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FIRST SUPPLEMENTAL INDENTURE
between
NATURAL MICROSYSTEMS CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
Dated as of ________________, 2000
SUPPLEMENTING THE INDENTURE
DATED AS OF _________, 2000
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TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS..............................................................................1
Section 1.01. Definitions..............................................................................1
ARTICLE TWO THE NOTES................................................................................5
Section 2.01. Designation, Form and Dating.............................................................5
Section 2.02. Execution and Authentication.............................................................5
Section 2.03. Registrar, Paying Agent and Conversion Agent.............................................5
Section 2.04. Paying Agent to Hold Money in Trust......................................................6
Section 2.05. Transfer and Exchange....................................................................6
Section 2.06. Treasury Notes...........................................................................8
ARTICLE THREE REDEMPTION AND REPURCHASE................................................................8
Section 3.01. Company's Right of Optional Redemption...................................................8
Section 3.02. Election to Redeem; Notice to Trustee....................................................9
Section 3.03. Selection of Notes to Be Redeemed........................................................9
Section 3.04. Notice of Redemption.....................................................................9
Section 3.05. Deposit of Redemption Price.............................................................10
Section 3.06. Notes Payable on Redemption Date........................................................10
Section 3.07. Conversion Arrangement on Call for Redemption...........................................10
Section 3.08. Repurchase of Notes At Option of the Holder upon Change in Control......................11
Section 3.09. Notice; Method of Exercising Repurchase Right...........................................14
Section 3.10. Effect of Repurchase Notice.............................................................16
Section 3.11. Deposit of Repurchase Price.............................................................16
Section 3.12. Notes Repurchased in Part...............................................................18
Section 3.13. Compliance with Securities Laws upon Repurchase of Notes................................18
Section 3.14. Repayment to the Company................................................................18
ARTICLE FOUR CONVERSION..............................................................................18
Section 4.01. Conversion Privilege....................................................................18
Section 4.02. Conversion Procedure....................................................................19
Section 4.03. Adjustments Below Par Value.............................................................20
Section 4.04. Taxes on Conversion.....................................................................20
Section 4.05. Company to Provide Stock................................................................21
Section 4.06. Adjustment of Conversion Price..........................................................21
Section 4.07. No Adjustment...........................................................................26
Section 4.08. Equivalent Adjustments..................................................................26
Section 4.09. Adjustment for Tax Purposes.............................................................26
Section 4.10. Notice of Adjustment....................................................................26
Section 4.11. Notice of Certain Transactions..........................................................27
Section 4.12. Effect of Reclassification, Consolidation, Merger or Sale on Conversion Privilege.......27
Section 4.13. Trustee's Disclaimer....................................................................29
Section 4.14. Voluntary Reduction.....................................................................29
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ARTICLE FIVE SUBORDINATION...........................................................................29
Section 5.01. Notes Subordinated to Senior Indebtedness...............................................29
Section 5.02. Notes Subordinated to Prior Payment of All Senior Indebtedness on Dissolution,
Liquidation, Reorganization, Etc., of the Company......................................30
Section 5.03. Noteholders to be Subrogated to Right of Holders of Senior Indebtedness.................31
Section 5.04. Obligations of the Company Unconditional................................................31
Section 5.05. Company Not to Make Payment With Respect to Notes in Certain Circumstances..............32
Section 5.06. Notice to Trustee.......................................................................33
Section 5.07. Application by Trustee of Monies Deposited With It......................................33
Section 5.08. Subordination Rights Not Impaired by Acts or Omissions of Company or Holders
of Senior Indebtedness..................................................................34
Section 5.09. Trustee to Effectuate Subordination.....................................................34
Section 5.10. Right of Trustee to Hold Senior Indebtedness............................................34
Section 5.11. Article 5 Not to Prevent Events of Default..............................................34
Section 5.12. No Fiduciary Duty Created to Holders of Senior Indebtedness.............................35
Section 5.13. Article Applicable to Paying Agents.....................................................35
Section 5.14. Certain Conversion Deemed Payment.......................................................35
ARTICLE SIX COVENANTS...............................................................................36
Section 6.01. Payment of Notes........................................................................36
Section 6.02. Liquidation.............................................................................36
ARTICLE SEVEN DEFAULT AND REMEDIES....................................................................37
Section 7.01. Events of Default.......................................................................37
ARTICLE EIGHT DISCHARGE OF INDENTURE..................................................................38
Section 8.01. Discharge...............................................................................38
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FIRST SUPPLEMENTAL INDENTURE, dated as of __________, 2000 (the "First
Supplemental Indenture"), between Natural MicroSystems Corporation, a Delaware
corporation (the "Company"), and State Street Bank and Trust Company, as trustee
(the "Trustee"), under the Indenture dated as of _________, 2000 between the
Company and the Trustee (the "Indenture").
WHEREAS, the Company executed and delivered the Indenture to the Trustee to
provide for the future issuance of the Company's unsecured debentures, notes or
other evidences of indebtedness (the "Securities") to be issued from time to
time in one or more series as may be determined by the Company under the
Indenture, in an unlimited aggregate principal amount which may be authenticated
and delivered as provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires to provide
for the establishment and issuance of a new series of its Securities to be known
as its [___]% Convertible Subordinated Notes due 2005 (the "Notes"), in the
initial aggregate principal amount of $201,250,000, the form and substance of
such Notes and the terms, provisions and conditions thereof to be set forth as
provided in the Indenture and this First Supplemental Indenture; and
WHEREAS, all requirements necessary to make this First Supplemental Indenture a
valid instrument in accordance with its terms, and to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been performed, and the execution and
delivery of this First Supplemental Indenture has been duly authorized in all
respects and the Company has requested that the Trustee execute and deliver this
First Supplemental Indenture:
NOW THEREFORE, in consideration of the purchase and acceptance of the Notes by
the Holders thereof, and for the purpose of setting forth, as provided in the
Indenture, the form and substance of the Notes and the terms, provisions and
conditions thereof, the Company covenants and agrees with the Trustee as
follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. DEFINITIONS.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used
in this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture
has the same meaning throughout;
(c) the singular includes the plural and vice versa;
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(d) except as otherwise provided,a reference to a Section or
Article is to a Section or Article of this First Supplemental
Indenture;
(e) headings are for convenience of reference only and do not
affect interpretation;
(f) the following terms have the meanings given to them in this
Section 1.01(f) or in the Section referenced:
"Aggregate Market Premium" shall have the meaning set forth
in Section 4.06(d).
