THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON ITS
CONVERSION HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
CELGENE CORPORATION
9.00% SENIOR CONVERTIBLE NOTE DUE JANUARY 20, 2004
PPN No.: $2,100,000
No. R-1
CELGENE CORPORATION, a corporation duly organized and existing
under the laws of Delaware (the "Company") for value received, hereby promises
to pay to XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY, or registered assigns, the
principal sum of TWO MILLION ONE HUNDRED THOUSAND DOLLARS ($2,100,000) on
January 20, 2004 and to pay interest thereon, from January 20, 1999, or from the
most recent interest payment date to which interest has been paid or duly
provided for, semiannually on January 20 and July 20 in each year, commencing
July 20, 1999, at the rate of 9.00% per annum, until the principal hereof is
due, and at the rate of 11.00% per annum on any overdue principal and premium,
if any, and, to the extent permitted by law, on any overdue interest. The
interest so payable, and punctually paid or duly provided for, on any interest
payment date will be paid to the person in whose name this Security (or one or
more predecessor Securities) is registered at the close of business on the
regular record date for such interest, which shall be the January 1 or July 1
(whether or not a Business Day), as the case may be, next preceding such
interest payment date. Payment of the principal of (and premium, if any, on)
this Security shall be made upon the surrender of this Security to the Company,
at its office at 0 Xxxxxx Xxxx Xxxxx, Xxxxxx, XX 00000 (or such other office
within the United States as shall be notified by the Company to the holder
hereof) (the "Designated Office"), in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, by transfer to a U.S. dollar account maintained by the
payee with a bank in the United States of America. Payment of interest on this
Security shall be made by wire transfer to a U.S. dollar account maintained by
the payee with a bank in the United States of America, provided that if the
holder shall not have furnished wire instructions in writing to the Company no
later than the record date relating to an interest payment date, such payment
may be made by U.S. dollar check mailed to the address of the Person entitled
thereto as such address shall appear in the Company security register. This
Security will rank pari passu with all existing and future senior debt of the
Company.
This Security is one of the Company's 9.00% Senior Convertible Notes
due January 20, 2004, limited to $15,000,000.00 aggregate principal amount,
issued pursuant to that certain Note Purchase Agreement dated January 20, 1999
(such agreements, as amended, modified and supplemented from time to time, the
"Note Purchase Agreement") between the Company and the Purchasers named therein,
and the holder hereof is entitled to the benefits of the Note Purchase
Agreement, and may enforce the agreements contained herein and therein and
exercise the remedies provided for hereby and thereby or otherwise available in
respect hereof and thereof, all in accordance with the terms hereof and thereof.
1. Optional Redemption With Premium. This Security is subject
to redemption upon not less than 30 nor more than 60 days' notice by mail, at
any time on or after January 20, 2001, as a whole or in part, (in any amount
that is an integral multiple of $1000) at the election of the Company, at a
redemption price of 103% the principal amount thereof, together with accrued
interest to the redemption date, but interest installments whose stated maturity
is on or prior to such redemption date will be payable to the holder of this
Security, or one or more predecessor Securities, of record at the close of
business on the relevant record dates referred to on the face hereof; provided,
however, that the Company may not redeem this Security on or prior to January
20, 2002 unless the Closing Price of the Common Stock exceeds 225 % of the
Conversion Price for each Trading Day in a period of 20 Consecutive Trading Days
commencing not earlier than January 20, 2001. The term "Conversion Price" on any
day shall equal $1,000 divided by the Conversion Rate in effect on each such
day.
2. Conversion. (a) The holder of this Security is entitled at
any time on or after January 20, 2000 and before the close of business on
January 20, 2004 (or, in case this Security or a portion hereof is called for
redemption or the holder hereof has exercised its right to require the Company
to repurchase this Security or a portion hereof, then in respect of this
Security or such portion hereof, as the case may be, until and including, but
(unless the Company defaults in making the payment due upon redemption or
repurchase, as the case may be) not after, the close of business on the
redemption date or the Repurchase Date, as the case may be) to convert this
Security (or any portion of the principal amount hereof that is an integral
multiple of $1,000), into fully paid and nonassessable shares (calculated as to
each conversion to the nearest 1/100 of a share) of Common Stock of the Company
at the rate of 55.56 shares of Common Stock for each $1,000 principal amount of
Security (or at the current adjusted rate if an adjustment has been made as
provided below) (the "Conversion Rate") by surrender of this Security, duly
endorsed or assigned to the Company or in blank to the Company at the Designated
Office, accompanied by written notice to the Company that the holder hereof
elects to convert this Security (or if less than the entire principal amount
hereof is to be converted, specifying the portion hereof to be converted). Upon
surrender of this Security for conversion, the holder will be entitled to
receive the interest accruing on the principal amount of this Security then
being converted from the interest payment date next preceding the date of such
conversion to such date of conversion. No payment or adjustment is to be made on
conversion for dividends on the
2
Common Stock issued on conversion hereof. No fractions of shares or scrip
representing fractions of shares will be issued on conversion, but instead of
any fractional interest, the Company shall pay a cash adjustment, computed on
the basis of the Closing Price of the Common Stock on the date of conversion,
or, at its option, the Company shall round up to the next higher whole share.
This Security shall be deemed to have been converted immediately prior to the
close of business on the day of surrender hereof for conversion, in accordance
with the foregoing provisions, and at such time the rights of the holder hereof,
as a holder hereof, shall cease, and the Person or Persons entitled to receive
the Common Stock issuable on conversion shall be treated by all Persons as the
holder or holders of such Common Stock at such time. Upon any partial conversion
of this Security, the Company, at its expense, will forthwith issue and deliver
to, or upon the order of the holder hereof, a new Convertible Note or
Convertible Notes in principal amount equal to the unconverted principal amount
of such surrendered Convertible Note, such new Convertible Note or Convertible
Notes to be dated and to bear interest from the date to which interest has been
paid on such surrendered Convertible Note.
As promptly as possible after the conversion of this Security,
in whole or in part, and in any event within ten (10) days thereafter, the
Company, at its expense, will issue and deliver a certificate or certificates
for the number of full shares of Common Stock issuable upon such conversion.
(b) The Conversion Rate shall be subject to adjustments from
time to time as follows:
(1) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company payable in
shares of Common Stock, the Conversion Rate in effect at the opening of
business on the day following the Determination Date for such dividend
or other distribution shall be increased by dividing such Conversion
Rate by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding at the close of business on such
Determination Date and the denominator shall be the sum of such number
of shares and the total number of shares constituting such dividend or
other distribution, such increase to become effective immediately after
the opening of business on the day following such Determination Date.
For the purposes of this paragraph (1), the number of shares of Common
Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not pay any dividend or make any distribution
on shares of Common Stock held in the treasury of the Company.
