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RELIANT ENERGY, INCORPORATED
To
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
Trustee
__________________
SUPPLEMENTAL INDENTURE No. 1
Dated as of September 1, 1999
_________________
17,167,381 XXXX(SM)
2.0% Zero-Premium Exchangeable Subordinated Notes due 2029 (XXXX(SM))
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________
(SM)Service Xxxx of Xxxxxxx, Xxxxx & Co.
RELIANT ENERGY, INCORPORATED
SUPPLEMENTAL INDENTURE NO. 1
2.0% Zero-Premium Exchangeable Subordinated Notes due 2029 (XXXX(SM))
SUPPLEMENTAL INDENTURE No. 1, dated as of September 1, 1999, between
RELIANT ENERGY, INCORPORATED, a Texas corporation (the "Company"), and CHASE
BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association duly
organized and existing under the laws of the United States of America, as
Trustee (the "Trustee").
RECITALS
The Company has heretofore executed and delivered to the Trustee a
Subordinated Indenture, dated as of September 1, 1999 (the "Indenture"),
providing for the issuance from time to time of one or more series of the
Company's Securities.
Section 301 of the Indenture provides that various matters with respect to
any series of Securities issued under the Indenture may be established in an
indenture supplemental to the Indenture.
Subparagraph (7) of Section 901 of the Indenture provides that the Company
and the Trustee may enter into an indenture supplemental to the Indenture to
establish the form or terms of Securities of any series as permitted by Sections
201 and 301 of the Indenture.
For and in consideration of the premises and the issuance of the series of
Securities provided for herein, it is mutually covenanted and agreed, for the
equal and proportionate benefit of the Holders of the Securities of such series,
as follows:
ARTICLE ONE
Relation to the Indenture; Additional Definitions
Section 101. Relation to the Indenture. This Supplemental Indenture
No. 1 constitutes an integral part of the Indenture.
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Section 102. Additional Definitions. For all purposes of this
Supplemental Indenture No. 1:
(1) Capitalized terms used herein shall have the meanings specified
herein or in the Indenture, as the case may be;
(2) "Additional Interest" means any Publicly Traded securities (other
than Publicly Traded Equity Securities, which shall themselves become
Reference Shares), any cash (other than the Reference Shares Dividend
Amount) and the cash value of any other securities or property, distributed
on or in respect of the Reference Shares attributable to one XXXX;
(3) "Additional Interest Payment Date" means the date twenty (20)
Business Days after the date any Publicly Traded securities (other than
Publicly Traded Equity Securities, which shall themselves become Reference
Shares), any cash (other than the Reference Shares Dividend Amount) or any
other securities or property is distributed on or in respect of the
Reference Shares;
(4) "Additional Interest Regular Record Date" means the date ten (10)
Business Days after the date any Publicly Traded securities (other than
Publicly Traded Equity Securities, which shall themselves become Reference
Shares), any cash (other than the Reference Shares Dividend Amount) or any
other securities or property is distributed on or in respect of the
Reference Shares;
(5) "Averaging Period" means the 20 Trading Day period beginning on
the first Trading Day of the 20 Trading Days immediately prior to, but not
including, the fifth Business Day preceding the Redemption Date or the
Maturity Date, as the case may be;
(6) "Business Day" means, with respect to the XXXX, each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in Houston, Texas or New York, New York are authorized or
obligated by law or regulation to close;
(7) "Closing Price" means, with respect to any security on any date of
determination, the closing sale price (or, if no closing sale price is
reported, the last reported sale price) of such security (regular way) on
the NYSE on such date or, if such security is not listed for trading on the
NYSE on such date, as reported in the composite transactions for the
principal United States securities exchange on which such security is so
listed, or if such security is not so listed on a United States national or
regional securities exchange, as reported by the Nasdaq National Market, or
if such security is not so reported, the last quoted bid price for such
security in the over-the-counter market as reported by the National
Quotation Bureau or similar organization. In the event that no such
quotation is available
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for any day, the Board of Directors shall be entitled to determine the
Closing Price on the basis of such quotations that it in good faith
considers appropriate;
(8) "Contingent Principal Amount" means the minimum amount payable
upon redemption or maturity of one XXXX, which shall initially be equal to
the Original Principal Amount. The Contingent Principal Amount shall be
adjusted from time to time in the manner set forth in Sections 203 and 206
hereof;
(9) "Current Market Value" (other than in the case of a Rollover
Offering) means the average Closing Price per Reference Share during the
Averaging Period; provided, however, that for purposes of determining the
payment required upon redemption in connection with a Rollover Offering,
"Current Market Value" means the Closing Price per Reference Share on the
Trading Day immediately preceding the date that the Rollover Offering is
priced (the "Pricing Date") or, if the Rollover Offering is priced after
4:00 p.m., New York City time, on the Pricing Date, the Closing Price per
Reference Share on the Pricing Date, except that if there is not a Trading
Day immediately preceding the Pricing Date or (where pricing occurs after
4:00 p.m., New York City time, on the Pricing Date) if the Pricing Date is
not a Trading Day, "Current Market Value" means the market value per
Reference Share as of the Redemption Date as determined by a nationally
recognized independent investment banking firm retained by the Company;
(10) "Designated Transaction Consideration" has the meaning set forth
in Section 501(f);
(11) "DTC" means The Depository Trust Company;
(12) "Early Exchange Ratio" has the meaning set forth in Section
401(a);
(13) "Equity Security" means any stock or any similar security.
Equity Securities shall not include any debt securities that are
convertible or exchangeable into stock or similar securities;
(14) "Exchange Market Value" has the meaning set forth in Section
401(b);
(15) "Final Period Distribution" has the meaning set forth in Section
203(d);
(16) "Interest Payment Date" has the meaning set forth in Section
206(a);
(17) "Interest Rate" means a rate of $0.29125 per XXXX per Quarterly
Interest Period, or 2.0% per annum of the Original Principal Amount, plus
the amount of the Reference Shares Dividend Amount;
(18) "Issue Date" has the meaning set forth in Section 206(a);
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(19) "Maturity Amount" has the meaning set forth in Section 203(c);
(20) "Maturity Date" has the meaning set forth in Section 205;
(21) "NYSE" means The New York Stock Exchange, Inc.;
(22) "Original Principal Amount" has the meaning set forth in Section
202;
(23) "Pricing Date" has the meaning set forth in the definition of
"Current Market Value";
(24) "Publicly Traded" means with respect to any security that, as of
the date of determination, such security is either (i) listed for trading
on the NYSE, (ii) listed for trading on any other United States national or
regional securities exchange, (iii) reported on the Nasdaq National Market,
or (iv) quoted in the over-the-counter market by the National Quotation
Bureau or similar organization;
(25) "Quarterly Interest Period" means each of the quarterly interest
periods of the XXXX commencing on March 16, June 16, September 16 and
December 16 of each year while the XXXX are Outstanding and ending on the
first succeeding June 15, September 15, December 15 and March 15
respectively; provided, however, that the first Quarterly Interest Period
shall commence on the Issue Date and end on December 15, 1999;
(26) "Redemption Price" means the sum of (a) the higher of (i) the
Contingent Principal Amount per XXXX or (ii) the sum of the Current Market
Value of the Reference Shares attributable to one XXXX at the Redemption
Date plus any deferred quarterly payments of the Interest Rate (including
any accrued interest thereon) per XXXX, plus, in each case, the Final
Period Distribution attributable to one XXXX, and (b) $3.495 per XXXX if
the Company redeems the XXXX prior to September 15, 2000, $2.330 per XXXX
if the Company redeems the XXXX on or after September 15, 2000 and prior to
September 15, 2001, $1.165 per XXXX if the Company redeems the XXXX on or
after September 15, 2001 and prior to September 15, 2002, or zero if the
Company redeems the XXXX any time on or after September 15, 2002;
(27) "Reference Company" means Time Warner Inc., a Delaware
corporation, and any other issuer of a Reference Share;
(28) "Reference Company Successor" means (i) any surviving entity of
any consolidation or merger of a Reference Company or subsequent surviving
entity of a Reference Company and (ii) any acquiring entity of any share
exchange involving a Reference Company or subsequent acquiring entity of a
Reference Company;
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(29) "Reference Share" has the meaning set forth in Section 501(a);
(30) "Reference Share Offer" means any tender offer or exchange offer
made for all or a portion of a class of Reference Shares;
(31) "Reference Share Offer Adjustment" has the meaning set forth in
Section 501(e);
(32) "Reference Share Proportionate Reduction" has the meaning set
forth in Section 501(g);
(33) "Reference Shares Dividend Amount" means the amount of any
quarterly cash dividends paid in respect of the Quarterly Interest Period
on the Reference Shares attributable to one XXXX. The Reference Shares
Dividend Amount shall include, but shall not be limited to, any quarterly
cash dividends on the Reference Shares attributable to one XXXX that (i)
are paid on the last day of the Quarterly Interest Period and (ii) if the
last day of the Quarterly Interest Period is not a business day for the
Reference Company and the quarterly cash dividends on such Reference
Company's Reference Shares are generally paid on the last day of the
Quarterly Interest Period, are paid on the first business day for the
Reference Company following the last day of the Quarterly Interest Period;
(34) "Regular Record Date" has the meaning set forth in Section
206(b);
(35) "Rollover Offering" means a refinancing of the XXXX by way of
either (a) a sale of all of the Reference Shares or (b) a sale of
securities that are priced by reference to the Reference Shares, in either
case, by means of a completed public offering or offerings by the Company
and which is expected to yield net proceeds which are sufficient to pay the
Redemption Price for all of the XXXX;
(36) "Time Warner Common Stock" means the common stock, $0.01 par
value per share, of Time Warner Inc.;
(37) "Trading Day" means a day on which the security, the Closing
Price of which is being determined, (a) is not suspended from trading on
any national or regional securities exchange or association or over-the-
counter market at the close of business and (b) has traded at least once on
the national or regional securities exchange or association or over-the-
counter market that is the primary market for the trading of such security;
(38) "XXXX" has the meaning set forth in Section 201;
(39) All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this
Supplemental Indenture No. 1; and
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(40) The terms "herein," "hereof," "hereunder" and other words of
similar import refer to this Supplemental Indenture No. 1.