"Beneficial owner" shall have the meaning set forth in Section
3.08(c),
"Change in Control" shall have the meaning set forth in
Section 3.08(c).
"Closing Price Per Share" shall have the meaning set forth in
Section 3.08(c).
"Common Stock" means any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company and which is not subject to redemption by
the Company. Subject to the provisions of Section 4.12, however, shares
issuable on conversion of Notes shall include only shares of Common
Stock, $0.01 par value per share (which is the class designated as
Common Stock of the Company at the date of this First Supplemental
Indenture), or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no
preference in respect of dividends or of amounts payable in the event
of any voluntary or involuntary liquidation, dissolution or winding up
of the Company and which are not subject to redemption by the Company;
PROVIDED that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall
be substantially in the proportion to 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.
"Company Benefit Plan" shall have the meaning set forth in
Section 4.06(c).
"Company Notice" shall have the meaning set forth in Section
3.09(a).
"Company" shall have the meaning set forth in the preamble.
"Consolidated Net Worth" shall have the meaning set forth in
Section 6.02.
"Continuing Directors" shall have the meaning set forth in
Section 3.08(c).
"Conversion Price" shall have the meaning set forth in Section
4.06.
"Conversion Shares" shall have the meaning set forth in
Section 4.01.
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"Custodian" means State Street Bank and Trust Company, as
custodian with respect to the Notes in global form, or any successor
entity thereto.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, The Depository Trust Company
as the Depositary with respect to the Notes, until a successor shall
have been appointed and becomes such pursuant to the applicable
provisions of this First Supplemental Indenture or the Indenture, and
thereafter, "Depositary" shall mean or include such successor.
"Distribution Date" shall have the meaning set forth in
Section 4.06(c).
"Event of Default" shall have the meaning set forth in Section
7.01.
"First Supplemental Indenture" shall have the meaning set
forth in the preamble.
"Global Note" shall have the meaning set forth in Section
2.05(a).
"Group" shall have the meaning set forth in Section 3.08(c).
"Indenture" shall have the meaning set forth in the preamble.
"junior securities" shall have the meaning set forth in
Section 5.14.
"Market Capitalization" means an amount determined by
multiplying the number of shares of Common Stock outstanding on the
applicable date by the current market price of the Common Stock
(determined as provided in Section 4.6(e)) as of such date.
"Notes" shall have the meaning set forth in the preamble.
"Optional Redemption" shall have the meaning set forth in
Section 3.01.
"Payment Blockage Period" shall have the meaning set forth in
Section 5.05.
"Payment Default" means any default in the payment of
principal of (or premium, if any) or interest on Senior Indebtedness.
"Payment of the Notes" shall have the meaning set forth in
Section 5.05.
"Purchase Option" means the option to purchase up to
$26,250,000 in aggregate principal amount of Notes granted by the
Company to the Underwriters pursuant to the Underwriting Agreement.
"Redemption Price" shall have the meaning set forth in Section
3.01.
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"Representative" means the indenture trustee or other trustee,
agent or representative for any class of Senior Indebtedness.
"Repurchase Date" shall have the meaning set forth in Section
3.08(a).
"Repurchase Notice" shall have the meaning set forth in
Section 3.09(b).
"Repurchase Price" shall have the meaning set forth in Section
3.08(a).
"Rights" shall have the meaning set forth in Section 4.06(c).
"Securities" shall have the meaning set forth in the preamble.
"Senior Agent" means, on any date, the Representative of the
class of Senior Indebtedness having the highest principal amount
(including all revolving credit, letter of credit and other working
capital commitments) then outstanding.
"Senior Indebtedness" means the following, whether outstanding
upon issuance of the Notes or thereafter incurred or created: (a) the
principal of and premium, if any, and interest on, and fees, costs,
enforcement expenses, collateral protection expenses and other
reimbursement or indemnity obligations in respect of all indebtedness
or obligations of the Company to any Person for money borrowed that is
evidenced by a note, bond, debenture, loan agreement, or similar
instrument or agreement; (b) commitment or standby fees due and payable
to lending institutions with respect to credit facilities available to
the Company; (c) all noncontingent obligations of the Company (i) for
the reimbursement of any obligor on any letter of credit, banker's
acceptance, or similar credit transaction, (ii) under interest rate
swaps, caps, collars, options, and similar arrangements, and (iii)
under any foreign exchange contract, currency swap agreement, futures
contract, currency option contract, or other foreign currency hedge;
(d) all obligations of the Company for the payment of money relating to
capitalized lease obligations; (e) any liabilities of others described
in the preceding clauses that the Company has guaranteed or which are
otherwise its legal liability; and (f) renewals, extensions,
refundings, refinancings, restructurings, amendments, and modifications
of any such indebtedness or guarantee; other than any indebtedness or
other obligation of the Company that by its terms is not superior in
right of payment to the Notes.
"Trading Days" shall have the meaning set forth in Section
4.06(e).
"Trigger Event" shall have the meaning set forth in Section
4.06(f).
"Trustee" shall have the meaning set forth in the preamble.
"Underwriters" means Deutsche Banc Alex. Xxxxx, U.S. Bancorp
Xxxxx Xxxxxxx, and Xxxx Xxxxxxxx Xxxxxxx.
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ARTICLE TWO
THE NOTES
SECTION 2.01. DESIGNATION, FORM AND DATING.
(a) The Notes shall be designated as the "[____]% Convertible
Subordinated Notes Due 2005." Other than as provided in Section 2.05, the Notes
and the Trustee's certificate of authentication to be borne by the Notes shall
be substantially in the form of EXHIBIT A attached hereto, which is incorporated
in and made part of this First Supplemental Indenture. The Company and the
Trustee, by their execution and delivery of this First Supplemental Indenture,
expressly agree to the terms and provisions of the Notes and to be bound
thereby. Any of the Notes may have imprinted thereon such legends or
endorsements as the officers executing the same may approve (execution thereof
to be conclusive evidence of such approval) and as are not inconsistent with the
provisions of this First Supplemental Indenture, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Notes may be listed or any
trading system in which the Notes may be admitted, or to conform to usage. Each
Note shall be dated the date of its authentication.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
The Trustee shall authenticate and make available for delivery Notes
for original issue in the initial aggregate principal amount of up to
$175,000,000, upon a Company Order. The Company Order shall specify the amount
of Notes to be authenticated and the date on which the original issue of Notes
is to be authenticated. Upon the exercise of the Purchase Option by the
Underwriters, additional Notes in the aggregate principal amount of up to
$26,250,000 shall be executed by the Company in the aforementioned manner and
delivered to the Trustee for authentication, and shall thereupon be
authenticated and delivered by the Trustee upon Company Order. [The aggregate
principal amount of Notes outstanding under this First Supplemental Indenture at
any time may not exceed $201,250,000, except as provided in Section 2.07 of the
Indenture.]
