foregoing (other than pursuant to the Guarantee).
ARTICLE V
EXPENSES
SECTION 5.1. PAYMENT OF EXPENSES.
In connection with the offering, sale and issuance of the
Convertible Debentures to the Institutional Trustee and in connection with
the sale of the Trust Securities by the Trust, the Company, in its capacity
as borrower with respect to the Convertible Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Convertible Debentures, including commissions to the
underwriters payable pursuant to the Underwriting Agreement and compensation
of the Trustee under the Indenture in accordance with the provisions of
Section 6.6 of the Indenture;
11
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the Trust, the
fees and expenses of the Institutional Trustee and the Delaware Trustee, the
costs and expenses relating to the operation of the Trust, including without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the acquisition, financing,
and disposition of Trust assets);
(c) pay all costs and expenses related to the enforcement by the
Institutional Trustee of the rights of the holders of the Convertible
Preferred Securities;
(d) be primarily liable for any indemnification obligations
arising with respect to the Declaration; and
(e) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
SECTION 5.2. PAYMENT UPON RESIGNATION OR REMOVAL.
Upon termination of this First Supplemental Indenture or the
Indenture or the removal or resignation of the Trustee pursuant to Section
6.7 of the Indenture, the Company shall pay to the Trustee all amounts
accrued to the date of such termination, removal or resignation. Upon
termination of the Declaration or the removal or resignation of the Delaware
Trustee or the Institutional Trustee, as the case may be, pursuant to Section
5.6 of the Declaration, the Company shall pay to the Delaware Trustee or the
Institutional Trustee, and their respective counsel, as the case may be, all
amounts accrued to the date of such termination, removal or resignation.
ARTICLE VI
COVENANT TO LIST ON EXCHANGE
SECTION 6.1. LISTING ON AN EXCHANGE.
If the Convertible Debentures are to be distributed to the holders
of Convertible Preferred Securities issued by the Trust upon a Dissolution
Event, the Company will use its best efforts to list such Convertible
Debentures on the New York Stock Exchange, Inc. or on such other exchange as
the Convertible Preferred Securities are then listed.
12
ARTICLE VII
CONVERSION OF CONVERTIBLE DEBENTURES
SECTION 7.1. CONVERSION RIGHTS.
Subject to and upon compliance with the provisions of this Article
VII, the Convertible Debentures are convertible, at the option of the Holder,
at any time beginning _______ through the close of business on ________ (or,
in the case of Convertible Debentures called for redemption, prior to the
close of business on the Business Day prior to the corresponding redemption
date) into fully paid and nonassessable shares of Common Stock of the Company
at an initial conversion rate of _______ shares of Common Stock for each $50
in aggregate principal amount of Convertible Debentures (equal to a
Conversion Price of $___ per share of Common Stock), subject to adjustment as
described in this Article VII. A Holder of Convertible Debentures may
convert any portion of the principal amount of the Convertible Debentures
into that number of fully paid and nonassessable shares of Common Stock
obtained by dividing the principal amount of the Convertible Debentures to be
converted by such Conversion Price. All calculations under this Article VII
shall be made to the nearest cent or to the nearest 1/100th of a share, as
the case may be.
SECTION 7.2. CONVERSION PROCEDURES.
(a) In order to convert all or a portion of the Convertible
Debentures, the Holder thereof shall deliver to the Conversion Agent an
irrevocable Notice of Conversion setting forth the principal amount of
Convertible Debentures to be converted, together with the name or names, if
other than the Holder, in which the shares of Common Stock should be issued
upon conversion and, if such Convertible Debentures are definitive
Convertible Debentures, surrender to the Conversion Agent the Convertible
Debentures to be converted, duly endorsed or assigned to the Company or in
blank. In addition, a holder of Convertible Preferred Securities may
exercise its right under the Declaration to convert such Convertible
Preferred Securities into Common Stock by delivering to the Conversion Agent
an irrevocable Notice of Conversion setting forth the information called for
by the preceding sentence and directing the Conversion Agent (i) to exchange
such Convertible Preferred Securities for a portion of the Convertible
Debentures held by the Trust (at an exchange rate of $50 principal amount of
Convertible Debentures for each Convertible Preferred Security) and (ii) to
immediately convert such Convertible Debentures, on behalf of such holder,
into Common Stock pursuant to this Article VII and, if such Convertible
Preferred Securities are in definitive form, surrendering such Convertible
Preferred Securities, duly endorsed or assigned to the Trust or in blank. So
long as any Convertible Preferred Securities are outstanding, the Trust shall
not convert any Convertible Debentures except pursuant to a Notice of
Conversion delivered to the Conversion Agent by a holder of Convertible
Preferred Securities.