(2) Subject to the last sentence of paragraph (7) of this
Section 2(b), in case the Company shall issue rights, options, warrants
or convertible securities entitling the holders thereof to subscribe
for or purchase shares of Common Stock at a
price per share less than the current market price per share (determined as
provided in paragraph (8) of this Section 2(b)) of the Common Stock on the
Determination Date for such distribution, the Conversion Rate in effect at the
opening of business on the day following such Determination Date, shall be
increased by dividing such Conversion Rate by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on such Determination Date plus the number of shares of Common Stock
which the aggregate amount received by the Company upon the issuance of such
rights, options, warrants or convertible securities plus the aggregate amount
receivable by the Company upon the exercise or conversion of such rights,
options, warrants or convertible securities would purchase at such current
market price and the denominator shall be the number of shares of Common Stock
outstanding at the close of business on such Determination Date plus the number
of shares of Common Stock so offered for subscription or purchase, such increase
to become effective immediately after the opening of business on the day
following such Determination Date provided, that no such adjustment need to be
made in the case of the granting by the Company to employees or directors of the
Company or consultants to the Company of Common Stock and/or options to purchase
Common Stock and the issuance of Common Stock upon the exercise of such options.
For the purposes of this paragraph (2), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not
issue any rights, options, warrants or convertible securities in respect of
shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall each be subdivided
into a greater number of shares of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision or
combination becomes effective.
(4) Subject to the last sentence of paragraph (7) of this Section 2(b),
in case the Company shall, by dividend or otherwise, distribute evidences of its
indebtedness, shares of any class of capital stock, or other property (including
securities, but excluding (i) any rights, options, warrants or convertible
security referred to in paragraph (2) of this Section 2(b) (ii) any dividend or
distribution paid exclusively in cash, (iii) any dividend or distribution
referred to in paragraph (1) of this Section 2(b) and (iv) any merger or
consolidation to which Section 2(h) applies),
4
the Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to the
close of business on the Determination Date for such distribution by a fraction
of which the numerator shall be the current market price per share (determined
as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such
Determination Date less the then fair market value (as determined in good faith
by the Board of Directors of the Company) of the portion of the assets, shares
or evidences of indebtedness so distributed applicable to one share of Common
Stock and the denominator shall be such current market price per share of the
Common Stock, such adjustment to become effective immediately prior to the
opening of business on the day following such Determination Date provided, that
no such adjustment need be made in the case of an underwritten public offering
of Common Stock in which the shares of Common Stock are sold to the public at a
price per share equal to or in excess of 95% of the market price per share of
the Common Stock as of the date of the pricing of such underwritten public
offering. If the Board of Directors determines the fair market value of any
distribution for purposes of this paragraph (4) by reference to the actual or
when issued trading market for any securities comprising such distribution, it
must in doing so consider the prices in such market over the same period used in
computing the current market price per share pursuant to paragraph (8) of this
Section 2(b).
(5) In case the Company shall, by dividend or otherwise, make a Cash
Distribution, then, and in each such case, immediately after the close of
business on the Determination Date for such Cash Distribution, the Conversion
Rate shall be adjusted so that the same shall equal the rate determined by
dividing the Conversion Rate in effect immediately prior to the close of
business on such Determination Date by a fraction (a) the numerator of which
shall be equal to the current market price per share (determined as provided in
paragraph (8) of this Section 2(b)) of the Common Stock on such Determination
Date less an amount equal to the quotient of (1) the amount of such Cash
Distribution divided by (2) the number of shares of Common Stock outstanding on
such Determination Date and (b) the denominator of which shall be equal to the
current market price per share (determined as provided in paragraph (8) of this
Section 2(b)) of the Common Stock on such Determination Date.
(6) In case the Company or any Subsidiary shall make an Excess Purchase
Payment, then, and in each such case, immediately prior to the opening of
business on the day after the tender offer in respect of which such Excess
Purchase Payment is to be made expires, the Conversion Rate shall be adjusted so
that the same shall equal the rate determined by dividing the Conversion Rate in
effect immediately prior to the close of business on the Determination Date for
such tender offer by a fraction (a) the numerator of which shall be equal to the
current market price per share (determined as provided in paragraph (8) of this
Section 2(b)) of the Common Stock on such Determination Date less an amount
equal to the quotient of (A) the Excess Purchase
Payment divided by (B) the number of shares of Common Stock outstanding
(including any tendered shares) as of the Determination Date less the number of
all shares validly tendered and not withdrawn as of the Determination Date and
(b) the denominator of which shall be equal to the current market price per
share (determined as provided in paragraph (8) of this Section 2(b)) of the
Common Stock as of such Determination Date.
(7) The reclassification of Common Stock into securities other than
Common Stock (other than any reclassification upon a consolidation or merger to
which Section 2(h) applies) shall be deemed to involve (a) a distribution of
such securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be the Determination
Date), and (b) a subdivision or combination, as the case may be, of the number
of shares of Common Stock outstanding immediately prior to such reclassification
into the number of shares of Common Stock outstanding immediately thereafter
(and the effective date of such reclassification shall be deemed to be "the day
upon which such subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of paragraph
(3) of this Section 2(b)). Rights, options, warrants or convertible securities
issued by the Company entitling the holders thereof to subscribe for or purchase
shares of Common Stock, which rights, options, warrants or convertible
securities (i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable and (iii) are also issued in respect of future
issuances of Common Stock, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events ("Trigger Event"), shall for purposes
of this Section 2(b) not be deemed issued until the occurrence of the earliest
Trigger Event.
(8) Except as otherwise provided in the last sentence of this
subsection (8) of Section 2(b) for the purpose of any computation under
paragraphs (2), (4), (5) or (6) of this Section 2(b) the current market price
per share of Common Stock on any date shall be calculated by the Company and be
deemed to be the average of the daily Closing Prices for the five (5)
consecutive Trading Days selected by the Company commencing not more than ten
(10) Trading Days before, and ending not later than, the earlier of the day in
question and the day before the "ex date" with respect to the issuance or
distribution requiring such computation. For purposes of this paragraph, the
term "ex date", when used with respect to any issuance or distribution, means
the first date on which the Common Stock trades regular way in the applicable
securities market or on the applicable securities exchange without the right to
receive such issuance or distribution. The current market price with respect to
any option issued to any employee or director of the Company or consultant to
the Company shall be the fair market value on the date of grant determined by
reference to the market price on the day of the grant of such option or to the
market price at the close of business on the Trading Day immediately preceding
such grant.