The Trustee shall act as the initial authenticating agent.
The Notes shall be issuable only in registered form without coupons
only in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. REGISTRAR, PAYING AGENT AND CONVERSION AGENT.
The Company or any Affiliate of the Company may act as Paying Agent
(except for the purposes of Section 6.02 of this First Supplemental Indenture
and Article 8 of the Indenture), Registrar or Conversion Agent.
The Company initially appoints the Trustee as Registrar, Paying Agent
and Conversion Agent in connection with the Notes.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of and premium, if any, or interest on
any Notes, deposit with a Paying Agent a sum sufficient to pay such amount, such
sum to be held in trust for the benefit of the Persons entitled to such
principal, premium, if any, or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 2.04,
that such Paying Agent will, subject to Section 5.07:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee written notice of any default by the Company (or
any other obligor upon the Notes) in the making of any payment of principal,
premium, if any, or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company in trust for the payment of the principal of, and premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal and premium, if any, or interest has become due and payable shall be
paid to the Company on written request of the Company, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper selected by
the Company and published in the English language, customarily published on each
Business Day and of general circulation in Boston, Massachusetts, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 2.05. TRANSFER AND EXCHANGE.
(a) So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, all Notes will be
represented by a Note in global form registered in the name of the Depositary or
the nominee of the Depositary (the "Global Note"). The transfer and exchange of
beneficial interests in the Global Note shall be effected through the Depositary
in accordance with this First Supplemental Indenture and the procedures of the
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Depositary therefor. The Trustee shall make appropriate endorsements to reflect
increases or decreases in the principal amounts of the Global Note as set forth
on the face of the Note to reflect any such transfers. Except as provided below,
beneficial owners of the Global Note shall not be entitled to have certificates
registered in their names, will not receive or be entitled to receive physical
delivery of certificates in definitive form and will not be considered holders
of such Notes in global form.
(b) Notwithstanding any other provisions of this First Supplemental
Indenture, the Global Note may not be transferred as a whole or in part except
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 or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to act
as Depositary with respect to the Global Note. Initially, the Global Note shall
be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Custodian for Cede & Co.
If at any time the Depositary for the Global Note notifies the
Company that it is unwilling or unable to continue as Depositary for such Global
Note, the Company may appoint a successor Depositary with respect to such Global
Note. If a successor Depositary is not appointed by the Company within ninety
(90) days after the Company receives such notice, the Company will execute, and
the Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of Notes, will authenticate and deliver, Notes in certificated form, in
aggregate principal amount equal to the principal amount of the Global Note, in
exchange for such Global Note.
Notes in certificated form issued in exchange for all or a
part of the Global Note pursuant to this Section 2.05 shall be registered in
such names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such Notes in certificated form to the persons in whose names such Notes
in certificated form are so registered.
At such time as all interests in the Global Note have been
redeemed, converted, canceled, exchanged for Notes in certificated form, or
transferred to a transferee who receives Notes in certificated form thereof,
such Global Note shall, upon receipt thereof, be canceled by the Trustee in
accordance with standing procedures and instructions existing between the
Depositary and the Custodian. At any time prior to such cancellation, if any
interest in the Global Note is redeemed, converted, repurchased or canceled, the
principal amount of the Global Note shall, in accordance with the standing
procedures and instructions existing between the Depositary and the Custodian,
be appropriately reduced and an endorsement shall be made on such Global Note,
by the Trustee or the Custodian, at the direction of the Trustee, to reflect
such reduction.
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(c) Each Holder of a Note agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Note in violation of any provision of this First
Supplemental Indenture and/or applicable United States Federal or state
securities law.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
First Supplemental Indenture or under applicable law with respect to any
transfer of any interest in any Note (including any transfers between or among
Depositary Participants or beneficial owners of interests in the Global Note)
other than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this First Supplemental Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
SECTION 2.06. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any notice, direction, waiver or consent, Notes owned by
the Company or any other obligor on the Notes or by any Affiliate of the Company
or of such other obligor shall be disregarded, except that for purposes of
determining whether the Trustee shall be protected in relying on any such
notice, direction, waiver or consent, only Notes which the Trustee knows are so
owned shall be so disregarded. Notes so owned which have been pledged in good
faith shall not be disregarded if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to the Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.
ARTICLE THREE
REDEMPTION AND REPURCHASE
SECTION 3.01. COMPANY'S RIGHT OF OPTIONAL REDEMPTION.
At any time on or after October 16, 2003, and prior to maturity, if the
closing price of the Common Stock shall have exceeded 130% of the Conversion
Price then in effect for at least 20 Trading Days in the consecutive 30-Trading
Day period ending on the Trading Day prior to the date of mailing of a notice of
redemption pursuant to Section 3.04, the Company may, at its option (an
"Optional Redemption"), redeem all or from time to time any part of the Notes on
any date prior to maturity, upon notice as set forth in Section 3.04, and at the
applicable optional redemption price set forth in paragraph 5 of the form of
Note attached as EXHIBIT A hereto, together with accrued interest to, but
excluding, the date fixed for redemption (the "Redemption Price").
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SECTION 3.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
If the Company elects to redeem Notes pursuant to paragraph 5 of the
Notes, it shall notify the Trustee at least 60 days prior to the redemption date
as fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee) of the redemption date and the principal amount of Notes to be
redeemed. If fewer than all of the Notes are to be redeemed, the record date
relating to such redemption shall be selected by the Company and given to the
Trustee, which record date shall not be less than 10 days after the date of
notice to the Trustee.
SECTION 3.03. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed, the Trustee shall,
not more than 60 days prior to the redemption date, select the Notes to be
redeemed by lot, pro rata or by another method the Trustee considers fair and
appropriate; provided that such method is not prohibited by any stock exchange
or market on which the Notes are then listed. The Trustee shall make the
selection from the Notes outstanding and not previously called for redemption.