If a Notice of Conversion is delivered on or after the Regular
Record Date and prior to the subsequent Interest Payment Date, the Holder on
the Regular Record Date will be entitled to receive the interest payable on
the subsequent Interest Payment Date on the
13
portion of Convertible Debentures to be converted notwithstanding the
conversion thereof prior to such Interest Payment Date. Except as otherwise
provided in the immediately preceding sentence, in the case of any
Convertible Debenture which is converted, interest whose payment date is
after the date of conversion of such Convertible Debenture shall not be
payable, and the Company shall not make nor be required to make any other
payment, adjustment or allowance with respect to accrued but unpaid interest
on the Convertible Debentures being converted, which shall be deemed to be
paid in full. Each conversion shall be deemed to have been effected
immediately prior to the close of business on the day on which the Notice of
Conversion was received (the "Conversion Date") by the Conversion Agent from
the Holder or from a holder of the Convertible Preferred Securities effecting
a conversion thereof pursuant to its conversion rights under the Declaration,
as the case may be. The Person or Persons entitled to receive Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock as of the Conversion Date. As
promptly as practicable on or after the Conversion Date, the Company shall
issue and deliver at the office of the Conversion Agent, unless otherwise
directed by the Holder in the Notice of Conversion, a certificate or
certificates for the number of full shares of Common Stock issuable upon such
conversion, together with the cash payment, if any, in lieu of any fraction
of any share to the Person or Persons entitled to receive the same. The
Conversion Agent shall deliver such certificate or certificates to such
Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Convertible Debentures are convertible
(together with the cash payment, if any, in lieu of fractional shares) shall
be deemed to satisfy the Company's obligation to pay the principal amount at
Maturity of the portion of Convertible Debentures so converted and any unpaid
interest (including Compounded Interest) accrued on such Convertible
Debentures at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the Closing Price of such fractional interest on the date on which the
Convertible Debentures were duly surrendered to the Conversion Agent for
conversion, or, if such day is not a Trading Day, on the next Trading Day,
and the Conversion Agent in turn will make such payment, if any, to the
Holder of the Convertible Debentures or the holder of the Convertible
Preferred Securities so converted.
(d) In the event of the conversion of any Convertible Debenture
in part only, a new Convertible Debenture or Convertible Debentures for the
unconverted portion thereof will be issued in the name of the Holder thereof
upon the cancellation thereof in accordance with Section 14.2 of the
Indenture.
(e) In effecting the conversion transactions described in this
Section 7.2, the Conversion Agent is acting as agent of the holders of
Convertible Preferred Securities (in the exchange of Convertible Preferred
Securities for Convertible Debentures) and as agent of the
14
Holders of Convertible Debentures (in the conversion of Convertible
Debentures into Common Stock), as the case may be. The Conversion Agent is
hereby authorized (i) to exchange Convertible Debentures held by the Trust
from time to time for Convertible Preferred Securities in connection with the
conversion of such Convertible Preferred Securities in accordance with this
Article VII and (ii) to convert all or a portion of the Convertible
Debentures into Common Stock and thereupon to deliver such shares of Common
Stock in accordance with the provisions of this Article VII and to deliver to
the Trust a new Convertible Debenture or Convertible Debentures for any
resulting unconverted principal amount.
SECTION 7.3. CONVERSION PRICE ADJUSTMENTS.
The Conversion Price shall be adjusted from time to time as follows:
(a) In case the Company shall, while any of the Convertible
Debentures are outstanding, (i) pay a dividend or make a distribution with
respect to Common Stock in shares of Common Stock, (ii) subdivide outstanding
shares of Common Stock, (iii) combine outstanding shares of Common Stock into
a smaller number of shares or (iv) issue by reclassification of shares of
Common Stock any shares of capital stock of the Company, the conversion
privilege and the Conversion Price for the Convertible Debentures shall be
adjusted so that the Holder of any Convertible Debenture thereafter
surrendered for conversion shall be entitled to receive the number of shares
of capital stock of the Company which such Holder would have owned
immediately following such action had such Convertible Debenture been
converted immediately prior thereto. An adjustment made pursuant to this
subsection (a) shall become effective immediately after the record date in
the case of a dividend or other distribution and shall become effective
immediately after the effective date in case of a subdivision, combination or
reclassification (or immediately after the record date if a record date shall
have been established for such event). If, as a result of an adjustment made
pursuant to this subsection (a), the Holder of any Convertible Debenture
thereafter surrendered for conversion shall become entitled to receive shares
of two or more classes or series of capital stock of the Company, the Board
of Directors (whose determination shall be conclusive and shall be described
in a Board Resolution filed with the Trustee) shall determine the allocation
of the adjusted Conversion Price for the Convertible Debentures between or
among shares of such classes or series of capital stock.