6
(9) No adjustment in the Conversion Rate shall be required
unless such adjustment (plus any adjustments not previously made by
reason of this paragraph (9)) would require an increase or decrease of
at least one percent in such rate; provided, however, that any
adjustments which by reason of this paragraph (9) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 2 shall be
made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
(10) The Company may make such increases in the Conversion
Rate, for the remaining term of the Securities or any shorter term, in
addition to those required by paragraphs (1), (2), (3), (4), (5) and
(6) of this Section 2(b) as it considers to be advisable in order to
avoid or diminish any income tax to any holders of shares of Common
Stock resulting from any dividend or distribution of stock or issuance
of rights, options, warrants or convertible securities to purchase or
subscribe for stock or from any event treated as such for income tax
purposes.
(c) Whenever the Conversion Rate is adjusted as provided in
Section 2(b), the Company shall compute the adjusted Conversion Rate in
accordance with Section 2(b) and shall prepare a certificate (the "Conversion
Rate Certificate") signed by the Senior Financial Officer of the Company setting
forth the adjusted Conversion Rate and showing in reasonable detail the facts
upon which such adjustment is based, and shall promptly deliver such certificate
to the holder of this Security. If the holders of the Convertible Notes and the
Company cannot agree in writing as to the adjusted Conversion Rate in accordance
with Section 2(b), the holders of the Convertible Notes and the Company shall
determine the adjusted Conversion Rate in accordance with the following
procedure. The holders of the Convertible Notes and the Company shall each
appoint one registered securities broker, licensed with the Securities and
Exchange Commission to sell securities to the public, which broker shall be a
senior vice president, managing director or equivalent of a major securities
brokerage company with offices in New York, New York. Each of such brokers shall
have no less than ten (10) years experience in such field, shall be unaffiliated
with, and their employer securities brokerage company shall be unaffiliated
with, the holders of the Convertible Notes and the Company and shall not have
previously participated in any underwriting of the Company's Common Stock in any
public offering or provided any Material investment banking or corporate
advisory services to the Company. The holders of the Convertible Notes and the
Company shall make their appointments promptly and, in any event, within thirty
(30) days from the date of the Conversion Rate Certificate. The two brokers
shall meet and shall be instructed to render a determination of the adjusted
Conversion Rate to the holders of the Convertible Notes and the Company within
sixty (60) days of the date of the Conversion Rate Certificate. If the two
brokers cannot agree, then each broker shall render their independent
determination and the two brokers shall simultaneously therewith provide the
name of a third broker acceptable to the two brokers meeting the criteria set
forth above. The third broker shall be instructed to render a determination of
the adjusted Conversion Rate within thirty (30) days of his or her
appointment. The two closest determinations of the adjusted Conversion Rate
shall be averaged and shall constitute the adjusted Conversion Rate. If the two
brokers cannot agree upon a third broker, the selection of a third broker shall
be submitted to binding arbitration in New York, New York under the rules of the
American Arbitration Association. In the event that the difference between the
Company's calculation of the adjusted Conversion Rate and the calculation of the
adjusted Conversion Rate determined by the foregoing process is five percent
(5%) or greater then the costs and expenses of the brokers and any arbitration
shall be paid by and be the obligation of the Company and in the event that such
difference is less than five percent (5%) the holders of the Convertible Notes
(as a group) shall each pay its pro rata share of 50% of such costs and expenses
and the Company shall pay 50% of such costs and expenses.
(d) In case:
(1) the Company shall declare a dividend or other distribution
on its Common Stock payable (i) otherwise than exclusively in cash or
(ii) exclusively in cash in an amount that would require any adjustment
pursuant to Section 2(b); or
(2) the Company shall authorize the granting to the holders of
its Common Stock of rights, options, warrants or convertible securities
to subscribe for or purchase any shares of capital stock of any class
or of any other rights; or
(3) of any reclassification of the Common Stock of the
Company, or of any consolidation, merger or share exchange to which the
Company is a party and for which approval of any shareholders of the
Company is required, or of the conveyance, sale, transfer or lease of
all or substantially all of the assets of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(5) the Company or any Subsidiary shall commence a tender
offer for all or a portion of the Company's outstanding shares of
Common Stock (or shall amend any such tender offer);
then the Company shall cause to be delivered to the holder of this Security, at
least 20 days (or 10 days in any case specified in clause (1) or (2) above)
prior to the applicable record, expiration or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights, options, warrants or
convertible securities or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution, rights, options,
warrants or convertible securities are to be determined, (y)
the date on which the right to make tenders under such tender
offer expires or (z) the date on which such reclassification,
consolidation, merger, share exchange, conveyance, transfer,
sale, lease, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange,
conveyance, transfer, sale, lease, dissolution, liquidation or
winding up. Neither the failure to give such notice nor any
defect therein shall affect the legality or validity of the
proceedings described in clauses (1) through (5) of this
Section 2(d).
(e) The Company shall at all times reserve
and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, for the purpose of
effecting the conversion of the Security, the full number of
shares of Common Stock then issuable upon the conversion of
this Security.
(f) Except as provided in the next sentence,
the Company will pay any and all taxes and duties that may be
payable in respect of the issue or delivery of shares of
Common Stock on conversion of this Security. The Company shall
not, however, be required to pay any tax or duty which may be
payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that
of the holder of this Security, and no such issue or delivery
shall be made unless and until the Person requesting such
issue has paid to the Company the amount of any such tax or
duty, or has established to the satisfaction of the Company
that such tax or duty has been paid.
(g) The Company agrees that all shares of
Common Stock which may be delivered upon conversion of the
Security, upon such delivery, will have been duly authorized
and validly issued and will be fully paid and nonassessable
(and shall be issued out of the Company's authorized but
unissued Common Stock) and, except as provided in the second
sentence of Section 2(f), the Company will pay all taxes,
liens and charges with respect to the issue thereof.
(h) In case of any consolidation of the
Company with any other Person, any merger of the Company into
another Person or of another Person into the Company (other
than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company) or any conveyance, sale, transfer
or lease of all or substantially all of the properties and
assets of the Company, the Person formed by such consolidation
or resulting from such merger or which acquires such
properties and assets, as the case may be, shall execute and
deliver to the holder of this Security a supplemental
agreement providing that such holder has the right, during the
period this Security shall be convertible as specified in
Section 2(a), to convert this Security only into the kind and
amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer or
lease (including any Common Stock
9
retainable) by a holder of the number of shares of Common
Stock of the Company into which this Security might have been
converted immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease, assuming such holder of
Common Stock of the Company (i) is not a Person with which the
Company consolidated, into which the Company merged or which
merged into the Company or to which such conveyance, sale,
transfer or lease was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (ii)
failed to exercise its rights of election, if any, as to the
kind or amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale,
transfer or lease (provided that if the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer, or lease is
not the same for each share of Common Stock of the Company
held immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease by others than a
Constituent Person or an Affiliate of a Constituent Person and
in respect of which such rights of election shall not have
been exercised ("Non-electing Share"), then for the purpose of
this Section 2(h) the kind and amount of securities, cash and
other property receivable upon such consolidation, merger,
conveyance, sale, transfer or lease by the holders of each
Non- electing Share shall be deemed to be the kind and amount
so receivable per share by a plurality of the Non-electing
Shares). Such supplemental agreement shall provide for
adjustments which, for events subsequent to the effective date
of such supplemental agreement, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this
Section 2. The above provisions of this Section 2(h) shall
similarly apply to successive consolidations, mergers,
conveyances, sales, transfers or leases. In this paragraph,
"securities of the kind receivable" upon such consolidation,
merger, conveyance, transfer, sale or lease by a holder of
Common Stock means securities that, among other things, are
registered and freely transferable under the Securities Act,
and listed and approved for quotation in all securities
markets, in each case to the same extent as such securities so
receivable by a holder of Common Stock.