Notes in denominations of $1,000 may only be redeemed in whole. The Trustee may
select for redemption portions (equal to $1,000 or any multiple thereof) of the
principal of Notes that have denominations larger than $1,000. Provisions of
this Supplemental Indenture that apply to Notes called for redemption also apply
to portions of Notes called for redemption.
SECTION 3.04. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed a notice of redemption by
first-class mail to each Holder of Notes to be redeemed at such Holder's address
as it appears on the Registrar's books.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the Redemption Price;
(c) the then current conversion price;
(d) the name and address of the Paying Agent and the Conversion
Agent;
(e) that Notes called for redemption must be presented and
surrendered to the Paying Agent to collect the Redemption
Price;
(f) that the Notes called for redemption may be converted at any
time before the close of business on the third Business Day
immediately preceding the redemption date;
(g) that Holders who wish to convert Notes must satisfy the
requirements in paragraph 8 of the Notes;
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(h) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date and the only remaining
right of the Holder is to receive payment of the Redemption
Price upon presentation and surrender to the Paying Agent of
the Notes;
(i) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after
the redemption date, upon presentation and surrender of such
Note, a new Note or Notes in principal amount equal to the
unredeemed portion thereof will be issued; and
(j) subject to Section 2.14 of the Indenture, the CUSIP number of
the Notes called for redemption.
At the Company's written request delivered at least 10 days prior to
the date of the mailing of the notice of redemption, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
If any Note called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or segregated and held in trust for
the redemption of such Note shall (subject to any right of the Holder of such
Note or any predecessor security to receive interest) be paid to the Company as
soon as practicable upon written request by the Company or, if then held by the
Company, shall be released from such trust.
SECTION 3.06. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest, if any)
such Notes shall cease to bear or accrue any interest. Upon surrender of any
such Note for redemption in accordance with said notice, such Note shall be paid
by the Company at the Redemption Price, together with accrued interest to (but
not including) the Redemption Date; PROVIDED, HOWEVER, that installments of
interest whose stated maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Notes registered as such at the close of business
on the relevant Record Dates according to their terms.
If the Company shall fail to deposit the Redemption Price with the
Trustee and any security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear and accrue interest from the Redemption Date at the rate borne
by the Note.
SECTION 3.07. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of Notes, the Company may arrange for
the purchase and conversion of any Notes by an agreement with one or more
investment bankers or other purchasers to purchase such Notes by paying to the
Trustee in trust for the Holders, on or before
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the Redemption Date, an amount not less than the applicable Redemption Price of
such Notes, together with interest accrued to the Redemption Date.
Notwithstanding anything to the contrary contained in this Article 3 or in
Article 3 of the Indenture, the obligation of the Company to pay the Redemption
Price of such Notes, together with interest accrued to, but excluding, the
Redemption Date shall be deemed to be satisfied and discharged to the extent
such amount is so paid by such purchasers. If such an agreement is entered into,
a copy of which shall be filed with the Trustee prior to the Redemption Date,
any Notes not duly surrendered for conversion by the Holders thereof, may, at
the option of the Company, be deemed, to the fullest extent permitted by law,
acquired by such purchasers from such Holders and (notwithstanding anything to
the contrary contained in Article 4) surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the
Redemption Date (and the right to convert any such Notes shall be deemed to have
been extended through such time), subject to payment of the above amount as
aforesaid. At the direction of the Company, the Trustee shall hold and dispose
of any such amount paid to it in the same manner as it would monies deposited
with it by the Company for the redemption of Notes. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Notes shall increase or otherwise affect any of
the powers, duties, responsibilities or obligations of the Trustee as set forth
in this First Supplemental Indenture or in the Indenture, and the Company agrees
to indemnify the Trustee from, and hold it harmless against, any loss, liability
or expense arising out of or in connection with any such arrangement for the
purchase and conversion of any Notes between the Company and such purchasers,
including the costs and expenses incurred by the Trustee in the defense of any
claim or liability arising out of or in connection with the exercise or
performance of any of its powers, duties, responsibilities or obligations under
this First Supplemental Indenture or in the Indenture. Nothing in the preceding
sentence shall be deemed to limit the rights and protections afforded to the
Trustee in Article 7 of the Indenture, including, but not limited to, the right
to the indemnification pursuant to Section 7.07 of the Indenture.
SECTION 3.08. REPURCHASE OF NOTES AT OPTION OF THE HOLDER UPON CHANGE IN
CONTROL.
(a) If at any time that Notes remain outstanding there shall have
occurred a Change in Control (as hereinafter defined), Notes shall be
repurchased by the Company at the option of the Holder thereof, at a purchase
price (the "Repurchase Price") equal to the principal amount thereof plus
accrued interest up to and including the Repurchase Date (as hereinafter
defined), on the date (the "Repurchase Date") fixed by the Company that is not
less than 45 days nor more than 60 days after the date of the Company Notice (as
hereinafter defined), subject to satisfaction by or on behalf of the Holder of
the requirements set forth in Section 3.09(b). 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 Section 3.08(b), by delivery of shares of
Common Stock having a fair market value equal to the Repurchase Price.
Whenever in this First Supplemental Indenture there is a reference to
the principal of any Note as of any time, such reference shall be deemed to
include reference to the Repurchase Price payable in respect of such Note to the
extent that such Repurchase Price is, was or would be so payable at such time,
and express mention of the Repurchase Price in any provision of this First
Supplemental Indenture shall not be construed as excluding the Repurchase Price
in those provisions of this First Supplemental Indenture when such express
mention is not made.
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Any rights of Holders, contractual or otherwise, arising under or
pursuant to any offer to repurchase Notes made by the Company under this Section
3.08 shall be subordinated in right of payment to all Senior Indebtedness to the
same extent as the Notes are subordinated to Senior Indebtedness under the
provisions of Article 5 and such offer to repurchase shall provide that, if at
the time the Notes are required to be repurchased pursuant to such offer,
payment of the Notes is not permitted pursuant to the provisions of Article 5,
the Company shall use its best efforts to obtain all necessary waivers from, or
to repay in full, the holders of Senior Indebtedness in order to permit such
repurchase. Notwithstanding the foregoing, any failure by the Company to comply
with this Section 3.08 to offer to repurchase, or to repurchase, the Notes shall
be a default in the performance by the Company hereunder.