(b) In case the Company shall, while any of the Convertible
Debentures are outstanding, issue rights or warrants to all holders of Common
Stock entitling them (for a period expiring within 45 days after the record
date mentioned below) to subscribe for or purchase shares of Common Stock at
a price per share less than the current market price per share of Common
Stock (as determined pursuant to subsection (g) below) on the record date
mentioned below, the Conversion Price for the Convertible Debentures shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of issuance of such
rights or warrants by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding on the date of
15
issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such current market price, and of
which the denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase. Such adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights or warrants. To the extent that shares of Common Stock are not so
delivered after the expiration of such rights or warrants, the Conversion
Price shall be readjusted to the Conversion Price which would then be in
effect if such date fixed for the determination of stockholders entitled to
receive such rights or warrants had not been fixed. For the purposes of this
subsection, the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company
shall not issue any rights or warrants in respect of shares of Common Stock
held in the treasury of the Company. In case any rights or warrants referred
to in this subsection in respect of which an adjustment shall have been made
shall expire unexercised within 45 days after the same shall have been
distributed or issued by the Company, the Conversion Price shall be
readjusted at the time of such expiration to the Conversion Price that would
have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(c) Subject to the last sentence of this subsection (c), in case
the Company shall, by dividend or otherwise, distribute to all holders of
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets or rights or warrants to subscribe for or
purchase any of its securities (excluding any rights or warrants referred to
in subsection (b), any dividend or distribution paid exclusively in cash and
any dividend or distribution referred to in subsection (a) of this Section
7.3), the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the effectiveness of the Conversion Price reduction contemplated by
this subsection (c) by a fraction of which the numerator shall be the current
market price per share (determined as provided in subsection (g)) of the
Common Stock on the date fixed for the payment of such distribution (the
"Reference Date") less the fair market value (as determined in good faith by
the Board of Directors, whose determination shall be conclusive and described
in a resolution of the Board of Directors), on the Reference Date, of the
portion of the evidences of indebtedness, shares of capital stock, cash and
assets so distributed or of such subscription rights or warrants applicable
to one share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the
Reference Date; provided, however, that in the event the numerator shall be
less than one, in lieu of the foregoing adjustment, adequate provision shall
be made so that each Holder of Convertible Debentures shall have the right to
receive upon conversion the amount of such distribution such Holder would
have received had such Holder converted each Convertible Debenture
immediately prior to the Reference Date. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend
16
or distribution had not occurred. If the Board of Directors determines the
fair market value of any distribution for purposes of this subsection (c) by
reference to the actual or when issued trading market for any securities
comprising such distribution, it must in doing so consider the prices in such
market over the same period used in computing the current market price per
share of Common Stock (determined as provided in subsection (g)). For
purposes of this subsection (c), any dividend or distribution that includes
shares of Common Stock or rights or warrants to subscribe for or purchase
shares of Common Stock shall be deemed instead to be (i) a dividend or
distribution of the evidences of indebtedness, shares of capital stock, cash
or assets other than such shares of Common Stock or such rights or warrants
(making any Conversion Price reduction required by this subsection (c))
immediately followed by (ii) a dividend or distribution of such shares of
Common Stock or such rights or warrants (making any further Conversion Price
reduction required by subsection (a) or (B)), except (A) the Reference Date
of such dividend or distribution as defined in this subsection (c) shall be
substituted as (1) "the record date in the case of a dividend or other
distribution," and (2) "the record date for the determination of stockholders
entitled to receive such rights or warrants" and (3) "the date fixed for such
determination" within the meaning of subsections (a) and (b) and (B) any
shares of Common Stock included in such dividend or distribution shall not be
deemed outstanding for purposes of computing any adjustment of the Conversion
Price in subsection (a).
(d) In case the Company shall pay or make a dividend or other
distribution on the Common Stock exclusively in cash (excluding any quarterly
cash dividend on Common Stock to the extent that the aggregate cash dividend
per share of Common Stock in any quarter does not exceed the greater of (i)
the amount per share of Common Stock of the next preceding quarterly dividend
on Common Stock to the extent such preceding quarterly dividend did not
require an adjustment of the Conversion Price pursuant to this subsection (d)
(as adjusted to reflect subdivisions or combinations of Common Stock), and
(ii) 3.75% of the current market price per share determined as provided in
subsection (g), and excluding any dividend or distribution in connection with
the liquidation, dissolution or winding-up of the Company), the Conversion
Price shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this
subsection (d) by a fraction of which the numerator shall be the current
market price per share (determined as provided in subsection (g)) of Common
Stock on the date fixed for the payment of such distribution less the amount
of cash so distributed (and not excluded as provided above) applicable to one
share of Common Stock and the denominator shall be such current market price
per share of the Common Stock (determined as provided in subsection (g)),
such reduction to become effective immediately prior to the opening of
business on the day following the date fixed for the payment of such
distribution; provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater
than the current market price per share (as defined in subsection (g)) of
Common Stock on the record date mentioned above, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder of
Convertible Debentures shall have the right to receive upon conversion the
amount of cash such Holder would have received had such Holder converted each
17
Convertible Debenture immediately prior to the record date for the
distribution of the cash. If an adjustment is required to be made pursuant
to this subsection (d) as a result of a distribution that is a quarterly
dividend, such adjustment shall be based upon the amount by which such
distribution exceeds the amount of the quarterly cash dividend permitted to
be excluded as provided above. If an adjustment is required to be made
pursuant to this subsection (d) as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of
the distribution. In the event that such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such record date had not
been fixed.
(e) In case a tender or exchange offer (other than an odd-lot
offer) made by the Company or any Subsidiary of the Company for all or any
portion of the Common Stock shall expire and such tender or exchange offer
shall involve the payment by the Company or such Subsidiary of consideration
per share of Common Stock having a fair market value (as determined in good
faith by the Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender
or exchange offer (as it shall have been amended) that exceeds the Closing
Price of the Common Stock on the Trading Day next succeeding the Expiration
Time, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the effectiveness of the Conversion Price reduction contemplated by
this subsection (e) by a fraction (which shall not be greater than one) of
which the numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time
multiplied by the Closing Price of Common Stock on the Trading Day next
succeeding the Expiration Time and the denominator shall be the sum of (i)
the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum, being referred to as
the "Purchased Shares") and (ii) the product of the number of shares of the
Common Stock outstanding (less any Purchased Shares) at the Expiration Time
and the Closing Price of Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become retroactively effective immediately
prior to the opening of business on the day following the Expiration Time.