(i) The Company (i) will effect all
registrations with, and obtain all approvals by, all
governmental authorities that may be necessary under any
United States Federal or state law (including the Securities
Act, the Exchange Act and state securities and Blue Sky laws)
for the shares of Common Stock issuable upon conversion of
this Security to be lawfully issued and delivered as provided
herein, and thereafter publicly traded (if permissible under
the Securities Act) and qualified or listed as contemplated by
clause (ii) (it being understood that the Company shall not be
required to register the Common Stock issuable on conversion
hereof under the Securities Act, except pursuant to the
Registration Rights Agreement between the Company and the
initial holder of this Security); and (ii) will list the
shares of Common Stock required to be issued and delivered
upon conversion of Securities, prior to such issuance or
delivery, on each national securities exchange on which
outstanding Common Stock is listed or quoted at the time of
such delivery, or if the Common Stock is not then listed on
any securities exchange, to qualify the Common Stock for
quotation on the Nasdaq National Market or such other
inter-dealer quotation system, if any, on which the Common
Stock is then quoted.
10
(i) For purposes hereof: (references to Sections shall mean
Sections of this Security unless otherwise specified)
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Business Day" means any day other than a Saturday, a Sunday
or other day which shall be in Boston, Massachusetts or New York, New York or a
legal holiday or a day on which commercial banks in Boston, Massachusetts or New
York, New York are required or authorized to be closed.
"Cash Distribution" means the distribution by the Company to
holders of its Common Stock of cash, other than any cash that is distributed
upon a merger or consolidation to which Section 2(h) applies or as part of a
distribution referred to in paragraph (4) of Section 2(b).
"Change of Control" is defined in Section 3(f)(2).
"Closing" is defined in Section 1 of the Note Purchase
Agreement.
"Closing Price" means, with respect to the Common Stock of the
Company, for any day, the reported last sale price per share on the Nasdaq
National Market, or, if the Common Stock is not admitted to trading on the
Nasdaq National Market, on the principal national securities exchange or
inter-dealer quotation system on which the Common Stock is listed or admitted to
trading, or if not admitted to trading on the Nasdaq National Market, or listed
or admitted to trading on any national securities exchange or inter-dealer
quotation system, the average of the closing bid and asked prices per share in
the over-the-counter market as furnished by any New York Stock Exchange member
firm selected from time to time by the Company for that purpose.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company authorized at the date of this instrument as originally
executed. Subject to the provisions of Section 2(h), shares issuable on
conversion or repurchase of this Security shall include only shares of Common
Stock or shares of any class or classes of common stock resulting from any
reclassification or reclassifications thereof; provided, however, that if at
11
any time there shall be more than one such resulting class, the shares so
issuable on conversion of this Security shall include shares of all such
classes, and the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.
"Convertible Note(s)"shall mean one or more of the Company's
9.00% Senior Convertible Notes due January 20, 2004.
"Conversion Price" is defined in Section 1.
"Conversion Rate" is defined in Section 2(a).
"Default" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of notice or
both, become an Event of Default.
"Designated Office" is defined in the Preamble.
"Determination Date" means, in the case of a dividend or other
distribution, including the issuance of rights, options, warrants or convertible
securities, to the date fixed for the determination of those entitled to receive
such dividend or other distribution, and in the case of a tender offer, the last
time that tenders could have been made pursuant to such tender offer.
"Environmental Laws" means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, licenses, written agreements or written governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Excess Purchase Payment" means the product of (A) the excess,
if any, of (i) the amount of cash plus the fair market value (as determined in
good faith by the Company's Board of Directors) of any non-cash consideration
required to be paid with respect to one share of Common Stock acquired or to be
acquired in a tender offer made by the Company
12
or any Subsidiary of the Company for all or any portion of the Common Stock over
(ii) the current market price per share as of the last time that tenders could
have been made pursuant to such tender offer and (B) the number of shares
validly tendered and not withdrawn as of the Determination Date in respect of
such tender offer.
"Event of Default" is defined in the preamble to Section 4.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any successor Federal statute, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder, all as the same
shall be in effect from time to time.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"Hazardous Materials" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the remediation of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is restricted, prohibited or penalized by any applicable Environmental Law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"holder" means, with respect to this Security or any other
Convertible Note, the Person in whose name it is registered in the register
maintained by the Company pursuant to Section 6(d).
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease (as
defined by GAAP), upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust agreements
and all similar arrangements).
"Make-Whole Amount" is defined in Section 4(g).
"Material" means material in relation to the business,
operations, affairs, financial condition, assets, properties, or prospects of
the Company and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, affairs, financial condition, assets, properties
or prospects of the Company and its Subsidiaries taken as a whole, or (b) the
ability of the Company to perform its obligations under the Note Purchase
Agreement, the Registration Rights Agreement and the Convertible Notes, or (c)
the validity or enforceability of this Agreement or the Convertible Notes.
13
"Multiemployer Plan" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Note Purchase Agreement" is defined in the Preamble.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may have
any liability.
"Purchaser(s)" XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY;
XXXX XXXXXXX VARIABLE LIFE INSURANCE COMPANY; SIGNATURE lA (CAYMAN), LTD;
SIGNATURE 3 LIMITED; and XXXXXXX MEZZANINE PARTNERS L.P.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date hereof among the Purchasers and the Company.
"Repurchase Date" is defined in Section 3(a).
"Repurchase Price" is defined in Section 3(a).
"Responsible Officer" means any Senior Financial Officer and
any other senior officer of the Company with responsibility for the
administration of the relevant covenants in this Security or in the Note
Purchase Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor Federal statute, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, all as the same shall
be in effect from time to time.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"Subsidiary" means, as to any Person, any corporation,
association or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or
14
more of its Subsidiaries owns sufficient equity or voting interests to enable it
or them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
entity, and any partnership or joint venture if more than a 50% interest in the
profits or capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries (unless such
partnership can and does ordinarily take major business actions without the
prior approval of such Person or one or more of its Subsidiaries). Unless the
context otherwise clearly requires, any reference to a "Subsidiary" is a
reference to a Subsidiary of the Company.