(b) The Company may elect to pay the Repurchase Price by delivery
of shares of Common Stock pursuant to Section 3.08(a) if:
(1) The shares of Common Stock deliverable in payment of
the Repurchase Price shall have a fair market value
as of the Repurchase Date of not less than the
Repurchase Price. For purposes of Section 3.08(a) and
this Section 3.08(b), the fair market value of shares
of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the
Closing Prices Per Share of the Common Stock for the
five consecutive Trading Days immediately preceding
and including the third Trading Day prior to the
Repurchase Date;
(2) The shares of Common Stock to be issued upon
repurchase of Notes hereunder
(i) shall not require registration under any
federal securities law before such shares
may be freely transferable without being
subject to any transfer restrictions under
the Securities Act upon repurchase or, if
such registration is required, such
registration shall be completed and shall
become effective prior to the Repurchase
Date, and
(ii) shall not 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 repurchase or if such
registration is required or such approval
must be obtained, such registration shall be
completed or such approval shall be obtained
prior to the Repurchase Date;
(3) The shares of Common Stock to be issued upon
repurchase of Notes hereunder are, or shall have
been, approved for listing on the Nasdaq National
Market or the New York Stock Exchange or listed on
another national securities exchange, in any case,
prior to the Repurchase Date; and
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(4) All shares of Common Stock which may be issued upon
repurchase of Notes will be issued out of the
Company's authorized but unissued Common Stock and,
will upon issue, be duly and validly issued and fully
paid and non-assessable and free of any preemptive or
similar rights.
If all of the conditions set forth in this Section 3.08(b) are not satisfied in
accordance with the terms thereof, the Repurchase Price shall be paid by the
Company only in cash.
(c) For purposes of this Section 3.08,
(1) a "Change in Control" shall be deemed to have
occurred at such time after the original issuance of
the Notes as any of the following occur:
(i) any sale, lease, exchange or other transfer
(in one transaction or a series of related
transactions) of all or substantially all of
the assets of the Company and its
subsidiaries, taken as a whole, to any
person or group of related persons, as
defined in Section 13(d) of the Exchange Act
(a "Group");
(ii) the approval by the holders of capital stock
of the Company of any plan or proposal for
the liquidation or dissolution of the
Company (whether or not otherwise in
compliance with the provisions of the
applicable indenture); or
(iii) any person or Group shall become the owner,
directly or indirectly, beneficially or of
record, of shares representing more than 50%
of the aggregate ordinary voting power
represented by the Company's issued and
outstanding voting stock or of any successor
to all or substantially all of the Company's
assets; or
(iv) the first day on which a majority of the
members of the Company's Board of Directors
are not Continuing Directors.
(2) "Beneficial owner" shall be determined in accordance
with Rule 13d-3 promulgated by the SEC under the
Exchange Act, as in effect on the date of execution
of this Indenture, except that a person shall be
deemed to be the "beneficial owner" of all securities
that such person has the right to acquire, whether
such right is exercisable immediately or only after
the passage of time.
(3) "Closing Price Per Share" means, with respect to the
Common Stock, for any day, (i) the last reported sale
price regular way on the Nasdaq National Market or,
(ii) if the Common Stock is not listed on the Nasdaq
National Market, the last reported sale price regular
way per share or, in case no such reported sale takes
place on such day, the average of the reported
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closing bid and asked prices regular way, in either
case, on the principal national securities exchange
on which the Common Stock is listed or admitted to
trading, or (iii) if the Common Stock is not quoted
on the Nasdaq National Market or listed or admitted
to trading on any national securities exchange, the
average of the closing bid prices in the
over-the-counter market as furnished by any Nasdaq
National Market member firm selected from time to
time by the Company for that purpose.
(4) "Continuing Directors" means, as of any date of
determination, any member of the Board of Directors
of the Company who (i) was a member of such Board of
Directors on the date of the original issuance of the
Notes or (ii) was nominated for election or elected
to such Board of Directors with the approval of a
majority of the Continuing Directors who were members
of such Board of Directors at the time of such
nomination or election.
SECTION 3.09. NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT.
(a) Within 30 days after the occurrence of a Change in Control, the
Company shall mail a written notice (the "Company Notice") by first-class mail
to the Trustee and to each Holder (and to beneficial owners as required by
applicable law) and shall cause a copy of such notice to be published in a daily
newspaper of national circulation. The notice shall include the form of a
Repurchase Notice (as defined below) to be completed by the Holder and shall
state:
(1) the date of such Change in Control and, briefly, the
events causing such Change in Control;
(2) the date by which the Repurchase Notice pursuant to
this Section 3.09 must be given;
(3) the Repurchase Date;
(4) the Repurchase Price, and whether the Repurchase
Price shall be paid by the Company in cash or by
delivery of shares of Common Stock;
(5) briefly, the conversion rights of the Notes
including, without limitation, the current Conversion
Price and any adjustments thereto;
(6) the name and address of the Paying Agent and the
Conversion Agent;
(7) whether the holders of Senior Indebtedness will
permit the payment of the Repurchase Price;
(8) that Notes as to which a Repurchase Notice has been
given may be converted into Common Stock only to the
extent that the Repurchase Notice has been withdrawn
in accordance with the terms of this First
Supplemental Indenture and the Indenture;
14
(9) the procedures that the Holder must follow to
exercise rights under Section 3.08;
(10) the procedures for withdrawing a Repurchase Notice,
including a form of notice of withdrawal;
(11) that the Holder must satisfy the requirements set
forth in the Notes in order to convert the Notes; and
(12) the CUSIP number of the Notes as to which a
Repurchase Notice has been given.
(b) A Holder may exercise its rights specified in Section 3.08 upon
delivery of a written notice of the exercise of such rights (a "Repurchase
Notice") to the Paying Agent at any time prior to 5:00 p.m. (eastern time) on
the third Business Day prior to the Repurchase Date, stating:
(1) the certificate number of each Note that the Holder
will deliver to be repurchased,
(2) the portion of the principal amount of each Note that
the Holder will deliver to be repurchased, which
portion must be $1,000 or an integral multiple
thereof;
(3) that such Note shall be repurchased pursuant to the
terms and conditions specified in this First
Supplemental Indenture; and
(4) in the event that the Repurchase Price shall be paid
in shares of Common Stock, the name or names (with
addresses) in which the certificate or certificates
for shares of Common Stock shall be issued.