(f) In case a tender or exchange offer made by a Person other than
the Company or any Subsidiary of the Company for all or any portion of the
Common Stock shall expire and such tender or exchange offer shall involve the
payment by a Person other than the Company or any Subsidiary of the Company
of consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose determination shall
be conclusive and described in a resolution of the Board of Directors) at the
applicable Expiration Time that exceeds the Closing Price of the Common Stock
on the Trading Day next succeeding the applicable Expiration Time in which as
of the closing date of the offer the Board of Directors of the Company is not
recommending
18
rejection of the offer, the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subsection (f) by a fraction (which shall not
be greater than one) of which the numerator shall be the number of shares of
Common Stock outstanding (including any tendered or exchanged shares) at the
Expiration Time multiplied by the Closing Price of the Common Stock on the
Trading Day next succeeding the Expiration Time and the denominator shall be
the sum of (i) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such maximum, being referred
to as the "Purchased Shares") and (ii) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) at the Expiration Time
and the Closing Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, such reduction to become retroactively effective
immediately prior to the opening of business on the day following the
Expiration Time; provided, however, that the reduction of the Conversion
Price contemplated by this subsection (f) will only be made if the tender
offer or exchange offer is made for an amount which increases that Person's
ownership of Common Stock to more than 25% of the total shares of Common
Stock outstanding and provided, further, that the reduction of the Conversion
Price contemplated by this subsection (f) will not be made if as of the close
of the offer, the offering documents with respect to such offer disclose a
plan or an intention to cause the Company to engage in a consolidation or
merger of the Company or a sale of all or substantially all of the assets of
the Company.
(g) For the purpose of any computation under subsections (b), (c)
or (d), the current market price per share of Common Stock on any date in
question shall be deemed to be the average of the daily Closing Prices for
the ten Trading Day period ending on the earlier of the day in question and,
if applicable, the day before the "ex" date with respect to the issuance or
distribution requiring such computation; provided, however, that if more than
one event occurs that would require an adjustment pursuant to subsections (a)
through (f), inclusive, the Board of Directors may make such adjustments to
the Closing Prices during such ten Trading Day period as it deems appropriate
to effectuate the intent of the adjustments in this Section 7.3, in which
case any such determination by the Board of Directors shall be set forth in a
Board Resolution and shall be conclusive. For purposes of this paragraph,
the term "ex" date, (1) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular
way on the New York Stock Exchange or on such successor securities exchange
as the Common Stock may be listed or in the relevant market from which the
Closing Prices were obtained without the right to receive such issuance or
distribution, and (2) when used with respect to any tender or exchange offer
means the first date on which the Common Stock trades regular way on such
securities exchange or in such market after the Expiration Time of such offer.
(h) The Company may make such reductions in the Conversion Price,
in addition to those required by subsections (a) through (f), as the Board of
Directors considers
19
to be advisable to avoid or diminish any income tax to holders of Common
Stock or rights to purchase Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated
as such for income tax purposes. The Company from time to time may reduce
the Conversion Price by any amount for any period of time if the period is at
least 20 days, the reduction is irrevocable during the period, and the Board
of Directors shall have made a determination that such reduction would be in
the best interest of the Company, which determination shall be conclusive.
Whenever the Conversion Price is reduced pursuant to the preceding sentence,
the Company shall mail to Holders of record of the Convertible Debentures a
notice of the reduction at least 15 days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it will be in effect.
(i) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Conversion Price; provided, however, that any adjustments which by reason of
this subsection (i) are not required to be made shall be carried forward and
taken into account in determining whether any subsequent adjustment shall be
required.
(j) If any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value to the Holder of Convertible
Debentures.
SECTION 7.4. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
(a) In the event that the Company shall be a party to any
transaction (including without limitation (i) any recapitalization or
reclassification of the Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination of the Common Stock), (ii) any
consolidation of the Company with, or merger of the Company into, any other
Person, any merger of another Person into the Company (other than a merger
which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company), (iii) any
sale or transfer of all or substantially all of the assets of the Company or
(iv) any compulsory share exchange) pursuant to which either shares of Common
Stock shall be converted into the right to receive other securities, cash or
other property, or, in the case of a sale or transfer of all or substantially
all of the assets of the Company, the holders of Common Stock shall be
entitled to receive other securities, cash or other property, then lawful
provision shall be made as part of the terms of such transaction whereby the
Holder of each Convertible Debenture then outstanding shall have the right
thereafter to convert such Convertible Debenture only into:
(A) in the case of any such transaction that does not constitute a
Common Stock Fundamental Change and subject to funds being legally
available for such purpose under applicable law at the time of such
conversion, the kind and amount of
20
the securities, cash or other property that would have been receivable
upon such recapitalization, reclassification, consolidation, merger,
sale, transfer or share exchange by a holder of the number of shares of
Common Stock issuable upon conversion of such Convertible Debenture
immediately prior to such recapitalization, reclassification,
consolidation, merger, sale, transfer or share exchange, after giving
effect, in the case of any Non-Stock Fundamental Change (as defined
below), to any adjustment in the Conversion Price in accordance with
clause (i) of subsection (c) of this Section 7.4; and
(B) in the case of any such transaction that constitutes a Common Stock
Fundamental Change, common stock of the kind received by holders of
Common Stock as a result of such Common Stock Fundamental Change in an
amount determined in accordance with clause (ii) of subsection (c) of
this Section 7.4.
(b) The company or the Person formed by such consolidation or
resulting from such merger or which acquired such assets or which acquires the
Company's shares, as the case may be, shall make provision in its certificate or
articles of incorporation or other constituent document to establish such right.
Such certificate or articles of incorporation or other constituent document
shall provide for adjustments which, for events subsequent to the effective date
of such certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article VII. The above provisions shall similarly apply to
successive transactions of the foregoing type.