ARTICLE TWO
The Series of Securities
Section 201. Title of the Securities. There shall be a series of
Securities designated the "2.0% Zero-Premium Exchangeable Subordinated Notes due
2029" (the "XXXX").
Section 202. Limitation on Aggregate Original Principal Amount. Each
XXXX shall represent $58.25 in original principal amount (the "Original
Principal Amount"), which is equal to the last reported sale price of one share
of Time Warner Common Stock as reported on the NYSE on September 15, 1999. The
aggregate number of XXXX (other than XXXX authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other XXXX
pursuant to Sections 304, 305, 306 or 906 of the Indenture) shall be limited to
17,167,381 XXXX.
Section 203. Contingent Principal Amount; Maturity Amount.
(a) The Contingent Principal Amount shall initially be equal to the
Original Principal Amount.
(b) If the sum of the Reference Shares Dividend Amount and Additional
Interest, if any, for a Quarterly Interest Period is greater than $.045, the
Contingent Principal Amount per XXXX shall be reduced to the extent necessary so
that the yield from the Issue Date to the Interest Payment Date relating to
such Quarterly Interest Period or the Additional Interest Payment Date, as the
case may be (including all quarterly payments of the Interest Rate and the fair
market value of any Additional Interest payments) does not exceed a 2.309%
annual yield. In no event shall the Contingent Principal Amount per XXXX be
less than zero. The Contingent Principal Amount per XXXX shall be increased to
the extent that the sum of the Reference Shares Dividend Amount and Additional
Interest, if any, for a Quarterly Interest Period is less than $.045, so that
the yield from the Issue Date to the Interest Payment Date relating to such
Quarterly Interest Period (including all quarterly payments of the Interest Rate
and the fair market value of any Additional Interest payments) is not less than
a 2.309% annual yield.
(c) At the Maturity Date, the Holders of XXXX shall be entitled to
receive the Maturity Amount in cash for each XXXX they hold. The "Maturity
Amount" shall mean an amount equal to the higher of (a) the Contingent Principal
Amount per XXXX or (b) the sum of the Current Market Value of the Reference
Shares attributable to one XXXX on the Maturity Date plus any deferred quarterly
payments of the Interest Rate (including any accrued interest thereon) per XXXX,
plus, in each case, the Final Period Distribution attributable to one XXXX.
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(d) "Final Period Distribution" means, in respect of (a) the Maturity
Date, a distribution determined in accordance with clauses (2) and (3) below,
and (b) the Redemption Date, a distribution determined in accordance with
clauses (1), (2) and (3) below. In the case of a Redemption Date in connection
with a Rollover Offering, the distribution determined in accordance with clause
(3) shall be all dividends and distributions on or in respect of the Reference
Shares which a holder of Reference Shares on the Pricing Date would be entitled
to receive.
(1) Unless (a) the Redemption Date of the XXXX is also an Interest
Payment Date or (b) quarterly interest has been deferred for the
then current Quarterly Interest Period, an amount equal to an
annual rate of 2.0% on the Original Principal Amount of the XXXX
from the most recent Interest Payment Date to the Redemption
Date, plus
(2) a distribution equal to the sum of all dividends and
distributions on or in respect of the Reference Shares declared
by the applicable Reference Company and for which the record date
falls during the period from the Issue Date to the date
immediately preceding the first Trading Day of the applicable
Averaging Period and which have not been distributed to holders
of Reference Shares prior to the commencement of the Averaging
Period, plus
(3) a distribution equal to the sum of, for each successive scheduled
Trading Day in the Averaging Period, the amounts determined in
accordance with the following formula:
E x (1 - 0.05n)
where:
E = all dividends and distributions on or in respect of the
Reference Shares applicable to a XXXX which a holder of
Reference Shares on the applicable day of the Averaging
Period would be entitled to receive as a result of a
record date that occurs on that day, provided that a
record date that occurs on a day that is not a
scheduled Trading Day shall be deemed to have occurred
on the immediately preceding scheduled Trading Day; and
n = the number of scheduled Trading Days that have elapsed
in the Averaging Period, with the first Trading Day of
the Averaging Period being counted as zero.
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The Holders of the XXXX are only entitled to receive distributions
determined in accordance with clauses (2) or (3) above to the extent actually
distributed by the applicable Reference Company. Cash amounts paid by the
applicable Reference Company on Reference Shares as described above in clauses
(2) or (3) before the Redemption Date or the Maturity Date, as the case may be,
shall be paid on the Redemption Date or the Maturity Date, as the case may be.
All other property distributed, or the cash value of the property, shall be
distributed within twenty (20) Business Days after it is distributed on or in
respect of the Reference Shares, which may be after the Maturity Date or the
Redemption Date, as the case may be.
The Holders of the XXXX shall not be entitled to receive any
distribution described above in clauses (2) and (3) if the record date for the
distribution occurs on a day between the end of the Averaging Period and the
Maturity Date or the Redemption Date, as the case may be.
(e) Upon maturity of the XXXX, the Company shall deliver to the
Trustee a notice informing the Trustee of the Maturity Amount per XXXX and in
the aggregate for all outstanding XXXX and its calculation thereof.
(f) In the event all of the Reference Shares cease to be Outstanding
as a result of a tender offer, an exchange offer, a business combination or
otherwise, the maturity of the XXXX will not be accelerated and the XXXX shall
continue to remain Outstanding until the Maturity Date or the Redemption Date,
as the case may be.
Section 204. Denominations. The XXXX shall be issuable in denominations
of one XXXX and integral multiples thereof.
Section 205. Stated Maturity. The Stated Maturity of the principal of
the XXXX shall be September 15, 2029 (the "Maturity Date").
Section 206. Interest and Interest Rates.
(a) The XXXX shall bear interest at the Interest Rate from and
including September 21, 1999 (the "Issue Date") to, but excluding, the Maturity
Date; provided that the initial interest payment on December 15, 1999 shall
equal the sum of $0.27183 per XXXX, which is calculated to equal an annual rate
of 2.0% on the Original Principal Amount from the Issue Date to, but excluding,
December 15, 1999, plus any Reference Shares Dividend Amount for the comparable
Quarterly Interest Period. Such interest shall be payable quarterly in arrears
on March 15, June 15, September 15 and December 15 of each year, commencing
December 15, 1999 (each such date, an "Interest Payment Date"), subject to the
Company's right to defer quarterly payments of the Interest Rate on the XXXX
pursuant to Section 207 hereof.
(b) The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Persons in whose names the
XXXX (or one or more Predecessor Securities) shall have been registered in the
Securities Register at the close of business
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on the March 1, June 1, September 1 or December 1, as the case may be, next
preceding such Interest Payment Date whether or not such March 1, June 1,
September 1 or December 1 is a Business Day (each such date, a "Regular Record
Date"). Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
shall either (i) be paid to the Person in whose name such XXXX (or one or more
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of the XXXX not less than 10
calendar days prior to such Special Record Date, or (ii) be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange or automated quotation system on which the XXXX may be listed or
traded, and upon such notice as may be required by such exchange or automated
quotation system, all as more fully provided in the Indenture.
(c) Interest on the XXXX payable for any full Quarterly Interest
Period shall be computed on the basis of a 360-day year of twelve 30-day months.
(d) Interest payable on any Interest Payment Date and at the Maturity
Date or Redemption Date of the XXXX, as the case may be, shall be the amount of
interest accrued from and including the most recent Interest Payment Date to
which interest has been paid or duly provided for (or from and including the
Issue Date if no interest has been paid or duly provided for with respect to the
XXXX) to, but excluding, such Interest Payment Date or the Maturity Date or the
Redemption Date, if any, as the case may be. If any Interest Payment Date, or
the Maturity Date or Redemption Date falls on a day that is not a Business Day,
the payment otherwise then due will be made on the next Business Day (and
without any interest or other payment in respect of any such delay) with the
same force and effect as if it were made on the date such payment was originally
payable. However, if the next Business Day is in the next calendar year, payment
of interest will be made on the preceding Business Day.
(e) Changes in the Contingent Principal Amount shall not affect the
Interest Rate.
(f) In addition to the quarterly payments of the Interest Rate, the
Company shall also distribute Additional Interest, if any, to the Holder of the
XXXX. The Company shall not distribute any fractional units of securities to
the Holders of the XXXX. In lieu of any fractional security, each Holder who
would otherwise have been entitled to a fractional unit of securities shall be
paid an amount in cash equal to such Holder's proportionate interest in the sum
of the net proceeds from the sale or sales of such fractional units of
securities on behalf of all such Holders. If a distribution on or in respect of
the Reference Shares includes securities that are not Publicly Traded or
includes property other than cash, the Company shall distribute to the Holders
of the XXXX in cash the fair market value of any such securities or property
comprising Additional Interest as determined in good faith by the Board of
Directors. The Company shall distribute any Additional Interest on each
Additional Interest Payment Date, if any, to the Persons in whose names the XXXX
(or one or more Predecessor Securities) shall have been registered in the
Securities Register on the applicable Additional Interest Regular Record Date,
if any.
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(g) Each XXXX shall initially be entitled to dividends and
distributions on or with respect to one Reference Share as of the Issue Date,
subject to adjustment as provided herein.