The delivery of such Note to the Paying Agent prior to, on or after the
Repurchase Date (together with all necessary endorsements) at the office of the
Paying Agent shall be a condition to the receipt by the Holder of the Repurchase
Price therefor; PROVIDED, HOWEVER, that such Repurchase Price shall be so paid
pursuant to Section 3.08 only if the Note so delivered to the Paying Agent shall
conform in all respects to the description thereof set forth in the related
Repurchase Notice.
The Company shall repurchase from the Holder thereof, pursuant to
Section 3.08, a portion of a Note if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this First Supplemental
Indenture that apply to the repurchase of all of a Note pursuant to Sections
3.08 through 3.14 also apply to the repurchase of such portion of such Note.
15
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Repurchase Notice contemplated by this
Section 3.09(b) shall have the right to withdraw such Repurchase Notice in
whole or in a portion thereof that is $1,000 or an integral multiple thereof
at any time prior to 5:00 p.m. (eastern time) on the Business Day prior to
the Repurchase Date by delivery of a written notice of withdrawal to the
Paying Agent in accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt by it
of any Repurchase Notice or written withdrawal thereof.
SECTION 3.10. EFFECT OF REPURCHASE NOTICE.
Upon receipt by the Paying Agent of the Repurchase Notice specified in
Section 3.09(b), the Holder of the Note in respect of which such Repurchase
Notice was given shall (unless such Repurchase Notice is withdrawn as specified
below) thereafter be entitled to receive solely the Repurchase Price with
respect to such Note. Such Repurchase Price shall be paid to such Holder
promptly following the later of (i) the Repurchase Date with respect to such
Note (provided the conditions in Section 3.09(b) have been satisfied) and (ii)
the time of delivery of such Note to the Paying Agent by the Holder thereof in
the manner required by Section 3.09(b). Notes in respect of which a Repurchase
Notice has been given by the Holder thereof may not be converted into shares of
Common Stock on or after the date of the delivery of such Repurchase Notice
unless such Repurchase Notice has first been validly withdrawn.
A Repurchase Notice may be withdrawn by means of a written notice of
withdrawal delivered by the Holder, with such Holder's signature guaranteed
in a manner satisfactory to the Paying Agent, to the office of the Paying
Agent at any time prior to 5:00 p.m. (eastern time) on the Business Day prior
to the Repurchase Date to which it relates, specifying:
(a) the certificate number of each Note in respect of which such notice
of withdrawal is being submitted;
(b) the principal amount of the Note or portion thereof with respect to
which such notice of withdrawal is being submitted; and
(c) the principal amount, if any, of such Note that remains subject to
the original Repurchase Notice and that has been or will be delivered for
repurchase by the Company.
SECTION 3.11. DEPOSIT OF REPURCHASE PRICE.
On or before the Repurchase Date, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company is acting as the Paying
Agent, shall segregate and hold in trust as provided in Section 2.4) an amount
of money or a number of shares of Common Stock, as provided herein, sufficient
to pay the aggregate Repurchase Price of all the Notes or portions thereof that
are to be repurchased as of such Repurchase Date or, if shares of Common Stock
are to be paid, as promptly as practicable after the Repurchase Date. The manner
in which the deposit required by this Section 3.11 is made by the Company shall
be at the option of the Company; PROVIDED that such deposit shall be made in a
manner such that the Trustee or the
16
Paying Agent shall have immediately available funds on the Repurchase Date;
PROVIDED FURTHER, that if such payment is made on the Repurchase Date it must
be received by the Trustee or Paying Agent, as the case may be, by 10:00 a.m.,
eastern time, on such date.
If the Paying Agent holds, in accordance with the terms hereof, money
or shares of Common Stock, as applicable, sufficient to pay the Repurchase Price
of any Note tendered for repurchase on the Business Day prior to the Repurchase
Date, then, on and after the Repurchase Date, such Note will cease to be
outstanding and interest on such Note will cease to accrue and will be deemed
paid, whether or not such Note is delivered to the Paying Agent, and all other
rights of the Holder in respect thereof shall terminate (other than the right to
receive the Repurchase Price upon delivery of such Note).
Any issuance of shares of Common Stock in respect of the Repurchase
Price shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the Person or Persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such repurchase shall be deemed to have become on the Repurchase Date the
holder or holders of record of the shares represented thereby; PROVIDED,
HOWEVER, that any surrender for repurchase on a date when the stock transfer
books of the Company shall be closed shall constitute the Person or Persons in
whose name or names the certificate or certificates for such shares are to be
issued as 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 upon repurchase of any Note declared prior to the
Repurchase Date.
No fractions of shares shall be issued upon repurchase of Notes. If
more than one Note shall be repurchased from the same Holder and the Repurchase
Price shall be payable in shares of Common Stock, the number of full shares
which shall be issuable upon such repurchase shall be computed on the basis of
the aggregate principal amount of the Notes so repurchased. Instead of any
fractional share of Common Stock which would otherwise be issuable on the
repurchase of any Note or Notes, the Company will deliver to the applicable
Holder its check for the current market value of such fractional share. The
current market value of a fraction of a share is determined by multiplying the
current market price of a full share by the fraction, and rounding the result to
the nearest cent. For purposes of this Section, the current market price of a
share of Common Stock is the Closing Price Per Share of the Common Stock on the
first day (which is not a Legal Holiday) immediately preceding the Repurchase
Date.
Any issuance and delivery of certificates for shares of Common Stock on
repurchase of Notes shall be made without charge to the Holder of Notes being
repurchased for such certificates or for any tax or duty in respect of the
issuance or delivery of such certificates or the Notes represented thereby;
PROVIDED, HOWEVER, that the Company shall not be required to pay any tax or duty
which may be payable in respect of (i) income of the Holder or (ii) any transfer
involved in the issuance or delivery of certificates for shares of Common Stock
in a name other than that of the Holder of the Notes being repurchased, and no
such issuance or delivery shall be made unless and until the Person requesting
such issuance or delivery has paid to the Company
17
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.
SECTION 3.12. NOTES REPURCHASED IN PART.
Any Note that is to be repurchased only in part shall be surrendered at
the office of the Paying Agent (with due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing),
and the Company shall execute and the Trustee shall authenticate and deliver to
the Holder of such Note, without service charge, a new Note or Notes, or such
authorized denomination or denominations as may be requested by such Holder, in
aggregate principal amount equal to, and in exchange for, the portion of the
principal amount of the Note so surrendered that is not repurchased.