(c) Notwithstanding any other provision of this Section 7.4 to the
contrary, if any Fundamental Change occurs, then the Conversion Price in effect
will be adjusted immediately after such Fundamental Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the Conversion
Price of the Convertible Debentures immediately following such Non-Stock
Fundamental Change shall be the lower of (A) the Conversion Price in
effect immediately prior to such Non-Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to Section
7.3, and (B) the product of (1) the greater of the Applicable Price and
the then applicable Reference Market Price and (2) a fraction, the
numerator of which is $50 and the denominator of which is (x) the amount
of the Optional Redemption Price set forth in Section 3.2 for $50 in
principal amount of Convertible Debentures if the redemption date were
the date of such Non-Stock Fundamental Change (or, for the period
commencing ________ and through _______ and the twelve-month periods
commencing and ________ and ________, the product of ________, _______
and ________, respectively, times $50) plus (y) any then-accrued and
unpaid interest on $50 in principal amount of Convertible Debentures; and
(ii) in the case of a Common Stock Fundamental Change, the Conversion
Price of the Convertible Debentures immediately following such Common
Stock Fundamen-
21
tal Change shall be the Conversion Price in effect immediately prior to such
Common Stock Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to Section 7.3, multiplied by a
fraction, the numerator of which is the Purchaser Stock Price and the
denominator of which is the Applicable Price; provided, however, that in
the event of a Common Stock Fundamental Change in which (A) 100% of the
value of the consideration received by a holder of Common Stock is common
stock of the successor, acquiror or other third party (and cash, if any,
paid with respect to any fractional interests in such common stock
resulting from such Common Stock Fundamental Change) and (B) all of the
Common Stock shall have been exchanged for, converted into or acquired
for, common stock of the successor, acquiror or other third party (and
any cash with respect to fractional interests), the Conversion Price of
the Convertible Preferred Securities immediately following such Common
Stock Fundamental Change shall be the Conversion Price in effect
immediately prior to such Common Stock Fundamental Change multiplied by a
fraction, the numerator of which is one and the denominator of which is
the number of shares of common stock of the successor, acquiror or other
third party received by a holder of one share of Common Stock as a result
of such Common Stock Fundamental Change.
SECTION 7.5. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price and
shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed with the Trustee and the
transfer agent for the Convertible Preferred Securities and the Convertible
Debentures; and
(b) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Company to all record holders of Convertible Preferred
Securities and the Convertible Debentures at their last addresses as they
appear upon the stock transfer books of the Company and the Trust.
SECTION 7.6. PRIOR NOTICE OF CERTAIN EVENTS.
In case:
(a) the Company shall (i) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash that would not
require an adjustment pursuant to Section 7.3(c) or (d) or (ii) authorize a
tender or exchange offer that would require an adjustment pursuant to Section
7.3(e);
22
(b) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants;
(c) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in
par value, or from par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company shall be required, or
of the sale or transfer of all or substantially all of the assets of the
Company or of any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or other property; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall (i) if any Convertible Preferred Securities are
outstanding, cause to be filed with the transfer agent for the Convertible
Preferred Securities, and shall cause to be mailed to the holders of record
of the Convertible Preferred Securities, at their last addresses as they
shall appear upon the stock transfer books of the Trust or (ii) shall cause
to be mailed to all Holders at their last addresses as they shall appear in
the Debenture Register, at least 15 days prior to the applicable record or
effective date hereinafter specified, a notice stating (A) the date on which
a record (if any) 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 (B) the
date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock
for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
SECTION 7.7. DIVIDEND OR INTEREST REINVESTMENT PLANS.
Notwithstanding the foregoing provisions, the issuance of any shares
of Common Stock pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Company and the investment
of additional optional amounts in shares of Common Stock under any such plan,
and the issuance of any shares of Common Stock or options or rights to
purchase such shares pursuant to any employee benefit plan or program of the
Company or pursuant to any option, warrant, right or exercisable,
exchangeable or convertible security outstanding as of _______, shall not be
deemed to constitute an issuance of Common Stock or exercisable, exchangeable
or convertible securities by the Company to which any of the adjustment
provisions described above applies. There shall
23
also be no adjustment of the Conversion Price in case of the issuance of any
stock (or securities convertible into or exchangeable for stock) of the
Company except as specifically described in this Article VII.
SECTION 7.8. CERTAIN ADDITIONAL RIGHTS.
In case the Company shall, by dividend or otherwise, declare or make
a distribution on the Common Stock referred to in Section 7.3 (c) or 7.3(d)
(including, without limitation, dividends or distributions referred to in the
last sentence of Section 7.3(d)), the Holder of Convertible Debentures, upon
the conversion thereof subsequent to the close of business on the date fixed
for the determination of stockholders entitled to receive such distribution
and prior to the effectiveness of the Conversion Price adjustment in respect
of such distribution, shall also be entitled to receive for each share of
Common Stock into which Convertible Debentures are converted, the portion of
the shares of Common Stock, rights, warrants, evidences of indebtedness,
shares of capital stock, cash and assets so distributed applicable to one
share of Common Stock; provided, however, that, at the election of the
Company (whose election shall be evidenced by a resolution of the Board of
Directors) with respect to all Holders so converting, the Company may, in
lieu of distributing to such Holder any portion of such distribution not
consisting of cash or securities of the Company, pay such Holder an amount in
cash equal to the fair market value thereof (as determined in good faith by
the Board of Directors, whose determination shall be conclusive and described
in a resolution of the Board of Directors). If any conversion of Convertible
Debentures described in the immediately preceding sentence occurs prior to
the payment date for a distribution to holders of Common Stock which the
Holder of Convertible Debentures so converted is entitled to receive in
accordance with the immediately preceding sentence, the Company may elect
(such election to be evidenced by a resolution of the Board of Directors) to
distribute to such Holder a due xxxx for the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash or assets
to which such Holder is so entitled, provided, that such due xxxx (a) meets
any applicable requirements of the principal national securities exchange or
other market on which the Common Stock is then traded and (b) requires
payment or delivery of such shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets no later
than the date of payment or delivery thereof to holders of shares of Common
Stock receiving such distribution.