"Trading Day" means (i) if the Common Stock is admitted to
trading on the Nasdaq National Market or any other system of automated
dissemination of quotations of securities prices, a day on which trades may be
effected through such system; (ii) if the Common Stock is listed or admitted for
trading on the New York Stock Exchange or any other national securities
exchange, a day on which such exchange is open for business; or (iii) if the
Common Stock is not admitted to trading on the Nasdaq National Market or listed
or admitted for trading on any national securities exchange or any other system
of automated dissemination of quotation of securities prices, a day on which the
Common Stock is traded regular way in the over-the-counter market and for which
a closing bid and a closing asked price for the Common Stock are available.
3. Right to Require Repurchase. (a) In the event that a Change
in Control shall occur, then the holder of this Security shall have the right,
at such holder's option, to require the Company to repurchase, and upon the
exercise of such right the Company shall repurchase, this Security, or any
portion of the principal amount hereof that is equal to $1,000 or any integral
multiple thereof, on the date (the "Repurchase Date") that is thirty (30)
Trading Days after the date on which the Company gives notice thereof to the
holder of this Security, at a purchase price equal to 100% of the principal
amount of this Security to be repurchased plus interest accrued to the
Repurchase Date (the "Repurchase Price"): provided, however, that installments
of interest on this Security whose stated maturity is on or prior to the
Repurchase Date shall be payable to the holder of this Security, or one or more
predecessor Securities, registered as such on the relevant Record Date according
to their terms. At the option of the Company, the Repurchase Price may be paid
in cash or subject to the fulfillment by the Company of the conditions set forth
in each of Section 5 and Section 6 and subject to the limitations set forth in
each of Section 5 and Section 6, by delivery of shares of Common Stock or in
common stock of any Person which succeeds the Company up to a maximum amount of
ten percent (10%) of the then issued and outstanding Common Stock or common
stock of such Person following any Change in Control, provided, however, the
cash plus the fair market value of such shares shall equal the Repurchase Price.
The Company agrees to give the holder of this Security notice of any Change in
Control, by facsimile transmission confirmed in writing by overnight courier
service, promptly and in any event within two (2) Trading Days of the occurrence
thereof.
15
(b) To exercise a repurchase right, the holder shall deliver
to the Company on or before the 10th Trading Day prior to the Repurchase Date,
together with this Security, written notice of the holder's exercise of such
right, which notice shall set forth the name of the holder, the number of shares
of Common Stock then owned by such holder and its affiliates, the principal
amount of this Security to be repurchased (and, if this Security is to be
repurchased in part, the portion of the principal amount thereof to be
repurchased and the name of the person in which the portion thereof to remain
outstanding after such repurchase is to be registered) and a statement that an
election to exercise the repurchase right is being made thereby and, in the
event that the Repurchase Price shall be paid in whole or in part by the
delivery of shares, as provided above, the name or names (and the addresses) in
which the certificates for shares shall be issued. Such written notice shall be
irrevocable, except that the right of the holder to convert this Security (or
the portion hereof with respect to which the repurchase right is being
exercised) shall continue until the close of business on the Repurchase Date (or
if the Company elects to pay the Repurchase Price by delivery of shares as
provided above, until the close of business on the Trading Day immediately
preceding the first delivery of shares with respect thereto).
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid to
the holder the Repurchase Price in cash or shares, as provided above, together
with accrued and unpaid interest to the Repurchase Date; provided, however, that
installments of interest that mature on or prior to the Repurchase Date shall be
payable in cash, to the holders of this Security, or one or more predecessor
Securities, registered as such at the close of business on the relevant regular
record date.
(d) If this Security (or portion thereof) is surrendered for
repurchase and is not so paid on or prior to the Repurchase Date. the principal
amount of this Security (or such portion hereof, as the case maybe) shall, until
paid, bear interest to the extent permitted by applicable law from the
Repurchase Date at eleven percent (11%) per annum, and shall remain convertible
into Common Stock until the principal of this Security (or portion thereof, as
the case may be) shall have been paid or duly provided for.
(e) If this Security is to be repurchased only in part, it
shall be surrendered to the Company at the Designated Office (with, if the
Company so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company duly executed by, the holder hereof or his
attorney duly authorized in writing), and the Company shall execute and make
available for delivery to the holder without service charge, a new Security or
Securities, containing identical terms and conditions, each in an authorized
denomination in aggregate principal amount equal to and in exchange for the
unrepurchased portion of the principal of the Security so surrendered.
(f) For purposes of this Section 3.
(1) the term "beneficial owner" shall be determined in
accordance with Rule 13d-3 promulgated by the Securities and Exchange Commission
pursuant to the Exchange Act; and
16
(2) a "Change in Control" shall be deemed to have occurred at
the time, after the original issuance of this Security, of:
(i) the acquisition by any Person of beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, of shares of capital stock of
the Company entitling such Person to exercise 50% or more of the total
voting power of all shares of capital stock of the Company entitled to
vote generally in the election of directors (any shares of voting stock
of which such Person is the beneficial owner that are not then
outstanding being deemed outstanding for purposes of calculating such
percentage) other than any such acquisition by the Company or any
employee benefit plan of the Company; or
(ii) any consolidation or merger of the Company with or into,
any other Person, any merger of another Person with or into the
Company, or any conveyance, transfer, sale, lease or other disposition
of all or substantially all of the assets of the Company to another
Person (other than (a) any such transaction (x) which does not result
in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock and (y) pursuant to which holders of
Common Stock immediately prior to such transaction have the entitlement
to exercise, directly or indirectly, 50% or more of the total voting
power of all shares of capital stock entitled to vote generally in the
election of directors of the continuing or surviving Person immediately
after such transaction and (b) any merger which is effected solely to
change the jurisdiction of incorporation of the Company and results in
a reclassification, conversion or exchange of outstanding shares of
Common Stock into solely shares of common stock,
4. Events of Default. (a) "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary, or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(1) (A) default in the payment of any principal or premium, if
any, upon this Security when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by declaration or
otherwise or (B) default in the payment of any interest upon this
Security when it becomes due and payable, and continuance of such
default for a period of five (5) days; or
(2) default by the Company in the performance of its
obligations in respect of any conversion of this Security (or any
portion hereof) in accordance with Section 2; or
(3) failure by the Company to give any notice of a Change of
Control required to be delivered in accordance with Section 3(a); or
(4) default in the performance, or breach, of any material
covenant or warranty of the Company herein, in the Note Purchase
Agreement, or in the Registration
17
Rights Agreements (other than a covenant or warranty a default in the
performance or breach of which is specifically dealt with elsewhere in
this Section 4(a)) and continuance of such default or breach for a
period of 30 days after the earlier to occur of(A) the Company's
obtaining knowledge of such default or (B) the Company's receiving
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(5) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company furnished in