SECTION 3.13. COMPLIANCE WITH SECURITIES LAWS UPON REPURCHASE OF NOTES.
In connection with any offer to repurchase or repurchase of Notes under
Section 3.08 hereof (PROVIDED that such offer or repurchase constitutes an
"issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) at the time of such offer or
repurchase), the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 under
the Exchange Act, (ii) file the related Schedule 13E-4 (or any successor
schedule, form or report) under the Exchange Act, and (iii) otherwise comply
with all federal and state securities laws so as to permit the rights of the
Holders and obligations of the Company under Sections 3.08 through 3.14 to be
exercised in the time and in the manner specified therein.
SECTION 3.14. REPAYMENT TO THE COMPANY.
Subject to the provisions of Section 5.7, to the extent that the
aggregate amount of cash or the number of shares of Common Stock deposited by
the Company pursuant to Section 3.11 exceeds the aggregate Repurchase Price of
the Notes or portions thereof to be repurchased, then, promptly after the
Business Day following the Repurchase Date, the Trustee or the Paying Agent, as
the case may be, shall return any such excess to the Company.
ARTICLE FOUR
CONVERSION
SECTION 4.01. CONVERSION PRIVILEGE.
At any time after 90 days following the latest date of original
issuance of the Notes and prior to the close of business on [______________],
2005, a Holder of a Note may convert such Note into Common Stock (the shares of
Common Stock issuable upon such conversion, the "Conversion Shares"), at the
conversion price then in effect, together with those rights specified in Section
4.06 hereof; PROVIDED that, if such Note is called for redemption pursuant to
Article 3, such conversion right shall terminate at the close of business on the
third Business Day before
18
the redemption date for such Note (unless the Company shall default in making
the redemption payment then due, in which case the conversion right shall
terminate on the date such default is cured and such Note is redeemed). The
number of shares of Common Stock issuable upon conversion of a Note shall be
determined by dividing the principal amount of the Note or portion thereof
surrendered for conversion by the conversion price in effect on the conversion
date. The initial conversion price is set forth in paragraph 8 of the Notes and
is subject to adjustment as provided in this Article 4.
A Holder may convert a portion of a Note equal to $1,000 or any
integral multiple thereof. Provisions of this First Supplemental Indenture that
apply to conversion of all of a Note also apply to conversion of a portion of a
Note.
A Note in respect of which a Holder has delivered a Repurchase
Notice pursuant to Section 3.09(b) exercising the option of such Holder to
require the Company to repurchase such Note may be converted only if such
Repurchase Notice is withdrawn by a written notice of withdrawal delivered to
the Paying Agent prior 5:00 p.m. (eastern time) on the Repurchase Date in
accordance with Section 3.10.
A Holder of Notes is not entitled to any rights of a holder of Common
Stock until such Holder has converted his Notes into Common Stock and, upon such
conversion, only to the extent such Notes are deemed to have been converted into
Common Stock pursuant to this Article 4.
SECTION 4.02. CONVERSION PROCEDURE.
To convert a Note, a Holder must:
(1) complete and manually sign the conversion notice on the back
of the Note and deliver such notice to the Conversion Agent,
(2) surrender the Note to the Conversion Agent,
(3) furnish appropriate endorsements and transfer documents to the
Registrar or the Conversion Agent,
(4) pay any transfer or other tax, if required by Section 4.04,
and
(5) if the Note is held in book-entry form, complete and deliver
to the Depositary appropriate instructions pursuant to the Depositary's
book-entry conversion programs.
The date on which the Holder satisfies all of the foregoing
requirements is the conversion date. As soon as practicable after the conversion
date, the Company shall deliver to the Holder through the Conversion Agent a
certificate for the number of whole shares of Common Stock issuable upon the
conversion and cash in lieu of any fractional shares pursuant to Section 4.05.
The person in whose name the certificate is registered shall be deemed
to be a stockholder of record on the conversion date; PROVIDED, HOWEVER, that no
surrender of a Note on
19
any date when the stock transfer books of the Company shall be closed shall be
effective to constitute the person or persons entitled to receive the shares of
Common Stock upon such conversion as the record holder or holders of such shares
of Common Stock on such date, but such surrender shall be effective to
constitute the person or persons entitled to receive such shares of Common Stock
as the record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are open;
PROVIDED, FURTHER, that such conversion shall be at the Conversion Price in
effect on the date that such Note shall have been surrendered for conversion, as
if the stock transfer books of the Company had not been closed. Upon conversion
of a Note, such person shall no longer be a Holder of such Note.
No payment or adjustment will be made for accrued interest on a
converted Note or for dividends or distributions on shares of Common Stock
issued upon conversion of a Note, but if any Holder surrenders a Note for
conversion between the record date for the payment of an installment of interest
and the next interest payment date, then, notwithstanding such conversion, the
interest payable on such interest payment date shall be paid to the Holder of
such Note on such record date. In such event, such Note, when surrendered for
conversion, must be accompanied by delivery of a check or draft payable to the
Conversion Agent in an amount equal to the interest payable on such interest
payment date on the portion so converted. If such payment does not accompany
such Note, the Note shall not be converted; PROVIDED, HOWEVER, that no such
check or draft shall be required if such Note has been called for redemption on
a redemption date within the period between and including such record date and
such interest payment date, or if such Note is surrendered for conversion on the
interest payment date. If the Company defaults in the payment of interest
payable on the interest payment date, the Conversion Agent shall repay such
funds to the Holder.
Upon surrender of a Note that is converted in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder, a new
Note equal in principal amount to the unconverted portion of the Note
surrendered.
SECTION 4.03. ADJUSTMENTS BELOW PAR VALUE.
Before taking any action which would cause an adjustment decreasing the
Conversion Price so that the shares of Common Stock issuable upon conversion of
the Notes would be issued for less than the par value of such Common Stock, the
Company will take all corporate action which may be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
such Common Stock at such adjusted Conversion Price.
SECTION 4.04. TAXES ON CONVERSION.
If a Holder converts a Note, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon such conversion. However, the Holder shall pay any such tax which is
due because the Holder requests the shares to be issued in a name other than the
Holder's name. The Conversion Agent may refuse to deliver the certificates
representing the Common Stock being issued in a name other than the Holder's
name until the Conversion Agent receives a sum sufficient to pay any tax which
will be
20
due because the shares are to be issued in a name other than the Holder's name.
Nothing herein shall preclude any tax withholding required by law or
regulations.