SECTION 7.9. TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR
ADJUSTMENTS.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder of any Convertible Debenture
to determine whether any facts exist which may require any adjustment of the
Conversion Price, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or whether this
supplemental indenture need be entered into. Neither the Trustee nor any
Conversion Agent shall be accountable with respect to the validity or value
(or the kind of account) of any shares of Common Stock or of any securities
or property, which may at any time be issued or delivered upon the conversion
of any Convertible Debenture; and neither
24
the Trustee nor any Conversion Agent makes any representation with respect
thereto. Neither the Trustee nor any Conversion Agent shall be responsible
for any failure of the Company to make any cash payment or to issue, transfer
or deliver any shares of Common Stock or stock certificates or other
securities or property upon the surrender of any Convertible Debenture for
the purpose of conversion.
ARTICLE VIII
FORM OF CONVERTIBLE DEBENTURE
SECTION 8.1. FORM OF CONVERTIBLE DEBENTURE.
The Convertible Debentures and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the
following forms:
[(FORM OF FACE OF CONVERTIBLE DEBENTURE)]
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT THE FOLLOWING -
- This Debenture is a Book Entry Debenture within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This Debenture is exchangeable for Convertible
Debentures registered in the name of a Person other than the Depositary or its
nominee only in the limited circumstances described in the Indenture, and no
transfer of this Debenture (other than a transfer of this Debenture 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 such limited circumstances.
Unless this Debenture is presented by an authorized representative
of The Depository Trust Company (55 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx) to the
issuer or its agent for registration of transfer, exchange or payment, and
any Debenture issued is registered in the name of Cede & Co. or such other
name as requested by an authorized representative of The Depository Trust
Company and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
No. _______________ CUSIP No. _______________
SUN HEALTHCARE GROUP, INC.
__% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE
Sun Healthcare Group, Inc., a Delaware corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to, ___________ or
registered assigns, the principal
25
sum of _____________ Dollars ($___________) on ________________, and to pay
interest on said principal sum from ___________, or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, quarterly (subject to deferral
as set forth herein) in arrears on _______, _______, _______, and ______of
each year commencing ____________, at the rate of __% per annum until the
principal hereof shall have become due and payable, and on any overdue
principal and premium, if any, and (without duplication and to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded
quarterly. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months. Except
as provided in the following sentence, the amount of interest payable for any
period shorter than a full quarterly period for which interest is computed,
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on this
Convertible Debenture is not a Business Day, then payment of interest payable
on such date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture (referred to on the
reverse hereof), be paid to the person in whose name this Convertible
Debenture (or one or more Predecessor Debentures, as defined in said
Indenture) is registered on the Regular Record Date for such interest
installment which shall be the close of business on the Business Day next
preceding such Interest Payment Date unless otherwise provided in the
Indenture. Any such interest installment not punctually paid or duly provided
for shall forthwith cease to be payable to the registered Holders on such
Regular Record Date and may be paid to the Person in whose name this
Convertible Debenture (or one or more Predecessor Debentures) is registered
at the close of business on a special record date to be fixed by the Trustee
for the payment of such defaulted interest, notice whereof shall be given to
the registered Holders of the Convertible Debentures not less than 10 days
prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Convertible Debentures may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture. The principal of (and premium, if any) and the interest on this
Convertible Debenture shall be payable at the office or agency of the Trustee
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; PROVIDED, HOWEVER, that payment of interest may be made at the
option of the Company by check mailed to the registered Holder at such
address as shall appear in the Debenture Register. Notwithstanding the
foregoing, so long as the Holder of this Convertible Debenture is the
Institutional Trustee, the payment of the principal of (and premium, if any)
and interest on this Convertible Debenture will be made at such place and to
such account as may be designated by the Institutional Trustee.
26
The indebtedness evidenced by this Convertible Debenture is, to the
extent provided in the Indenture, subordinate and junior in right of payment
to the prior payment in full of all Senior Indebtedness, and this Convertible
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Convertible Debenture, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each Holder hereof, by his or her acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness,
whether now outstanding or hereafter incurred, and waives reliance by each
such Holder upon said provisions.
This Convertible Debenture shall not be entitled to any benefit
under the Indenture hereinafter referred to, be valid or become obligatory
for any purpose until the Certificate of Authentication hereon shall have
been signed by or on behalf of the Trustee.
The provisions of this Convertible Debenture are continued on the
reverse side hereof and such continued provisions shall for all purposes have
the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
SUN HEALTHCARE GROUP, INC.
By: _____________________________________________
Name:
Title
Attest:
By: ________________________
Name:
Title:
27
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Debentures of the series of Convertible
Debentures described in the within-mentioned Indenture.