(h) At least five (5) Business Days prior to any distribution of
Additional Interest on the XXXX, the Company shall deliver a notice to the
Trustee setting forth: (i) the exact amount of property and/or cash to be
distributed on or with respect to the Reference Shares per XXXX and (ii) the
total amount of property and/or cash to be distributed on or with respect to the
Reference Shares for all outstanding XXXX at the date of such distribution. If
any distribution is made of any property that is not Publicly Traded, then at
least five (5) Business Days prior to such distribution, the Company shall
deliver to the Trustee: (i) a certified copy of the resolution of the Board of
Directors establishing the fair market value of the property and (ii) a notice
setting forth the exact amount of cash to be distributed on the Reference Shares
per XXXX. The Trustee shall only be responsible for distributing property in the
form of global book entry securities which are DTC eligible. The Company shall
be responsible for acting as its own Paying Agent to make all other
distributions of property. The Company shall prepare a press release relating to
any such distribution and its record date and provide such notice to DTC, within
five (5) Business Days after the Company's receipt of such Additional Interest,
for dissemination through the DTC broadcast facility.
(i) The Company shall pay interest on any overdue installments of
interest and the fair market value of Additional Interest, if any (without
regard to any applicable grace period), at 2.309% per annum, compounded
quarterly.
Section 207. Deferral of Interest.
(a) If no Event of Default has occurred and is continuing with respect
to the XXXX, the Company may, at any time and from time to time, defer quarterly
payments of the Interest Rate for up to 20 consecutive Quarterly Interest
Periods; provided that a deferral of quarterly payments of the Interest Rate may
not extend beyond the Maturity Date. A deferral of quarterly payments of the
Interest Rate, in and of itself, if made in accordance with this Section 207,
shall not constitute an Event of Default. The Company shall not defer
distributions of Additional Interest. If the Company defers quarterly payments
of the Interest Rate, the Contingent Principal Amount per XXXX shall be
increased by the amount of the deferred quarterly payments of the Interest Rate,
plus accrued interest thereon at an annual rate of 2.309%, compounded quarterly,
and the Early Exchange Ratio shall increase to 100% from the date the Company
notifies the Trustee of its decision to defer quarterly payments of the Interest
Rate. After the Company pays all deferred quarterly payments of the Interest
Rate, plus accrued interest thereon, together with the quarterly payment of the
Interest Rate for the current Quarterly Interest Period, the Contingent
Principal Amount shall be reduced by the amount of that payment of deferred
quarterly payments of the Interest Rate plus accrued interest thereon, the Early
Exchange Ratio shall decrease to 95%, and the Company may thereafter again defer
quarterly payments of the Interest Rate as described above.
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(b) Instead of paying or deferring cash payments of the Interest Rate
for a Quarterly Interest Period, so long as the then Current Market Value
(determined on the date that the Company notifies the Trustee of its decision to
increase the number of Reference Shares attributable to each XXXX) of the
Reference Shares exceeds the Original Principal Amount, the Company may at its
option, but is not obligated to, increase the number of Reference Shares
attributable to each XXXX by 0.57725% with respect to any quarterly payment of
the Interest Rate (an annual rate of 2.309%). A decision to increase the number
of Reference Shares attributable to each XXXX in lieu of making a quarterly
payment of the Interest Rate, in and of itself, if made in accordance with this
Section 207(b), shall not constitute an Event of Default. If the Company elects
to make this Reference Share increase, (i) the Company shall be deemed current
on that quarterly payment of the Interest Rate, (ii) the Contingent Principal
Amount per XXXX shall not increase, (iii) the Holders of the XXXX shall not be
entitled to receive cash interest for that Quarterly Interest Period, and (iv)
the Early Exchange Ratio shall be 100% for the following Quarterly Interest
Period. Thereafter, provided the Company is current on all quarterly payments of
the Interest Rate, the Early Exchange Ratio shall decrease to 95%. All Reference
Share increases, together with any successive Reference Share increases, shall
continue to be in effect until the Maturity Date or the Redemption Date of the
XXXX, as the case may be. At the time the Company elects to give notice that it
does not intend to pay a quarterly payment of the Interest Rate in cash, it must
elect to either accrue cash interest on the XXXX for that Quarterly Interest
Period or increase the number of Reference Shares attributable to each XXXX,
each as described above. The Company shall give the Trustee a notice if the
Company decides to defer interest payments on the XXXX or elects to increase the
number of Reference Shares attributable to each XXXX and shall prepare a press
release to be provided to DTC for dissemination through the DTC broadcast
facility. The Company shall give that notice to the Trustee one Business Day
before the earlier of (i) the Regular Record Date for the next Interest Payment
Date; or (ii) the date the Company is required by the rules of the NYSE (or any
other applicable self-regulatory organization) to give notice to such
organization or to the Holder of the XXXX as of the Regular Record Date or the
Interest Payment Date. When applicable under this Section, the Company shall
state in the notice that it is not subject to the twenty (20) consecutive
Quarterly Interest Period limitation on deferral and may continue to defer
quarterly payments of the Interest Rate until the Maturity Date or the
Redemption Date, as the case may be.
(c) The notice described above in Section 207(b) shall set forth: (i)
the Quarterly Interest Period with respect to which the Company is electing to
defer payment of interest, (ii) the exact amount of increase of the Contingent
Principal Amount per XXXX, (iii) the total amount of increase of the Contingent
Principal Amount for all outstanding XXXX, (iv) a statement that the Early
Exchange Ratio will increase to 100% prospectively from that date and (v) that
no Event of Default has occurred and is continuing with respect to the XXXX. The
Company is required to deliver such an Officers' Certificate for each interest
payment deferred.
(d) If and when the Company pays all of its deferred interest and
accrued interest, it must deliver to the Trustee a notice setting forth the
calculation of accrued interest owed per XXXX and the total amount owed on all
outstanding XXXX.
(e) If the Company elects to increase the amount of Reference Shares
payable for each XXXX as provided for in Section 207(b) in lieu of paying
accrued interest for that Quarterly
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Interest Period, it shall deliver a notice to the Trustee setting forth: (i) the
amount of such increase and the total amount, after such increase, of Reference
Shares applicable to each XXXX and (ii) the total amount of Reference Shares
applicable to all outstanding XXXX.
(f) In the event all of the Reference Shares cease to be Outstanding
as a result of a tender offer, an exchange offer, a business combination or
otherwise, the Company's right to defer quarterly payments of the Interest Rate
under this Section shall no longer be subject to the twenty (20) consecutive
Quarterly Interest Period limitation on deferral set forth in this Section. If
such an event occurs, the Company shall have the right to defer quarterly
payments of the Interest Rate until the Maturity Date or the Redemption Date, as
the case may be, provided, however, the Company shall not defer payment of the
Interest Rate beyond the Maturity Date.
Section 208. Place of Payment. The Place of Payment where the XXXX may
be presented or surrendered for payment of the Maturity Amount, the Redemption
Price, Additional Interest, if any, and interest on the XXXX shall be at the
office or agency the Company maintains for such purpose within New York, New
York, or, at the Company's option, payment of cash interest may be made by check
mailed to the Holders of the XXXX at their respective addresses set forth in the
Security Register or by wire transfer of immediately available funds to Holders
of XXXX who have provided written wire transfer instructions, on or prior to the
relevant Regular Record Date, to the Paying Agent. Until otherwise designated
by the Company, the Place of Payment shall be the Corporate Trust Office of the
Trustee.
Section 209. Place of Registration or Exchange; Notices and Demands With
Respect to the XXXX. The place where the Holders of the XXXX may present the
XXXX for registration of transfer or exchange and may make notices and demands
to or upon the Company in respect of the XXXX shall be the Corporate Trust
Office of the Trustee.
Section 210. Redemption; Sinking Fund Obligations.
(a) Pursuant to Article Three hereof, the XXXX are subject to
redemption by the Company in whole, but not in part, upon payment of the
Redemption Price.
(b) The Company has no obligation to redeem or purchase any XXXX
pursuant to any sinking fund or analogous requirement or upon the happening of a
specified event or at the option of a Holder thereof.
Section 211. Percentage of Principal Amount. The XXXX shall be initially
issued to the public at a price equal to 100% of their Original Principal
Amount.
Section 212. Global Securities. The XXXX shall be issuable in whole or
in part in the form of one or more Global Securities. Such Global Securities
shall be deposited with, or on behalf of, DTC, which shall act as Depositary
with respect to the XXXX. Such Global Securities shall bear the legends set
forth in the form of Security attached as Exhibit A hereto.
12
Section 213. Form of Securities. The XXXX shall be substantially in the
form attached as Exhibit A hereto.
Section 214. Securities Registrar. The Trustee shall initially serve as
Securities Registrar for the XXXX.
Section 215. Defeasance and Discharge; Covenant Defeasance. Article
Fourteen of the Indenture, including without limitation, Sections 1402 and 1403
thereof, shall not apply to the XXXX.
Section 216. Exchange. Pursuant to Article Four hereof, the Holders of
the XXXX may at any time exchange the XXXX for cash in an amount equal to the
Early Exchange Ratio.
Section 217. Currency. Payment of principal and interest on the XXXX
shall be payable in U.S. dollars.
Section 218. Calculations in Respect of the XXXX.
(a) The Company shall be responsible for making all calculations
called for under the XXXX and hereunder. These calculations include, but are
not limited to, determination of (i) the Contingent Principal Amount per XXXX,
(ii) the Current Market Value of the Reference Shares, (iii) the Exchange Market
Value of the Reference Shares, (iv) the Final Period Distribution on the XXXX,
(v) the cash value of any securities that are not Publicly Traded or any other
property distributed on the Reference Shares, (vi) the Designated Transaction
Consideration in a Reference Share Offer, (vii) the composition of a Reference
Share and (viii) the amount of accrued interest payable upon redemption or at
maturity of the XXXX.
(b) The Company must make all these calculations in good faith and
such calculations are final and binding on Holders of the XXXX, absent manifest
error. The Company shall provide a schedule of its calculations to the Trustee
and the Trustee is entitled to rely upon the accuracy of such calculations,
without independent verification.