connection with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date as of which
made; or
(6) a final judgment or judgments for the payment of money
aggregating in excess of $250,000 are rendered against one or more of
the Company and its Subsidiaries and which judgments are not, within 60
days after entry thereof, bonded, discharged or stayed pending appeal,
or are not discharged within 60 days after tile expiration of such
stay; or
(7) a default under all3, bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company, or under
any agreement, mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company. with a principal amount
then outstanding in excess of $1,000,000, whether such indebtedness now
exists or shall hereafter be created, which default shall constitute a
failure to pay the principal of such indebtedness (in whole or in any
part greater than $1,000,0003 when due and payable or shall have
resulted in such indebtedness (in whole or in any part greater than
$1,000.0003 becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable; or
(8) if(i) any Plan other than a Multiemployer Plan shall fail
to satisfy the minimum funding standards of ERISA or the Code for any plan year
or part thereof or a waiver of such standards or extension of any amortization
period is sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan other than a Multiemployer Plan shall have been or
is reasonably expected to be filed with the PBGC or the PBGC shall have
instituted proceedings under ERISA section 4042 to terminate or appoint a
trustee to administer any Plan other than a Multiemployer Plan or the PBGC shall
have notified the Company or any ERISA Affiliate that a Plan other than a
Multiemployer Plan may become a subject of any such proceedings, (iii) the
aggregate "amount of unfunded benefit liabilities" (within the meaning of
section 4001(a)(183 of ERISA) under all Plans other than a Multiemployer Plan,
determined in accordance with Title IV of ERISA, shall exceed $250,000, (iv) the
Company or any ERISA Affiliate shall have incurred or is reasonably expected to
incur any liability pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, (v) the Company
or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the
Company or any Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment wealthier benefits in a manner that would
increase the liability of the
18
Company or any Subsidiary thereunder; and any such event or
events described in clauses (i) through (vi) above, either
individually or together with any other such event or events,
could reasonably be expected to have a Material Adverse
Effect. (As used in this Section 4(a)(8), the terms "employee
benefit plan" and "employee welfare benefit plan" shall have
the respective meanings assigned to such terms in Section 3 of
ERISA.); or
(9) if, as a result of any Change of Control
or any other consolidation or merger, the holding by
the Purchasers or any assignees thereof of this
Security or the holding of any Common Stock or common
stock of any Person succeeding the Company, issued to
the Purchasers or any assignees thereof after
conversion of this Security would constitute, with
respect to any Plan (other than a Multiemployer Plan)
a prohibited transaction which would violate the
prohibitions of section 406 of ERISA or which would
subject any "disqualified person" (as defined in
section 4975(e)(2) of the Code) to a tax pursuant to
section 4975(c)(1)(A)-(D) of the Code; or
(10) the entry by a court having
jurisdiction in the premises of(A) a decree or order
for relief in respect of the Company in an
involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree
or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any
applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company
or of any substantial part of its property, or
ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or
order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive
days; or
(11) the commencement by the Company of a
voluntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company
in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization
or similar relief under any applicable Federal or
State law, or the consent by it to the filing of such
petition or to the appointment of or taking
possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of
its property, or the making by it of an assignment
for the benefit of creditors, or not paying its debts
as they become due or the admission by it in writing
of its inability to pay its debts generally as they
become due, or the taking of corporate action by the
Company in furtherance of any such action.
(b) If an Event of Default (other than an
Event of Default specified in Section 4(a)(l0) or 4(a)(11))
occurs and is continuing, then in every such case the holder
of this Security may declare the principal hereof to be due
and payable immediately, by a notice in
19
writing to the Company, and upon any such declaration such
principal and all accrued interest hereon shall become
immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived, and the Company shall forthwith upon any
such acceleration pay to the holder of this Security (i) the
entire principal of and interest accrued on this Security, and
(ii) in addition, to the extent permitted by applicable law,
an amount equal to the Make Whole Amount, as liquidated
damages and not as a penalty; and, in
case of the occurrence of an Event of Default of the character
described in subdivisions 4(a)(10) or 4(a)(11) the principal
of and accrued interest on this Security, ipso facto shall
become immediately due and payable without any declaration or
other act of the holder of this Security and without
presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived, and the Company shall
forthwith upon any such acceleration pay to the holder of this
Security (x) the entire principal of and interest accrued on
this Security and (y) in addition, if such Event of Default is
"Voluntary" (as hereinafter defined), to the extent permitted
by applicable law, an amount equal to the Make-Whole Amount,
as liquidated damages and not as a penalty.
For purposes of this section 4(a), "Voluntary" shall
mean an Event of Default of the character described in
subdivisions 4(a)(l 0) or 4(a)(11 ) which shall have been (x)
procured by the Company or any officer, director, stockholder
or Affiliate of the Company or (y) primarily the result of
action or inaction by the Company or by any officer, director,
stockholder or Affiliate of the Company.
(c) In case any one or more of the Events of
Default specified in section 4(a) shall have occurred, and
irrespective of whether this Security has become or has been
declared immediately due and payable under section 4(a), the
holder of this Security may proceed to protect and enforce its
rights either by suit in equity or by action at law, or both.
The Company stipulates that the remedies at law of the holder
of this Security in the event of any Default or threatened
Default by the Company in the performance of or compliance
width any covenant or agreement in this Security, the Note
Purchase Agreement or the Registration Rights Agreement are
not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a
decree for the specific performance thereof, whether by an
injunction against a violation thereof or otherwise.
(d) No remedy conferred in this Security,
the Note Purchase Agreement or the Registration Rights
Agreement is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or thereunder
or now or hereafter existing at law or in equity or by statute
or otherwise.
(e) No course of dealing between the Company
and any of its Subsidiaries, on the one hand, and the holder
of this Security, on the other hand, and no delay by any such
holder in exercising any rights hereunder or under the Note
Purchase Agreement or the Registration Rights Agreement shall
operate as a waiver of any rights of such holder.
20
(f) In case any one or more of the Events of Default specified
in section 4(a) shall have occurred, all amounts to be applied to the prepayment
or payment of this Security shall be applied, after the payment of all related
costs and expenses incurred by the holder of this Security (including, without
limitation, compensation to any and all trustees, liquidators, receivers or
similar officials and reasonable fees, expenses and disbursements of counsel) in
such order of priority as is determined by the holder of this Security.
(g) The term "Make-Whole Amount" means, with respect to this
Security, an amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of this
Security over the amount of such Called Principal, provided that the Make-Whole
Amount may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:
"Called Principal" means, with respect to this Security, the
principal of this Security that has become or is declared to be
immediately due and payable pursuant to Section 4(b).