Dated:
--------------
The Bank of New York,
as Trustee or as Authentication Agent
By By
-------------------- --------------------
Authorized Signatory Authorized Signatory
28
[FORM OF REVERSE OF DEBENTURE]
This Convertible Debenture is one of a duly authorized series of
Debentures of the Company (herein sometimes referred to as the "Debentures"),
specified in the Indenture, all issued or to be issued in one or more series
under and pursuant to an Indenture dated as of __________, duly executed and
delivered between the Company and The Bank of New York, as Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture dated as of
__________, between the Company and the Trustee (the Indenture as so
supplemented, the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the Holders of Convertible Debentures. By
the terms of the Indenture, the Debentures are issuable thereunder in series
that may vary as to amount, date of maturity, rate of interest and in other
respects as provided in the Indenture. This series of Debentures is limited
in aggregate principal amount as specified in said First Supplemental
Indenture and is herein sometimes referred to as the "Convertible Debentures.
Because of the occurrence and continuation of a Special Event, in
certain circumstances, this Convertible Debenture may become due and payable,
in whole or in part, at the principal amount together with any interest
accrued thereon, including Compounded Interest and Additional Interest (the
"Redemption Price"). The Redemption Price shall be paid prior to 12:00 noon,
New York time, on the date of such redemption or at such earlier time as the
Company determines. In addition, the Company shall have the right to redeem
this Convertible Debenture at the option of the Company, upon not less than
30 nor more than 60 days notice, without premium or penalty, in whole or in
part at any time on or after _______ (an "Optional Redemption") at the
following prices (expressed as percentages of the principal amount of the
Convertible Debentures) (the "Optional Redemption Price") together with
accrued and unpaid interest, including Additional Interest and Compounded
Interest to, but excluding, the redemption date, if redeemed during the
12-month period beginning ____:
YEAR REDEMPTION PRICE
and 100% if redeemed on or after _______.
If Convertible Debentures are redeemed on any __________, _________,
___________, or ___________, accrued and unpaid interest shall be payable to
holders of record on the relevant record date.
So long as the corresponding Convertible Preferred Securities are
outstanding, the proceeds from the redemption of any of the Convertible
Debentures will be used to redeem Convertible Preferred Securities.
29
If the Convertible Debentures are only partially redeemed by the
Company pursuant to an Optional Redemption, the Convertible Debentures will
be redeemed PRO RATA or by lot or by any other method utilized by the Trustee.
In the event of redemption of this Convertible Debenture in part
only, a new Convertible Debenture or Convertible Debentures of this series
for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Convertible
Debentures may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the
time outstanding, as defined in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the
Holders of the Debentures of such series; provided, however, that no such
supplemental indenture shall (a) extend the fixed maturity of any Debenture
of any series, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, or reduce any premium payable
upon the redemption thereof, or make any change that adversely affects the
right to convert any Debenture of any series or make any change in the
subordination provisions that adversely affects the rights of any Holders of
any Debenture of any series, without the consent of the Holder of each
Debenture so affected, or (b) reduce the aforesaid percentage of Debentures
of such series, the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of each Debenture
of any series then outstanding and affected thereby. The Indenture also
contains provisions permitting the Holders of a majority in aggregate
principal amount of the Debentures of any series at the time outstanding
affected thereby, on behalf of all of the Holders of the Debentures of such
series, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture with
respect to such series, and its consequences, except a default in the payment
of the principal of or premium, if any, or interest on any Debentures of such
series or a failure to convert any Debentures of such series in accordance
with its terms upon an election by the Holders thereof. Any such consent or
waiver by the registered Holder of this Convertible Debenture (unless revoked
as provided in the Indenture) shall be conclusive and binding upon such
Holder and upon all future Holders and owners of this Convertible Debenture
and of any Convertible Debenture issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Convertible Debenture.
No reference herein to the Indenture and no provision of this
Convertible Debenture or of the Indenture shall alter or impair the
obligation of the Company, which is
30
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Convertible Debenture at the time and place and at the rate
and in the money herein prescribed.
As long as an Event of Default under Section 5.1(a) of the Indenture
shall not have occurred and be continuing, the Company shall have the right
at any time during the term of the Convertible Debentures and from time to
time to extend the interest payment period of such Convertible Debentures for
up to 20 consecutive quarters (an "Extended Interest Payment Period"), at the
end of which period the Company shall pay all interest then accrued and
unpaid (together with interest thereon at the rate specified for the
Convertible Debentures to the extent that payment of such interest is
enforceable under applicable law). Before the termination of any such
Extended Interest Payment Period, the Company may further extend such
Extended Interest Payment Period, provided that such Extended Interest
Payment Period together with all such further extensions thereof shall not
exceed 20 consecutive quarters. At the termination of any such Extended
Interest Payment Period and upon the payment of all accrued and unpaid
interest and any additional amounts then due, the Company may commence a new
Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Convertible Debenture is transferable by the
registered Holder hereof on the Debenture Register of the Company, upon
surrender of this Convertible Debenture for registration of transfer at the
office or agency of the Trustee in the City and State of New York accompanied
by a written instrument or instruments of transfer in form satisfactory to
the Company or the Trustee duly executed by the registered Holder hereof or
his or her attorney duly authorized in writing, and thereupon one or more new
Convertible Debentures of authorized denominations and for the same aggregate
principal amount and series will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Convertible Debenture, the Company, the Trustee, any paying agent and the
Debenture Registrar may deem and treat the registered holder hereof as the
absolute owner hereof (whether or not this Convertible Debenture shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the Debenture Registrar) for the purpose of receiving
payment of or on account of the principal hereof and premium, if any, and
interest due hereon and for all other purposes, and neither the Company nor
the Trustee nor any paying agent nor any Debenture Registrar shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Convertible Debenture, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law,
or by the en-
31
forcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
The Holder of any Convertible Debenture has the right, exercisable
at any time beginning _________ through the close of business (New York time)
on _________ (or, in the case of a Convertible Debenture called for
redemption, prior to the close of business on the Business Day prior to the
corresponding redemption date), to convert the principal amount thereof (or
any portion thereof that is an integral multiple of $50) into shares of
Common Stock at the initial conversion rate of _____ shares of Common Stock
for each Convertible Debenture (equivalent to a Conversion Price of $__ per
share of Common Stock), subject to adjustment under certain circumstances.