Section 219. Amount Payable upon Bankruptcy. Upon dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other similar proceedings in respect
of the Company, each Holder of a XXXX shall be entitled to receive an amount in
cash equal to the higher of (a) the Contingent Principal Amount per XXXX or (b)
the sum of the Current Market Value (without giving effect to the provisions
hereof relating to Rollover Offerings) of the Reference Shares attributable to
one XXXX on the date of such event plus any deferred quarterly payments of the
Interest Rate (including any accrued interest thereon), plus, in each case, the
Final Period Distribution, determined as if the date of such event was the
Maturity Date of the XXXX.
13
Section 220. Amount Payable upon Acceleration of Maturity. Upon the
acceleration of the maturity of the XXXX, each Holder of a XXXX shall be
entitled to receive an amount in cash equal to the higher of (a) the Contingent
Principal Amount per XXXX or (b) the sum of the Current Market Value (without
giving effect to the provisions hereof relating to Rollover Offerings) of the
Reference Shares attributable to one XXXX on the date of such event plus any
deferred quarterly payments of the Interest Rate (including any accrued interest
thereon), plus in each case, the Final Period Distribution determined as if the
date of such event was the Redemption Date.
Section 221. Principal Amount Deemed Outstanding. If for any reason
under the Indenture a determination of the aggregate principal amount of the
Outstanding XXXX is required, the aggregate principal amount of the Outstanding
XXXX shall equal the product of (a) the higher of (i) the Contingent Principal
Amount per XXXX or (ii) the sum of the Current Market Value (without giving
effect to the provisions of the Indenture relating to Rollover Offerings) of the
Reference Shares attributable to one XXXX on the date of such determination plus
any deferred quarterly payments of the Interest Rate (including any accrued
interest thereon), plus in each case, the Final Period Distribution determined
as if the date of such determination was the Maturity Date and (b) the aggregate
number of XXXX then Outstanding.
ARTICLE THREE
Optional Redemption
Section 301. Optional Redemption.
(a) The Company may redeem the XXXX at any time in whole but not in
part at the Redemption Price.
(b) If the Company is planning to effect a Rollover Offering, the
Company shall issue a press release prior to 4:00 p.m., New York City time, on
the Business Day immediately before the day on which the Closing Price of the
Reference Shares is to be measured for the purpose of determining the Current
Market Value in connection with such Rollover Offering. The notice shall state
that the Company is firmly committed to price the Rollover Offering, shall
specify the date on which the Rollover Offering is to be priced (including
whether the Rollover Offering will be priced during trading on the Pricing Date
or after the close of trading on the Pricing Date) and consequently, whether the
Closing Price for the Reference Shares by which the Current Market Value will be
measured will be the Closing Price on the Trading Day immediately preceding the
Pricing Date or the Closing Price on the Pricing Date. The Company shall
provide such press release to DTC for dissemination through the DTC broadcast
facility. The Trustee shall notify Holders of the XXXX of any election to
redeem such Holders' XXXX in connection with a Rollover Offering not less than
thirty (30) Business Days nor more than sixty (60) Business Days prior to the
Redemption Date.
14
(c) Notwithstanding Sections 1102 and 1104 of the Indenture, in case
of redemption of the XXXX, the Company shall give not less than thirty (30)
Business Days' notice to the Trustee (unless such shorter period shall be
satisfactory to the Trustee) together with a notice setting forth on a per XXXX
and an aggregate basis, the estimated Redemption Price, the Contingent Principal
Amount, the Current Market Value of the Reference Shares and the deferred
quarterly payments of the Interest Rate, if any. The Trustee shall give Holders
at least thirty (30) Business Days' notice before redemption of the XXXX and the
Company shall irrevocably deposit with the Trustee, on or prior to the
Redemption Date, sufficient funds to pay the aggregate Redemption Price for the
XXXX. Interest on the XXXX to be paid on or before the Redemption Date for the
XXXX shall be payable to the Holders of XXXX on the Regular Record Date for the
related Interest Payment Date, except to the extent such interest payments are
payable as part of the Final Period Distribution.
(d) Once notice of redemption is given and funds are irrevocably
deposited, interest on the XXXX shall cease to accrue on and after the
Redemption Date and all rights of the Holders of the XXXX shall cease, except
for the right of Holders to receive the Redemption Price (but without interest
on such Redemption Price), including, if applicable, the Final Period
Distribution.
(e) If the Redemption Date is not a Business Day, then the Redemption
Price shall be payable on the next Business Day (and without any interest or
other payment in respect of any such delay). However, if the next Business Day
is in the next calendar year, the Redemption Price shall be payable on the
preceding Business Day. If payment of the Redemption Price for any XXXX called
for redemption is improperly withheld or refused and not paid by the Company,
interest on the XXXX shall continue to accrue at an annual rate of 2.0% from the
original Redemption Date scheduled to the actual date of payment. In such a
case, the actual payment date shall be considered the Redemption Date for
purposes of calculating the Redemption Price. The Final Period Distribution
shall be deemed paid on the original Redemption Date scheduled to the extent
paid as set forth in the definition of Final Period Distribution.
ARTICLE FOUR
Optional Exchange
Section 401. Exchange Option.
(a) A Holder of XXXX may at any time exchange a XXXX for an amount of
cash equal to a percentage (the "Early Exchange Ratio") of the Exchange Market
Value of the Reference Shares attributable to each XXXX exchanged. The Early
Exchange Ratio shall be equal to (a) 95% of the Exchange Market Value of the
Reference Shares attributable to each XXXX or (b) 100% of the Exchange Market
Value of the Reference Shares attributable to each XXXX (i) during a deferral of
the quarterly interest payments on the XXXX, (ii) for the Quarterly Interest
Period following the
15
Company's election to increase the number of Reference Shares pursuant to
Section 207(b) hereof or (iii) if the Company so elects, during the pendency of
any Reference Share Offer. The Company shall pay the Holder of a XXXX the amount
due upon exchange as soon as reasonably practicable after the Holder exercises
such right of exchange in accordance with Section 401(c) hereof, but in no event
earlier than three (3) Trading Days after the date the Holder exercises such
right of exchange in accordance with Section 401(c) hereof or later than ten
(10) Trading Days after the date the Holder exercises such right of exchange in
accordance with Section 401(c) hereof.
(b) "Exchange Market Value" means the Closing Price of the Reference
Shares attributable to one XXXX on the Trading Day following the date a Holder
of XXXX exercises such right of exchange in accordance with Section 401(c)
hereof, unless more than 500,000 XXXX have been delivered for exchange on such
date. If more than 500,000 XXXX have been delivered for exchange, then the
Exchange Market Value shall be the average Closing Price of the Reference Shares
attributable to one XXXX on the five (5) Trading Days following such date. If
more than 500,000 XXXX are delivered for exchange on any one day, the Company
shall give notice of that fact by (i) issuing a press release prior to 9:00 a.m.
New York City time on the next Trading Day, (ii) providing notice to DTC for
dissemination through the DTC broadcast facility and (iii) providing notice to
the Trustee. The Company's failure to provide these notices, however, shall not
affect the determination of the Exchange Market Value as described above.
(c) So long as the XXXX are represented by a Global Security or
Securities and held through DTC, a Holder of XXXX may exercise such right of
exchange through the relevant direct participant in the DTC ATOP system by
delivering an agent's message and delivering the Holder's XXXX to the Trustee's
DTC participant account. If the XXXX are no longer represented by a Global
Security or Securities but are held in certificated form, a Holder of XXXX may
exercise such right of exchange as follows: the Holder shall (i) complete and
manually sign an Option to Exchange XXXX form in the form attached to the
reverse of the XXXX certificate or available from the Trustee and deliver such
completed Option to Exchange XXXX form to the Trustee at the office maintained
by the Trustee for such purpose, (ii) surrender the XXXX to the Trustee, (iii)
if required, furnish appropriate endorsements and transfer documents, and (iv)
if required, pay all transfer or similar taxes.
(d) By 12:00 noon New York City time on each Business Day following
receipt by the Trustee of notification from DTC that they have received an
agent's message from a DTC participant electing to exercise their exchange
option with respect to their XXXX and delivery of such XXXX into the Trustee's
DTC participant account or following receipt of a complete manually signed
Option to Exchange XXXX form and receipt of XXXX from a Holder, the Trustee
shall notify the Company of the amount of XXXX which were tendered. The Company
shall deliver a notice to the Trustee setting forth the exact amount to be paid
to the tendering Holder and shall deposit such amount with the Trustee. Upon
receipt of such payment from the Company, the Trustee shall pay DTC, as soon as
practicable or in the case of XXXX that are held in certificated form, as
directed by the tendering Holder.
16
(e) Pursuant to the Indenture, the date on which all of the foregoing
requirements have been satisfied is the Redemption Date with respect to the XXXX
delivered for exchange.
ARTICLE FIVE
Reference Share Adjustments
Section 501. Reference Share Adjustments.
(a) As of the Issue Date, a "Reference Share" means one share of Time
Warner Common Stock. Any Publicly Traded Equity Securities that are distributed
on or in respect of the Reference Shares, shall themselves become Reference
Shares.