"Discounted Value" means, with respect to the Called Principal
of this Security, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice
and at a discount factor (applied on the same periodic basis as that on
which interest on this Security is payable) equal to the Reinvestment
Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of this Security, 150 basis points over the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M. (New York City
time) on the second Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as "PX-I"
of the Bloomberg Financial Markets Services Screen for actively traded
U.S. Treasury securities having a maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date, or
(ii) if such yields are not reported as of such time or the yields
reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding
the Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the duration closest to and
greater than the Remaining Average Life and (2) the actively traded
U.S. Treasury security with the duration closest to and less than the
Remaining Average Life.
21
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payment" means, with respect to the
Called Principal of this Security, all payments of such Called
Principal and interest thereon that would be due after the Settlement
Date with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if
such Settlement Date is not a date on which interest payments are due
to be made under the terms of this Security, then the amount of the
next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date.
"Settlement Date" means, with respect to the Called Principal
of this Security, the date on which such Called Principal or has become
or is declared to be immediately due and payable pursuant to Section
4(b).
5. Consolidation. Merger, Etc. (a) The Company shall not
consolidate with or merge into any other Person or, directly or indirectly,
convey, transfer, sell or lease all or substantially all of its properties and
assets to any Person, and the Company shall not permit any Person to consolidate
with or merge into the Company or, directly or indirectly, convey, transfer,
sell or lease all or substantially all of its properties and assets to the
Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer, sell or lease all or substantially
all of its properties and assets to any Person, the Person formed by
such consolidation or into which the Company is merged or the Person
which acquires by conveyance, transfer or sale, or which leases, all or
substantially all the properties and assets of the Company shall be a
corporation, limited liability company, partnership or trust, shall be
organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an agreement supplemental hereto, executed and
delivered to the holder of this Security in form satisfactory to the
holder, the due and punctual payment of the principal of(and premium,
if any) and interest on this Security and the performance or observance
of every covenant of this Security on the part of the Company to be
performed or observed, including the conversion rights provided herein
(which shall thereafter relate to common stock of such successor, on a
basis reasonably designed to preserve the economic value to the holder
of this Security of such conversion rights);
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or
a Subsidiary of the Company as a result of such transaction as having
been incurred by the Company or such Subsidiary of the Company at the
time of such transaction, no Event of Default, and no
22
event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing;
(3) the Company has delivered to the holder of this Security
an officers' certificate stating that such consolidation, merger,
conveyance, transfer, sale or lease and, if a supplemental agreement is
required in connection with such transaction, such supplemental
agreement, comply with this Section and that all conditions precedent
herein provided for relating to such transaction have been complied
with; and
(4) counsel for the Company has delivered to the holder of
this Security an opinion of such counsel with respect to such
consolidation, merger, conveyance, transfer, sale or lease, and if a
supplemental agreement is required in connection with such transaction,
such supplemental agreement, which opinion shall be, in form and
substance, reasonably acceptable to such holder and its counsel.
(b) Upon any consolidation of the Company with, or merger of
the Company into, any other Person or any conveyance, transfer, sale or lease of
all or substantially all of the properties and assets of the Company in
accordance with Section 5(a), the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer, sale
or lease is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Security with the same effect
as if such successor Person had been named as the Company herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved o fall obligations and covenants under this Security.
6. Payment in Stock. (a) The Company may elect to pay some or
all of the Repurchase Price by delivery of shares of Common Stock or shares of
common stock in any Person succeeding the Company, if and only if, each of the
following conditions shall be satisfied (without limiting any other conditions
contained herein):
(1) Any such payment shall be made in five equal installments,
on each of the five consecutive Trading Days ending on and including the third
Trading Day immediately preceding the date when any cash payment would otherwise
be due, and the shares of Common Stock or common stock of any Person succeeding
the Company deliverable in payment of each such installment shall have a fair
market value as of the date of such installment of not less than 20% of the
amount of such payment due hereunder which is payable in shares of stock. For
purposes of this Section 6, the fair market value of shares of Common Stock
shall be equal to 95% of the Closing Price for the immediately preceding Trading
Day;
(2) In the event any shares of Common Stock or common stock of
any Person succeeding the Company to be issued in respect of any amount due
hereunder require registration under any Federal securities law before such
shares may be freely transferrable without being subject to any transfer
restrictions under the Securities Act of 1933 upon
23
issuance, such registration shall have been completed and shall have become
effective prior to the date of the first such installment;
(3) In the event any shares of Common Stock or common stock of
any Person succeeding the Company to be issued in respect of any amount due
hereunder require registration with or approval of any governmental authority
under any State law or any other Federal law before such shares may be validly
issued or delivered upon issuance or transferred freely, such registration shall
have been completed or have become effective and such approval shall have been
obtained, in each case, prior to the date of the first such installment;
(4) The shares of Common Stock or common stock of any Person
succeeding the Company deliverable in payment of such amount due hereunder shall
have been approved for quotation in the Nasdaq National Market immediately prior
to the date of the first such installment or, if at the time its shares of
Common Stock or shares of common stock of any Person succeeding the Company are
listed or admitted for trading on any national securities exchange, the shares
of Common Stock or common stock in any Person succeeding the Company and
deliverable shall have been so listed or admitted for trading.
(5) All shares of Common Stock or common stock of any Person
succeeding the Company deliverable in payment of such amount due hereunder
shall, upon issue, be duly and validly issued and fully paid and non-assessable
and free of any preemptive rights;
(6) In respect of each such payment date, the Company shall
have given the holder of this Security not less than 10 nor more than 15 Trading
Days' notice of its election to effect payment in respect of such payment date
by delivery of shares of Common Stock; provided that any such notice shall
accompany the Company's notice of a Change of Control relating thereto; and
(7) The Company shall deliver, or cause to be delivered a
certificate from the Person succeeding the Company which states, that after
giving effect to any Change of Control that the holding by the Purchasers or any
assignees thereof of this Security, or the holding of any Common Stock or common
stock of any Person succeeding the Company after conversion of this Security
would not constitute a prohibited transaction which would violate the
prohibition of section 406 of ERISA or which would subject any "disqualified
person" (as defined in section 4975(e)(2) of the Code) to a tax pursuant to
section 4975 (c)(1)(A)-(D) of the Code.
If all of the conditions set forth in this Section 6(a) are
not satisfied in accordance with the terms hereof, any such amount due hereunder
shall be paid by the Company only in cash.