To convert a Convertible Debenture, a Holder must (a) complete and
sign a conversion notice substantially in the form attached hereto, (b)
surrender the Convertible Debenture to a Conversion Agent, (c) furnish
appropriate endorsements or transfer documents if required by the Conversion
Agent and (d) pay any transfer or similar tax, if required. Upon conversion,
no adjustment or payment will be made for interest or dividends, but if any
Holder surrenders a Convertible Debenture for conversion on or after the
Regular Record Date for the payment of an installment of interest and prior
to the opening of business on the next Interest Payment Date, then,
notwithstanding such conversion, the interest payable on such Interest
Payment Date will be paid to the registered Holder of such Convertible
Debenture on such Regular Record Date. In such event, such Convertible
Debenture, when surrendered for conversion, need not be accompanied by
payment of an amount equal to the interest payable on such Interest Payment
Date on the portion so converted. The number of shares issuable upon
conversion of a Convertible Debenture is determined by dividing the principal
amount of the Convertible Debentures converted by the Conversion Price in
effect on the Conversion Date. No fractional shares will be issued upon
conversion but a cash adjustment will be made for any fractional interest.
The outstanding principal amount of any Convertible Debenture shall be
reduced by the portion of the principal amount thereof converted into shares
of Common Stock.
[The Convertible Debentures of this series are issuable only in
registered form without Coupons in denominations of $50 and any integral
multiple thereof.] [This Global Debenture is exchangeable for Convertible
Debentures in definitive form only under certain limited circumstances set
forth in the Indenture. Convertible Debentures of this series so issued are
issuable only in registered form without Coupons in denominations of $50 and
any integral multiple thereof.] As provided in the Indenture and subject to
certain limitations therein set forth, Convertible Debentures of this series
are exchangeable for a like aggregate principal amount of Convertible
Debentures of this series of a different authorized denomination, as requested
by the Holder surrendering the same.
All terms used in this Convertible Debenture that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
32
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
INDENTURE AND THE CONVERTIBLE DEBENTURES WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.
33
[FORM OF ELECTION TO CONVERT]
ELECTION TO CONVERT
To: Sun Healthcare Group, Inc.
The undersigned owner of this Convertible Debenture hereby irrevocably
exercises the option to convert this Convertible Debenture, or the portion below
designated, into Common Stock of SUN HEALTHCARE GROUP, INC. in accordance with
the terms of the Indenture referred to in this Convertible Debenture, and
directs that the shares issuable and deliverable upon conversion, together with
any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
Date: ____________, ____
in whole __
Portions of Convertible Debenture to be converted ($50
or integral multiples-thereof): $
--------------------
------------------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including
Zip Code, and Social Security or Other Identifying
Number
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Signature Guarantee:(1)
-------------------------------
------------------------
(1) Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings loan association or credit union
meeting the requirements of the Conversion Agent, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Conversion Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities and
Exchange Act of 1934, as amended.
34
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Convertible
Debenture to:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
----------------------------------------------------------------
(Insert assignee's social security or tax identification number)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
----------------------------------------
------------------------------------------------------------------------------
--------------------------- agent to transfer this Convertible Debenture on the
books of the Trust. The agent may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Convertible
Debenture)
Signature Guarantee (*):
------------------------------------------
-----------------------------
(*) Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Debenture Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities and Exchange Act of 1934,
as amended.
35
ARTICLE IX
ORIGINAL ISSUE OF CONVERTIBLE DEBENTURES
SECTION 9.1. ORIGINAL ISSUE OF CONVERTIBLE DEBENTURES.
Convertible Debentures in the aggregate principal amount of
$________ may, upon execution of this First Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and make available for delivery said
Convertible Debentures to or upon the written order of the Company, signed by
its Chairman, its Vice Chairman, its President, or any Vice President and its
Treasurer or an Assistant Treasurer, without any further action by the
Company.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. RATIFICATION OF INDENTURE; FIRST SUPPLEMENTAL INDENTURE CONTROLS.
The Indenture, as supplemented by this First Supplemental Indenture,
is in all respects ratified and confirmed, and this First Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the
extent herein and therein provided. The provisions of this First Supplemental
Indenture shall supersede the provisions of the Indenture to the extent the
Indenture is inconsistent herewith.
SECTION 10.2. TRUSTEE NOT RESPONSIBLE FOR RECITALS.
The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or
sufficiency of this First Supplemental Indenture.
SECTION 10.3. GOVERNING LAW.
This First Supplemental Indenture and each Debenture shall be deemed
to be a contract made under the internal laws of the State of New York, and
for all purposes shall be construed in accordance with the laws of said State.
SECTION 10.4. SEPARABILITY.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Convertible Debentures shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this First Supplemental Indenture or of the Convertible
Debentures,
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but this First Supplemental Indenture and the Convertible Debentures shall be
construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.
SECTION 10.5. COUNTERPARTS.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed on the date or dates indicated in
the acknowledgements and as of the day and year first above written.
SUN HEALTHCARE GROUP, INC.
By: ________________________
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By: _________________________
Name:
Title:
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