(b) Subject to a Reference Share Offer Adjustment as described in
Section 501(e) hereof, a "Reference Share" means, collectively (a) one share of
Time Warner Common Stock (to the extent not combined, subdivided, converted,
reclassified or exchanged as set forth below) and (b) each share of Publicly
Traded Equity Securities allocable to a Reference Share in respect of such share
of Time Warner Common Stock or other Reference Shares (either directly or as the
result of successive applications of this paragraph) upon any of the following
events: (i) the distribution on or in respect of a Reference Share in Reference
Shares, (ii) the combination of Reference Shares into a smaller number of shares
or other units, (iii) the subdivision of outstanding shares or other units of
Reference Shares, (iv) the conversion or reclassification of Reference Shares by
issuance or exchange of other securities, (v) any consolidation or merger of a
Reference Company, or any Reference Company Successor, with or into another
entity (other than a merger or consolidation in which the Reference Company is
the continuing corporation and in which the Reference Company common stock
outstanding immediately prior to the merger or consolidation is not exchanged
for cash, securities or other property of the Reference Company or another
corporation), (vi) any statutory exchange of securities of the Reference Company
or any Reference Company Successor with another corporation (other than in
connection with a merger or acquisition and other than a statutory exchange of
securities in which the Reference Company is the continuing corporation and in
which the Reference Company common stock outstanding immediately prior to the
statutory exchange is not exchanged for cash, securities or other property of
the Reference Company or another corporation), or (vii) any liquidation,
dissolution or winding up of the Reference Company or any Reference Company
Successor.
(c) In connection with any consolidation or merger of a Reference
Company, or any Reference Company Successor, the Company shall distribute as
Additional Interest on each XXXX the consideration consisting of cash and
Publicly Traded securities (other than Publicly Traded Equity Securities, which
will themselves become Reference Shares), if any, and in cash the fair market
value (as determined in good faith by the Board of Directors) of any
consideration consisting of non-Publicly Traded securities or property, if any,
deemed to be paid or distributed on or in respect of the Reference Shares and
attributable to each XXXX.
17
(d) In the event of a Reference Share Offer, the Company shall, at its
option, either: (i) increase the Early Exchange Ratio to 100% during the
pendency of the Reference Share Offer; or (ii) make a Reference Share Offer
Adjustment and distribute Additional Interest, if any, each as described below.
(e) A "Reference Share Offer Adjustment" means that the Reference
Shares attributable to one XXXX shall be adjusted so that: (i) each share of
Publicly Traded Equity Securities, if any, deemed to be paid or distributed on
or in respect of a Reference Share as the Designated Transaction Consideration
shall itself become a Reference Share and (ii) the Reference Shares which are
the subject of the applicable Reference Share Offer and attributable to one XXXX
shall be reduced by the Reference Share Proportionate Reduction.
(f) The "Designated Transaction Consideration" deemed to be allocated
to one Reference Share in a Reference Share Offer shall be equal to (a) the
aggregate consideration actually paid or distributed to all holders of Reference
Shares that received or elected to receive in the Reference Share Offer the
maximum amount of consideration to be paid in Publicly Traded Equity Securities,
if any, divided by (b) the total number of Reference Shares held by such holders
receiving or electing to receive in the Reference Share Offer the maximum amount
of consideration to be paid in Publicly Traded Equity Securities. If the
Reference Share Offer does not provide holders of Reference Shares with a choice
between Publicly Traded Equity Securities and other forms of consideration or if
none of the holders of Reference Shares elect to receive the maximum amount of
consideration to be paid in Publicly Traded securities, then the "Designated
Transaction Consideration" deemed to be allocated to one Reference Share in a
Reference Share Offer shall be equal to (x) the aggregate consideration actually
paid or distributed to all holders of Reference Shares in the Reference Share
Offer, divided by (y) the total number of Reference Shares participating in that
Reference Share Offer.
(g) The "Reference Share Proportionate Reduction" means a
proportionate reduction in the number of Reference Shares which are the subject
of the applicable Reference Share Offer and attributable to one XXXX calculated
in accordance with the following formula:
X
R = ---
N
where:
R = the fraction by which the number of Reference Shares of the class of
Reference Shares subject to the Reference Share Offer and attributable to
one XXXX will be reduced.
X = the aggregate number of Reference Shares of the class of Reference
Shares subject to the Reference Share Offer accepted in the Reference Share
Offer.
18
N = the aggregate number of Reference Shares of the class of Reference
Shares subject to the Reference Share Offer outstanding immediately prior
to the expiration of the Reference Share Offer.
(h) If the Company elects to make a Reference Share Offer Adjustment,
it shall distribute as Additional Interest on each XXXX the Designated
Transaction Consideration deemed to be paid or distributed on or in respect of
the Reference Shares of the class subject to the Reference Share Offer and
attributable to each XXXX immediately prior to giving effect to the Reference
Share Proportionate Reduction relating to that Reference Share Offer (other than
Designated Transaction Consideration that consists of Publicly Traded Equity
Securities, which shall themselves become Reference Shares as a result of a
Reference Share Offer Adjustment).
(i) If the Company elects to make a Reference Share Offer Adjustment,
and, during the pendency of the Reference Share Offer another Reference Share
Offer is commenced in relation to the Reference Shares that are the subject of
the then existing Reference Share Offer, the Company may change its original
election by electing to increase the Early Exchange Ratio to 100% during the
pendency of the new Reference Share Offer or the Company may continue to elect
to make a Reference Share Offer Adjustment. The Company shall similarly be
entitled to change its election for each further Reference Share Offer made
during the pendency of any Reference Share Offer for the same class of Reference
Shares. For the purposes of these adjustments, a material change to the terms
of an existing Reference Share Offer shall be deemed to be a new Reference Share
Offer.
(j) If the Company elects to increase the Early Exchange Ratio to 100%
in connection with a Reference Share Offer, no Reference Share Offer Adjustment
shall be made and the Company shall not be able to change its election if any
further Reference Share Offer relating to the same class of Reference Shares is
made.
(k) The Company shall give the Trustee notice, no later than ten (10)
Business Days before the scheduled expiration of the Reference Share Offer, of
its election in the event of any Reference Share Offer. The Company shall also
prepare a press release and provide it to DTC for dissemination through the DTC
broadcast facility.
ARTICLE SIX
Miscellaneous Provisions
Section 601. The Indenture, as supplemented and amended by this
Supplemental Indenture No. 1, is in all respects hereby adopted, ratified and
confirmed.
Section 602. This Supplemental Indenture No. 1 may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but
19
one and the same instrument. This Supplemental Indenture No. 1 shall be deemed
part of the Indenture in the manner and to the extent herein and therein
provided.
Section 603. THIS SUPPLEMENTAL INDENTURE NO. 1 AND EACH XXXX SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 1 to be duly executed, as of the day and year first written above.
RELIANT ENERGY, INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice Chairman and
Chief Financial Officer
Attest:
/s/ Xxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Assistant Corporate
Secretary
(SEAL)
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Xxxxxx Xxxxxx
---------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President and
Trust Officer
(SEAL)
20
Exhibit A
[FORM OF FACE OF SECURITY]
IF THIS SECURITY IS TO BE A GLOBAL SECURITY IT SHALL BEAR THE FOLLOWING LEGEND -
THIS SECURITY IS A GLOBAL SECURITY 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 SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT 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.
[For as long as this Global Security is deposited with or on behalf of The
Depository Trust Company it shall bear the following legend.] Unless this
certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to Reliant Energy, Incorporated or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
RELIANT ENERGY, INCORPORATED
2.0% Zero-Premium Exchangeable Subordinated Notes due 2029 (XXXX(SM))
No. __________ ________ XXXX
CUSIP No. 00000X000
RELIANT ENERGY, INCORPORATED, a corporation duly organized and
existing under the laws of the State of Texas (herein called the "Company,"
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ______________ or
its registered assigns, the Maturity Amount on September 15, 2029 (the "Maturity
Date"), unless this Security has been previously redeemed or exchanged, at the
office or agency of the Company in New York, New York, and to pay interest,
subject to the Company's right to defer quarterly payments of interest on this
Security as specified on the reverse hereof, at the
A-1
Interest Rate specified below, from the original date of issuance of this
Security or from the most recent March 15, June 15, September 15 and December 15
to which interest has been paid or duly provided for, quarterly in arrears on
the 15th day of March, June, September and December of each year, commencing
December 15, 1999 (each such date, an "Interest Payment Date"), until payment of
the Maturity Amount, or if earlier redeemed, the Redemption Price, has been in
either case made or duly provided for or until exchange of this Security in the
manner specified on the reverse hereof. For purposes of this Security, the
"Interest Rate" means a rate of $0.29125 per XXXX per Quarterly Interest Period,
or 2.0% per annum of the Original Principal Amount, plus the amount of the
Reference Shares Dividend Amount; provided that the initial interest payment on
December 15, 1999 shall equal the sum of $0.27183 per XXXX, which is calculated
to equal an annual rate of 2.0% on the Original Principal Amount from the Issue
Date to, but excluding, December 15, 1999, plus any Reference Shares Dividend
Amount for the comparable Quarterly Interest Period. Additional Interest shall
be distributed as specified on the reverse hereof. Changes in the Contingent
Principal Amount shall not affect the Interest Rate. Interest may be deferred,
at the election of the Company, as specified on the reverse hereof.
Any such interest payable on any Interest Payment Date shall (subject
to exceptions provided in the Indenture referred to on the reverse hereof) be
paid to the Person in whose name this Security or the Securities in exchange or
substitution for which this Security shall have been issued, shall have been
registered in the Securities Register at the close of business on March 1, June
1, September 1 or December 1, as the case may be next preceding such Interest
Payment Date whether or not such March 1, June 1, September 1 or December 1 is a
Business Day (each such date, a "Regular Record Date"). Any such interest not
so punctually paid or duly provided for shall forthwith cease to be payable to
the Holder on such Regular Record Date and shall either (i) be paid to the
Person in whose name this Security (or one or more Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of the XXXX not less than 10 calendar days prior to such
Special Record Date, or (ii) be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange or automated
quotation system on which the XXXX may be listed or traded, and upon such notice
as may be required by such exchange or automated quotation system, all as more
fully provided in the Indenture.
Interest on this Security payable for any full Quarterly Interest
Period shall be computed on the basis of a 360-day year of twelve 30-day months.