(b) Any issuance of shares of Common Stock or shares of common
stock of any Person succeeding the Company in respect of any installment due
hereunder pursuant to this Section 6 shall be deemed to have been effected
immediately prior to the close of
24
business on the date of delivery of such installment and the
person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon
such delivery shall be deemed to have become on such date the
holder or holders of record of the shares represented thereby;
provided, however, that in case any installment shall be due
on a date when the stock transfer books of the Company shall
be closed, the person or persons in whose name or names the
certificate or certificates for such shares are to be issued
shall be deemed to have become the record holder or holders
thereof for all purposes at the opening of business on the
next succeeding day on which such stock transfer books are
open. No payment or adjustment shall be made for dividends or
distributions on any Common Stock issued pursuant to this
Section 6 declared prior to the relevant delivery date; and
(c) Any issuance and delivery of
certificates for shares of common stock or shares of common
stock of any Person succeeding the Company pursuant to this
Section 6 shall be made without charge to the holder of this
Security for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or
the securities represented thereby.
7. Other. (a) No provision of this Security
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Security in cash at the times, places and rate, and in the coin or currency,
herein prescribed or to convert this Security as herein provided.
(b) The Company will give prompt written
notice to the holder of Security of any change in the location
of the Designated Office.
(c) The transfer of this Security is
registrable on the Security Register of the Company upon
surrender of this Security for registration of transfer at the
Designated Office, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the
Company duly executed by, the holder hereof or his attorney
duly authorized in writing, and thereupon one or more new
Securities, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated
transferee or transferees. Such Securities are issuable only
in registered form without coupons in denominations of $1,000
and any integral multiple thereof. No service charge shall be
made for any such registration of transfer, but the Company
may require payment of a sum sufficient to recover any tax or
other governmental charge payable in connection therewith.
Prior to due presentation of this Security for registration of
transfer, the Company and any agent of the Company may treat
the Person in whose name this Security is registered as the
owner thereof for all purposes, whether or not this Security
be overdue, and neither the Company nor any such agent shall
be affected by notice to the contrary.
(d) The Company shall keep at the Designated
Office a register for the registration and registration of
transfers of Convertible Notes. The name and address of each
holder of one or more Convertible Notes, each transfer thereof
and the name and address of each transferee of one or more
Convertible Notes shall be registered in such register. Prior
to due presentment for registration of transfer, the Person in
whose name any Convertible Note
25
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary. The Company shall give to any holder of a Convertible
Note promptly upon request therefor, a complete and correct copy of the names
and addresses of all registered holders of Convertible Notes.
(e) Upon surrender of any Convertible Note at the Designated
Office for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such
Convertible Note or his attorney duly authorized in writing and accompanied by
the address for notices of each transferee of such Convertible Note or part
thereof), the Company shall execute and deliver, at the Company's expense
(except as provided below), one or more new Convertible Notes (as requested by
the holder thereof) in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Convertible Note. Each such
new Convertible Note shall be payable to such Person as such holder may request
and shall be substantially in the form of this Security. Each such new
Convertible Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Convertible Note or dated the
date of the surrendered Convertible Note if no interest shall have been paid
thereon. The Company may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such transfer of this
Security. Convertible Notes shall not be transferred in denominations of less
than $100,000, provided that if necessary to enable the registration of transfer
by a holder of its entire holding of Convertible Notes, one Convertible Note may
be in a denomination of less than $100,000. Any transferee, by its acceptance of
a Convertible Note registered in its name (or the name of its nominee), shall be
deemed to have made the representation set forth in Section 3 of the Note
Purchase Agreement.
(f) Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Security (which evidence shall be notice from such holder of
such ownership and such loss, theft, destruction or mutilation), and
(i) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of this
Security is, or is a nominee for, an original holder or another
institutional investor holder of this Security, such Person's own
unsecured agreement of indemnity shall be deemed to be satisfactory),
or
(ii) in the case of mutilation, upon surrender and
cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Convertible Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Convertible
Note or dated the date of such lost, stolen, destroyed or mutilated Convertible
Note if no interest shall have been paid thereon.
26
(g) This Security shall be governed by and construed in
accordance with the laws of the State of New York, United States of America.
(h) So long as you or your nominee shall be holder of this
Security and notwithstanding anything in this Security to the contrary, the
Company will pay all sums becoming due hereunder for principal, Make-Whole
Amount, if any, and interest by the method and at the address specified for such
purpose below your name in Schedule I of the Note Purchase Agreement, or by such
other method provided in the Preamble or at such other address as you shall have
from time to time specified to the Company in writing for such purpose, without
the presentation or surrender of this Security, or the making of any notation
hereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment in full of this Security, you shall
surrender this Security for cancellation, reasonably promptly after any such
request to the Company at its principal executive office or at the place of
payment most recently designated by the Company. Prior to any sale or other
disposition of this Security you will, at your election, either endorse thereon
the amount of principal paid thereon and the last date to which interest has
been paid thereon or surrender this Security to the Company in exchange for a
new Convertible Note pursuant to the terms hereof. The Company will afford the
benefits of this Section to any institutional investor that is the direct or
indirect transferee of this Security.
[END OF PAGE - SIGNATURE PAGE FOLLOWS]
27
Signature Page of 9.00% Senior Convertible Note due January
20, 2004
1N WITNESS WHEREOF, the Company has caused this Security to be
duly executed under its corporate seal.
Dated: January 20, 1999
CELGENE CORPORATION
Name:
Title:
Attest:
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 3(a) of this Security, the
undersigned hereby elects to have all or a portion of this
Security repurchased by the Company.
2. The undersigned hereby directs the Company to pay
[choose one] (a) it or (b) Name: ; address: ; Social Security or Other
Taxpayer Identification Number, if any: , an amount in cash or equal to
100% of the principal amount to be repurchased (as set forth below), plus
interest accrued to the Repurchase Date, as provided herein.
Dated:
Signature
Number of shares of Common Stock owned by the holder and its affiliates:
Principal amount to be repurchased (an integral multiple of $1,000):
Remaining principal amount following such repurchase (not less than
$1,000):
NOTICE: The signature to the foregoing Election must correspond to the
name as written upon the face of this Security in every particular,
without alteration or any change whatsoever.
CONVERSION NOTICE
The undersigned holder of this Security hereby irrevocably
exercises the option to convert this Security, or any portion of the principal
amount hereof (which is an integral multiple of $1,000) below designated, into
shares of Common Stock (subject to the limitation set forth in the second
paragraph of Section 2(a) of the Security) in accordance with the terms of this
Security, and directs that such shares, together with a check in payment for any
fractional share and any Security representing any unconverted principal amount
hereof, be delivered to and be registered in the name of the undersigned unless
a different name has been indicated below. If shares of Common Stock or
Securities are to be registered in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
Dated:
Signature
Number of shares of Common Stock owned by the holder and its affiliates:
If shares or Securities are to be registered in If only a portion of the
Securities is to be the name of a person other than the holder, converted,
please indicate: please print such person's name and address:
1. Principal amount to be converted:
$
Name
2. Principal amount and denomination
of Security representing unconverted
principal amount to be issued:
Address
Amount: $
Denominations: $
(any integral multiple of $1,000)
Social Security or other Taxpayer
Identification Number, if any