Interest payable on any Interest Payment Date and at the Maturity Date
or Redemption Date, as the case may be, shall be the amount of interest accrued
from and including the most recent Interest Payment Date to which interest has
been paid or duly provided for (or from and including the Issue Date if no
interest has been paid or duly provided for with respect to this Security) to,
but excluding, such Interest Payment Date or the Maturity Date or Redemption
Date, as the case may be. If any Interest Payment Date, or the Maturity Date or
Redemption Date falls on a day that is not a Business Day, the payment otherwise
then due will be made on the next Business Day (and without any interest or
other payment in respect of any such delay) with the same force and
A-2
effect as if it were made on the date such payment was originally payable.
However, if the next Business Day is in the next calendar year, payment of
interest will be made on the preceding Business Day.
This Security is an unsecured, subordinated obligation of the Company.
The indebtedness evidenced by this Security is, to the extent provided in the
Indenture, subordinate and junior in right of payment to the prior payment in
full of all Senior Debt (as such term is defined in the Indenture), and this
Security is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
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
attorney-in-fact for any and all such purposes. Each Holder hereof, by his
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Debt, whether now outstanding or hereafter incurred, and waives reliance
by each such holder upon said provisions.
Capitalized terms used on the face hereof without definition have the
meaning specified on the reverse hereof.
THE PROVISIONS OF THIS SECURITY ARE CONTINUED ON THE REVERSE HEREOF
AND SUCH CONTINUED PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS
THOUGH FULLY SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
* * *
A-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _______________ RELIANT ENERGY, INCORPORATED
By:
---------------------------
Name:
(SEAL) Title:
Attest:
---------------------------
Name:
Title:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, as Trustee
Date of Authentication:________________
By:
---------------------------
Authorized Signatory
A-4
[FORM OF REVERSE OF SECURITY]
2.0% Zero-Premium Exchangeable Subordinated Notes due 2029 (XXXX(SM))
General
This Security is one of a duly authorized issue of subordinated
debentures, notes, bonds or other evidences of indebtedness of the Company
(herein called the "Securities") of the series hereinafter specified, all issued
or to be issued under a Subordinated Indenture, dated as of September 1, 1999,
as supplemented by Supplemental Indenture No. 1 thereto, dated as of September
1, 1999 (as supplemented, herein called the "Indenture"), each executed between
the Company and Chase Bank of Texas, National Association, a national banking
association duly organized and existing under the laws of the United States of
America (hereinafter called the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a specification of the rights and
limitations of rights thereunder of the registered Holders of the Securities,
the rights and obligations thereunder of the Company and the rights, duties and
immunities thereunder of the Trustee and the terms upon which the Securities
are, and are to be, authenticated and delivered. The terms of the Indenture are
hereby incorporated by reference herein. This Security is one of a series
designated as the "2.0% Zero-Premium Exchangeable Subordinated Notes due 2029"
(hereinafter called the "XXXX") of the Company. Each XXXX shall represent
$58.25 in Original Principal Amount. The aggregate number of XXXX (other than
XXXX authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other XXXX pursuant to Section 304, 305, 306 or 906
of the Indenture) shall be limited to 17,167,381 XXXX.
The Maturity Amount, the Redemption Price, Additional Interest, if
any, and quarterly payments of the Interest Rate on the XXXX shall be payable at
the office or agency the Company maintains for such purpose within New York, New
York as a Place of Payment or, at the Company's option, quarterly payments of
the Interest Rate may be made by check mailed to the Holders of the XXXX at
their respective addresses set forth in the Security Register or by wire
transfer of immediately available funds to Holders of XXXX who have provided
wire transfer instructions, on or prior to the relevant Regular Record Date, to
the Paying Agent. Until otherwise designated by the Company, the Place of
Payment shall be the Corporate Trust Office of the Trustee.
Interest and Additional Interest
The Company shall pay interest to the Holder of this Security in such
amounts and at such times as specified on the face of this Security. At least
five (5) Business Days prior to each Interest Payment Date the Company shall
deliver a notice to the Trustee setting forth: (i) the amount of
interest per XXXX due for that Quarterly Interest Period, (ii) the applicable
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Reference Shares Dividend Amount for that Quarterly Interest Period and (iii)
the total payment due for that Quarterly Interest Period on all XXXX
outstanding.
In addition to the quarterly payments of the Interest Rate, the
Company shall also distribute to Holders of the XXXX, as additional interest on
each XXXX ("Additional Interest"), any Publicly Traded securities (other than
Publicly Traded Equity Securities, which shall themselves become Reference
Shares), any cash (other than the Reference Shares Dividend Amount) and the cash
value of any other securities or property, distributed on or in respect of the
Reference Shares attributable to one XXXX. The Company shall not distribute any
fractional units of securities to Holders of the XXXX. The Company shall pay
cash to Holders of the XXXX instead of distributing the fractional units. If a
distribution on or in respect of the Reference Shares includes securities that
are not Publicly Traded or includes property other than cash, the Company shall
distribute to Holders of the XXXX in cash the fair market value of any such
securities or property comprising Additional Interest as determined in good
faith by the Board of Directors. The Company shall distribute Additional
Interest twenty (20) Business Days after the date any cash (other than the
Reference Shares Dividend Amount) or property (other than Publicly Traded Equity
Securities, which shall themselves become Reference Shares) is distributed on or
in respect of the Reference Shares. The record date for any distribution of
Additional Interest is the date ten (10) Business Days after the date any cash
(other than the Reference Shares Dividend Amount) or property (other than
Publicly Traded Equity Securities, which shall themselves become Reference
Shares) is distributed on or in respect of the Reference Shares. Each XXXX
shall initially be entitled to dividends and distributions on or with respect to
one Reference Share as of the Issue Date, subject to adjustment as provided
herein.
At least five (5) Business Days prior to any distribution of
Additional Interest on the XXXX, the Company shall deliver a notice
to the Trustee setting forth: (i) the exact amount of property
and/or cash to be distributed on or with respect to the Reference Shares per
XXXX and (ii) the total amount of property and/or cash to be distributed on or
with respect to the Reference Shares for all outstanding XXXX at the date of
such distribution. If any distribution is made of any property that is not
Publicly Traded, then at least five (5) Business Days prior to such
distribution, the Company shall deliver to the Trustee: (i) a certified copy of
the resolution of the Board of Directors establishing the fair market value of
the property and (ii) a notice setting forth the exact amount of cash to be
distributed on the Reference Shares per XXXX. The Trustee shall only be
responsible for distributing property in the form of global book entry
securities which are DTC eligible. The Company shall be responsible for acting
as its own Paying Agent to make all other distributions of property. The Company
shall prepare a press release relating to any such distribution to be provided
to DTC for dissemination through the DTC broadcast facility.
If a quarterly payment of the Interest Rate or Additional Interest is
payable on a date that is not a Business Day (as defined at the end of this
paragraph), payment will be made on the next Business Day (and without any
interest or other payment in respect of such delay). However, if the
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next Business Day is in the next calendar year, payment of interest will be made
on the preceding Business Day. A "Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in Houston, Texas or New York, New York are authorized or obligated by law or
regulation to close.
The Company shall pay interest on overdue installments of quarterly
payments of the Interest Rate and the fair market value of Additional Interest,
if any (without regard to any applicable grace period), at 2.309% per annum,
compounded quarterly.
Deferral of Interest Payments
If no Event of Default (as such term is defined in the Indenture) has
occurred and is continuing with respect to the XXXX, the Company may, at any
time and from time to time, defer quarterly payments of the Interest Rate for up
to 20 consecutive Quarterly Interest Periods; provided that a deferral of
quarterly payments of the Interest Rate may not extend beyond the Maturity Date.
A deferral of quarterly payments of the Interest Rate, in and of itself, if made
in accordance with the provisions of the Indenture, shall not constitute an
Event of Default. The Company shall not defer distributions of Additional
Interest. If the Company defers quarterly payments of the Interest Rate, the
Contingent Principal Amount per XXXX shall be increased by the amount of the
deferred quarterly payments of the Interest Rate, plus accrued interest thereon
at an annual rate of 2.309%, compounded quarterly, and the Early Exchange Ratio
shall increase to 100% from the date the Company notifies the Trustee of its
decision to defer quarterly payments of the Interest Rate. After the Company
pays all deferred quarterly payments of the Interest Rate, plus accrued interest
thereon, together with the quarterly payment of the Interest Rate for the
current Quarterly Interest Period, the Contingent Principal Amount shall be
reduced by the amount of that payment of deferred quarterly payments of the
Interest Rate plus accrued interest thereon, the Early Exchange Ratio shall
decrease to 95%, and the Company may thereafter again defer quarterly payments
of the Interest Rate as described above.
Instead of paying or deferring cash payments of the Interest Rate for
a Quarterly Interest Period, so long as the then Current Market Value
(determined on the date that the Company notifies the Trustee of its decision to
increase the number of Reference Shares attributable to each XXXX) of the
Reference Shares exceeds the Original Principal Amount, the Company may at its
option, but is not obligated to, increase the number of Reference Shares
attributable to each XXXX by 0.57725% with respect to any quarterly payment of
the Interest Rate (an annual rate of 2.309%). A decision to increase the number
of Reference Shares attributable to each XXXX in lieu of making a quarterly
payment of the Interest Rate, in and of itself, if made in accordance with the
provisions of the Indenture, shall not constitute an Event of Default. If the
Company elects to make this Reference Share increase, (i) the Company shall be
deemed current on that quarterly payment of the Interest Rate, (ii) the
Contingent Principal Amount per XXXX shall not increase, (iii) the Holder of
this Security shall not be entitled to receive cash interest for that Quarterly
Interest Period, and (iv) the Early Exchange Ratio shall be 100% for the
following Quarterly Interest Period. Thereafter, provided the Company is current
on all quarterly payments of the Interest Rate, the Early Exchange Ratio shall
decrease to 95%. All Reference Share increases, together with any successive
Reference Share increases, shall continue to be in effect until the Maturity
Date or Redemption Date of the XXXX, as the case may be. At the time the Company
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elects to give notice that it does not intend to pay a quarterly payment of the
Interest Rate in cash, it must elect to either accrue cash interest on the XXXX
for that Quarterly Interest Period or increase the number of Reference Shares
attributable to the XXXX, each as described above. The Company shall give the
Trustee notice if the Company decides to defer interest payments on the XXXX and
shall prepare a press release to be provided to DTC for dissemination through
the DTC broadcast facility. The Company shall give that notice to the Trustee
one Business Day before the earlier of (i) the Regular Record Date for the next
Interest Payment Date; or (ii) the date the Company is required by the rules of
the NYSE (or any other applicable self-regulatory organization) to give notice
to such organization or to the Holder of this Security as of the Regular Record
Date or the Interest Payment Date. When applicable under the Indenture, the
Company shall state in the notice that it is not subject to the twenty (20)
consecutive Quarterly Interest Period limitation on deferral and may continue to
defer quarterly payments of the Interest Rate until the Maturity Date or the
Redemption Date, as the case may be.
The notice described above shall set forth: (i) the Quarterly Interest
Period with respect to which the Company is electing to defer payment of
interest, (ii) the exact amount of increase of the Contingent Principal Amount
per XXXX, (iii) the total amount of increase of the Contingent Principal Amount
for all outstanding XXXX, (iv) a statement that the Early Exchange Ratio will
increase to 100% prospectively from that date and (v) that no Event of Default
has occurred and is continuing with respect to the XXXX. The Company is required
to deliver such notice for each interest payment deferred.
If and when the Company pays all of its deferred interest and accrued
interest, it must deliver to the Trustee a notice setting forth the calculation
of accrued interest owed per XXXX and the total amount owed on all outstanding
XXXX.
If the Company elects to increase the amount of Reference Shares
payable for each XXXX as provided for in the Indenture in lieu of paying accrued
interest for that Quarterly Interest Period, it shall deliver a notice to the
Trustee setting forth: (i) the amount of such increase and the total amount,
after such increase, of Reference Shares applicable to each XXXX and (ii) the
total amount of Reference Shares applicable to all outstanding XXXX.
In the event all of the Reference Shares cease to be Outstanding as a
result of a tender offer, an exchange offer, a business combination or
otherwise, the Company's right to defer quarterly payments of the Interest Rate
under the Indenture shall no longer be subject to the twenty (20) consecutive
Quarterly Interest Period limitation on deferral set forth in the Indenture. If
such an event occurs, the Company shall have the right to defer quarterly
payments of the Interest Rate until the Maturity Date or the Redemption Date, as
the case may be, provided, however, the Company shall not defer payment of the
Interest Rate beyond the Maturity Date.
Principal Amount
The Original Principal Amount per XXXX is equal to $58.25. The
minimum amount payable upon redemption or maturity of a XXXX (the "Contingent
Principal Amount") shall initially
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be equal to the Original Principal Amount. If the sum of the Reference Shares
Dividend Amount and any Additional Interest for a Quarterly Interest Period is
greater than $.045, the Contingent Principal Amount per XXXX shall be reduced to
the extent necessary so that the yield from the Issue Date to the Interest
Payment Date relating to such Quarterly Interest Period or the Additional
Interest Payment Date, as the case may be (including all quarterly payments of
the Interest Rate and the fair market value of any Additional Interest payments)
does not exceed a 2.309% annual yield. In no event shall the Contingent
Principal Amount per XXXX be less than zero. The Contingent Principal Amount per
XXXX shall be increased to the extent that the sum of the Reference Shares
Dividend Amount and any Additional Interest for a Quarterly Interest Period paid
on the Reference Shares attributable to one XXXX is less than $.045, so that the
yield from the Issue Date to the Interest Payment Date relating to the Interest
Payment Date relating to such Quarterly Interest Period (including all quarterly
payments of the Interest Rate and the fair market value of any Additional
Interest payments) is not less than a 2.309% annual yield.
At the Maturity Date, Holders of the XXXX shall be entitled to receive
in cash for each XXXX the Maturity Amount. The "Maturity Amount" shall mean the
higher of (a) the Contingent Principal Amount per XXXX or (b) the sum of the
Current Market Value of the Reference Shares attributable to one XXXX on the
Maturity Date plus any deferred quarterly payments of the Interest Rate
(including any accrued interest thereon) per XXXX, plus, in each case, the Final
Period Distribution attributable to one XXXX.
Upon maturity of the XXXX the Company shall deliver to the Trustee a
notice informing the Trustee of the Maturity Amount per XXXX and in the
aggregate for all outstanding XXXX and its calculation thereof.
Exchange Option
A Holder of XXXX may at any time exchange a XXXX for an amount of cash
equal to a percentage (the "Early Exchange Ratio") of the Exchange Market Value
of the Reference Shares attributable to each XXXX exchanged. The Early
Exchange Ratio shall be equal to (a) 95% of the Exchange Market Value of the
Reference Shares attributable to each XXXX or (b) 100% of the Exchange Market
Value of the Reference Shares attributable to each XXXX (i) during a deferral of
the quarterly payments of the Interest Rate on the XXXX (ii) for the Quarterly
Interest Period following the Company's election to increase the number of
Reference Shares in accordance with the terms of the Indenture or (iii) if the
Company so elects, during the pendency of any Reference Share Offer. The Company
shall pay the Holder of a XXXX the amount due upon exchange as soon as
reasonably practicable after the Holder exercises such right of exchange in
accordance with the Indenture, but in no event earlier than three (3) Trading
Days after the date the Holder exercises such right of exchange in accordance
with the Indenture or later than ten (10) Trading Days after the date the Holder
exercises such right of exchange in accordance with the Indenture.
"Exchange Market Value" means the Closing Price of the Reference
Shares attributable to one XXXX on the Trading Day following the date a Holder
of XXXX delivers a
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completed Option to Exchange XXXX form to the Trustee, unless more than 500,000
XXXX have been delivered for exchange on such date. If more than 500,000 XXXX
have been delivered for exchange, then the Exchange Market Value shall be the
average Closing Price on the Reference Shares attributable to one XXXX on the
five (5) Trading Days following such date. If more than 500,000 XXXX are
delivered for exchange on any one day, the Company shall give notice of that
fact by (i) issuing a press release prior to 9:00 a.m. New York City time on the
next Trading Day, (ii) providing notice to DTC for dissemination through the DTC
broadcast facility and (iii) providing notice to the Trustee. The Company's
failure to provide these notices, however, shall not affect the determination of
the Exchange Market Value as described above.
So long as the XXXX are represented by a Global Security or Securities
and held through DTC, a Holder of XXXX may exercise such right of exchange
through the relevant direct participant in the DTC ATOP system by delivering an
agent's message and delivering the Holder's XXXX to the Trustee's DTC
participant account. If the XXXX are no longer represented by a Global Security
or Securities but are held in certificated form, a Holder of XXXX may exercise
such right of exchange as follows: the Holder shall (i) complete and manually
sign an Option to Exchange XXXX form in the form attached to this Security or
available from the Trustee and deliver a completed Option to Exchange XXXX form
to the Trustee at the office maintained by the Trustee for such purpose, (ii)
surrender the XXXX to the Trustee, (iii) if required, furnish appropriate
endorsements and transfer documents, and (iv) if required, pay all transfer or
similar taxes.
Redemption
The Company may redeem the XXXX at any time in whole but not in part
at a redemption price per XXXX (the "Redemption Price") equal to the sum of (a)
the higher of (i) the Contingent Principal Amount per XXXX or (ii) the sum of
the Current Market Value of the Reference Shares attributable to one XXXX at the
Redemption Date plus any deferred quarterly payments of the Interest Rate
(including any accrued interest thereon), plus, in either case, the Final Period
Distribution, and (b) $3.495 per XXXX if the Company redeems the XXXX prior to
September 15, 2000, $2.330 per XXXX if the Company redeems the XXXX on or after
September 15, 2000 and prior to September 15, 2001, $1.165 per XXXX if the
Company redeems the XXXX on or after September 15, 2001 and prior to September
15, 2002, or zero if the Company redeems the XXXX any time on or after September
15, 2002.
In case of redemption, the Company shall give not less than thirty
(30) Business Days' notice to the Trustee (unless such shorter period shall be
satisfactory to the Trustee) together with a notice setting forth on a per XXXX
and an aggregate basis, the estimated Redemption Price, the Contingent Principal
Amount, the Current Market Value of the Reference Shares, the deferred quarterly
interest payments and the Final Period Distribution. The Trustee shall give
Holders at least thirty (30) Business Days' notice before redemption of the XXXX
and the Company shall irrevocably deposit with the Trustee, on or prior to the
Redemption Date, sufficient funds to pay the aggregate Redemption Price for the
XXXX. Interest on the XXXX to be paid on or before the Redemption Date for the
XXXX shall be payable to the Holders of XXXX on the Regular
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Record Date for the related Interest Payment Date, except to the extent such
interest payments are payable as part of the Final Period Distribution.
Once notice of redemption is given and funds are irrevocably
deposited, interest on the XXXX shall cease to accrue on and after the
Redemption Date and all rights of the Holders of the XXXX shall cease, except
for the right of Holders to receive the Redemption Price (but without interest
on such Redemption Price), including, if applicable, the Final Period
Distribution.
If the Redemption Date is not a Business Day, then the Redemption
Price shall be payable on the next Business Day (and without any interest or
other payment in respect of any such delay). However, if the next Business Day
is in the next calendar year, the Redemption Price shall be payable on the
preceding Business Day. If payment of the Redemption Price for any XXXX called
for redemption is improperly withheld or refused and not paid by the Company,
interest on the XXXX shall continue to accrue at an annual rate of 2.0% from the
original Redemption Date scheduled to the actual date of payment. In such a
case, the actual payment date shall be considered the Redemption Date for
purposes of calculating the Redemption Price. The Final Period Distribution
shall be deemed paid on the original Redemption Date scheduled to the extent
paid as set forth in the definition of Final Period Distribution.
Reference Share Adjustments
As of the Issue Date, a "Reference Share" means one share of Time
Warner Common Stock. Any Publicly Traded Equity Securities that are distributed
on or in respect of the Reference Shares, shall themselves become Reference
Shares.
Subject to a Reference Share Offer Adjustment, a "Reference Share"
means, collectively (a) one share of Time Warner Common Stock (to the extent not
combined, subdivided, converted, reclassified or exchanged as set forth below)
and (b) each share of Publicly Traded Equity Securities allocable to a Reference
Share in respect of such share of Time Warner Common Stock or other Reference
Shares (either directly or as the result of successive applications of this
paragraph) upon any of the following events: (i) the distribution on or in
respect of a Reference Share in Reference Shares, (ii) the combination of
Reference Shares into a smaller number of shares or other units, (iii) the
subdivision of outstanding shares or other units of Reference Shares, (iv) the
conversion or reclassification of Reference Shares by issuance or exchange of
other securities, (v) any consolidation or merger of a Reference Company, or any
Reference Company Successor, with or into another entity (other than a merger or
consolidation in which the Reference Company is the continuing corporation and
in which the Reference Company common stock outstanding immediately prior to the
merger or consolidation is not exchanged for cash, securities or other property
of the Reference Company or another corporation), (vi) any statutory exchange of
securities of the Reference Company or any Reference Company Successor with
another corporation (other than in connection with a merger or acquisition and
other than a statutory exchange of securities in which the Reference Company is
the continuing corporation and in which the Reference Company common stock
outstanding immediately prior to the statutory exchange is not exchanged
A-11
for cash, securities or other property of the Reference Company or another
corporation), or (vii) any liquidation, dissolution or winding up of the
Reference Company or any Reference Company Successor.
If the Company elects to make a Reference Share Offer Adjustment, it
shall distribute as Additional Interest on each XXXX the Designated Transaction
Consideration deemed to be paid or distributed on or in respect of the Reference
Shares of the class subject to the Reference Share Offer and attributable to
each XXXX immediately prior to giving effect to the Reference Share
Proportionate Reduction relating to that Reference Share Offer (other than
Designated Transaction Consideration that consists of Publicly Traded Equity
Securities, which shall themselves become Reference Shares as a result of a
Reference Share Offer Adjustment).
If the Company elects to make a Reference Share Offer Adjustment, and,
during the pendency of the Reference Share Offer another Reference Share Offer
is commenced in relation to the Reference Shares that are the subject of the
then existing Reference Share Offer, the Company may change its original
election by electing to increase the Early Exchange Ratio to 100% during the
pendency of the new Reference Share Offer or the Company may continue to elect
to make a Reference Share Offer Adjustment. The Company shall similarly be
entitled to change its election for each further Reference Share Offer made
during the pendency of any Reference Share Offer for the same class of Reference
Shares. For the purposes of these adjustments, a material change to the terms
of an existing Reference Share Offer shall be deemed to be a new Reference Share
Offer.
If the Company elects to increase the Early Exchange Ratio to 100% in
connection with a Reference Share Offer, no Reference Share Offer Adjustment
shall be made and the Company shall not be able to change its election if any
further Reference Share Offer relating to the same class of Reference Shares is
made.
The Company shall give the trustee notice, no later than ten (10)
Business Days before the scheduled expiration of the Reference Share Offer, of
its election in the event of any Reference Share Offer. The Company shall also
prepare a press release and provide it to DTC for dissemination through the DTC
broadcast facility.
Events of Default
In case an Event of Default shall occur and be continuing, the
Maturity Amount of all XXXX then outstanding under the Indenture may be
declared, or may become, due and payable upon the conditions and in the manner
and with the effect provided in the Indenture.
Amount Payable upon Bankruptcy
Upon dissolution, winding-up, liquidation or reorganization, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
similar proceedings in respect of the Company, each Holder of a XXXX shall be
entitled to receive an amount in cash equal to the higher
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of (a) the Contingent Principal Amount per XXXX or (b) the sum of the Current
Market Value (without giving effect to the provisions of the Indenture relating
to Rollover Offerings) of the Reference Shares attributable to one XXXX on the
date of such event plus any deferred quarterly payments of the Interest Rate
(including any accrued interest thereon), plus, in each case, the Final Period
Distribution, determined as if the date of such event was the Maturity Date of
the XXXX.
Amount Payable upon Acceleration of Maturity
Upon the acceleration of the maturity of the XXXX, each Holder of a
XXXX shall be entitled to receive an amount in cash equal to the higher of (a)
the Contingent Principal Amount per XXXX or (b) the sum of the Current Market
Value (without giving effect to the provisions of the Indenture relating to
Rollover Offerings) of the Reference Shares attributable to one XXXX on the date
of such event plus any deferred quarterly payments of the Interest Rate
(including any accrued interest thereon), plus in each case, the Final Period
Distribution determined as if the date of such event was the Redemption Date.
Calculations in Respect of the XXXX
The Company shall be responsible for making all calculations called
for under the XXXX. These calculations include, but are not limited to,
determination of (i) the Contingent Principal Amount per XXXX, (ii) the Current
Market Value of the Reference Shares, (iii) the Exchange Market Value of the
Reference Shares, (iv) the Final Period Distribution on the XXXX, (v) the cash
value of any securities that are not Publicly Traded or any other property
distributed on the Reference Shares, (vi) the Designated Transaction
Consideration in a Reference Share Offer, (vii) the composition of a Reference
Share and (viii) the amount of accrued interest payable upon redemption or at
maturity of the XXXX.
The Company must make all these calculations in good faith and such
calculations are final and binding on Holders of the XXXX, absent manifest
error. The Company shall provide a schedule of its calculations to the Trustee
and the Trustee is entitled to rely upon the accuracy of such calculations,
without independent verification.
Miscellaneous
Except with respect to the rights of the holders of Senior Debt set
forth in this Security and in the Indenture, no reference herein to the
Indenture and no provision of this Security or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, premium, if any, or interest on this Security at the
place, at the respective times, at the rate, and in the coin or currency herein
prescribed.
The Indenture contains provisions setting forth certain conditions to
the institution of proceedings by the Holder of this Security with respect to
this Security and the Indenture and the enforcement of remedies under this
Security and the Indenture, including, without limitation, the
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appointment of a receiver or trustee. However, no reference herein to the
Indenture and no provision of this Security or the Indenture shall impair or
affect the right of any Holder of any Security to receive payment of the
principal of, premium, if any, and interest on such Security on or after the
respective dates expressed in this Security, or to institute suit for the
enforcement of any such payment on or after such respective dates and any such
right or such enforcement thereof shall not require the consent of any other
such Holder.
The transfer of this Security is registrable by the registered Holder
hereof, in person or by his attorney duly authorized in writing, on the books of
the Company to be kept for that purpose at the office or agency of the Company
in New York, New York, upon surrender and cancellation of this Security and upon
presentation of a duly executed written instrument of transfer, and thereupon a
new Security or Securities of authorized denominations for the same aggregate
number of Securities will be issued to the transferee or transferees in exchange
herefor; and this Security may be in like manner exchanged for one or more
Securities of other authorized denominations but of the same aggregate number of
Securities, all in the manner and subject to the conditions in the Indenture
contained and without payment of any service or other charge, except for any
stamp or other tax or governmental charge in connection therewith. Prior to due
presentment of this Security for registration or transfer, the Company, the
Trustee, any Paying Agent and any Security Registrar may deem and treat the
person in whose name this Security is registered as the absolute owner hereof
for the purpose of receiving payment hereof or on account hereof or of interest
hereon (subject to the provisions of the first paragraph on the face hereof) and
for all other purposes.
No recourse shall be had for the payment of the principal of, premium,
if any, or interest on this Security or for any claim based hereon or otherwise
in any manner in respect hereof, or in respect of the Indenture, against any
subsidiary, incorporator, shareholder, officer, director or employee, as such
past, present or future, of the Company or any subsidiary, incorporator,
shareholder, officer, director or employee, as such, past, present or future, of
any predecessor or successor corporation, whether by virtue of any
constitutional provision or statute or rule of law, or by the enforcement of any
assessment or penalty or in any other manner, all such liability being expressly
waived and released by the acceptance hereof and as part of the consideration
for the issue hereof.
The Indenture contains provisions for satisfaction and discharge of
the entire indebtedness of the Indenture upon compliance by the Company with
certain conditions set forth in the Indenture.
Article Fourteen of the Indenture, including without limitation,
Sections 1402 and 1403 thereof, shall not apply to this Security.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive
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compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in aggregate number
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in aggregate number of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of principal hereof or any premium or
interest hereon on or after the respective due dates expressed herein.
The Indenture and this Security shall be deemed to be a contract made
under the laws of the State of New York, and for all purposes shall be construed
in accordance with the laws of said jurisdiction.
The Securities of this series are subordinated in right of payment to
Senior Debt as provided in Article Sixteen of the Indenture.
All capitalized terms used in this Security and not otherwise defined
herein shall have the meanings ascribed to them in the Indenture.
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The following abbreviations, when used in the inscription on the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common GIFT MIN ACT -........Custodian.........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act__________________
in common (State)
Additional abbreviations may also be used though not in the above list.
-----------------------------------
For Value Received, ____________ hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
---------------------------------------
---------------------------------------:
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(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
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the within Security and all rights thereunder, irrevocably constituting and
appointing
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Attorney to transfer said Security on the books of the within named Company with
full power of substitution in the premises.
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Dated: _________________
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NOTICED: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
A-17
[Form of Exchange Notice to come.]
A-18