SECTION 4.05. COMPANY TO PROVIDE STOCK.
The Company shall, prior to issuance of any Notes hereunder, and from
time to time as may be necessary, reserve, out of its authorized but unissued
Common Stock a sufficient number of shares of Common Stock to permit the
conversion of all outstanding Notes for shares of Common Stock.
No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same holder, the number of full
shares which shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Notes (or specified portions thereof to
the extent permitted hereby) so surrendered. If any fractional share of Common
Stock would be issuable upon the conversion of any Note or Notes, the Company
shall make an adjustment thereof in cash at the current market value thereof.
For these purposes, the current market value of a share of Common Stock shall be
the Closing Price (as defined in Section 4.06(e))on the first day (which is not
a Legal Holiday) immediately preceding the day on which the Notes (or specified
portions thereof) are deemed to have been converted.
The Company covenants that all shares of Common Stock delivered upon
conversion of the Notes shall be newly issued shares or treasury shares, shall
be duly authorized, validly issued, fully paid and non-assessable and shall be
free from preemptive rights and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of Notes, if any, and will list or cause to have quoted such shares
of Common Stock on each national securities exchange or in the over-the-counter
market or such other market on which the Common Stock is then listed or quoted.
SECTION 4.06. ADJUSTMENT OF CONVERSION PRICE.
The conversion price (the "Conversion Price") shall be that price set
forth in paragraph 8 of the form of Note attached hereto as EXHIBIT A and shall
be adjusted from time to time by the Company as follows:
(a) In case the Company shall
(1) pay a dividend or other distribution in shares of
Common Stock to holders of Common Stock,
(2) subdivide its outstanding Common Stock into a greater
number of shares,
(3) combine its outstanding Common Stock into a smaller
number of shares, or
21
(4) reclassify its outstanding Common Stock,
the Conversion Price in effect immediately prior thereto shall be adjusted so
that the Holder of any Note thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock which it would have
owned or have been entitled to receive had such Note been converted immediately
prior to the happening of such event. An adjustment made pursuant to this
subsection (a) shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately after
the effective date in the case of subdivision or combination.
(b) In case the Company shall issue rights, warrants or options to
all or substantially all holders of its Common Stock, entitling them (for a
period commencing no earlier than the record date described below and
expiring not more than 45 days after such record date) to subscribe for or
purchase shares of Common Stock (or securities convertible into Common Stock)
at a price per share less than the current market price per share of Common
Stock (as determined in accordance with subsection (e) below), at the record
date for the determination of stockholders entitled to receive such rights,
warrants or options, the Conversion Price in effect immediately prior thereto
shall be adjusted so that the Conversion Price shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on such record date, plus the number of
shares which the aggregate subscription or purchase price for the total
number of shares of Common Stock offered by the rights, warrants or options
so issued (or the aggregate conversion price of the convertible securities
offered by such rights, warrants or options) would purchase at such current
market price, and of which the denominator shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock offered by such rights, warrants or options (or into
which the convertible securities so offered by such rights, warrants or
options are convertible). Such adjustment shall be made successively whenever
any such rights, warrants or options are issued, and shall become effective
immediately after such record date. If at the end of the period during which
such rights, warrants or options are exercisable not all rights, warrants or
options shall have been exercised, the adjusted Conversion Price shall be
immediately readjusted to what it would have been upon application of the
foregoing adjustment substituting the number of additional shares of Common
Stock actually issued (or the number of shares of Common Stock issuable upon
conversion of convertible securities actually issued) for the total number of
shares of Common Stock offered (or the convertible securities offered).
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock any shares of capital stock of the Company (other
than Common Stock) or evidences of its indebtedness, cash, other securities
or other assets, or shall distribute to all or substantially all holders of
its Common Stock rights, warrants or options to subscribe for or purchase any
of its securities (excluding (i) those rights, warrants and options referred
to in subsection (b) above; (ii) those dividends, distributions, subdivisions
and combinations referred to in subsection (a) above; and (iii) dividends and
distributions paid in cash in an aggregate amount that, combined together
with (A) all other such cash distributions made within the preceding 12
22
months in respect of which no adjustment has been made under this Section 4.06
and (B) the fair market value of consideration payable in respect of any
repurchases (including by way of tender offers) by the Company or any of its
Subsidiaries or Affiliates, or any employee benefit plan for the benefit of
employees of the Company or any of its Subsidiaries or Affiliates (a "Company
Benefit Plan"), of Common Stock concluded within the preceding 12 months, in
each case in respect of which no adjustment has been made under this Section
4.06, does not exceed 10% of Market Capitalization as of the record date for
such distribution), then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of such distribution or
purchase by a fraction of which the numerator shall be the current market price
per share (as defined in subsection (e) below) of the Common Stock on the record
date mentioned below less the fair market value on such record date (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive evidence of such fair market value) of the portion of the capital
stock or evidences of indebtedness, securities or assets so distributed or of
such rights, warrants or options, in each case as applicable to one share of
Common Stock, and of which the denominator shall be the current market price per
share (as defined in subsection (e) below) of the Common Stock on such record
date. Such adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive such distribution.
Notwithstanding the foregoing, in the event that the Company shall distribute
rights, warrants or options (other than those referred to in subsection (b)
above) ("Rights") PRO RATA to holders of Common Stock, the Company may, in lieu
of making any adjustment pursuant to this Section 4.06, make proper provision so
that each Holder of a Note who converts such Note (or any portion thereof) after
the record date for such distribution and prior to the expiration or redemption
of the Rights shall be entitled to receive upon such conversion, in addition to
the Conversion Shares, a number of Rights to be determined as follows: (x) if
such conversion occurs on or prior to the date for the distribution to the
holders of Rights of separate certificates evidencing such Rights (the
"Distribution Date"), the same number of Rights to which a holder of a number of
shares of Common Stock equal to the number of Conversion Shares is entitled at
the time of such conversion in accordance with the terms and provisions of and
applicable to the Rights; and (y) if such conversion occurs after the
Distribution Date, the same number of Rights to which a holder of the number of
shares of Common Stock into which the principal amount of the Note so converted
was convertible immediately prior to the Distribution Date would have been
entitled on the Distribution Date in accordance with the terms and provisions
of, and applicable to, the Rights. If the Company implements a new stockholder
rights plan, the Company agrees that such rights plan will provide that upon
conversion of the Notes, the Holders holding Common Stock issued upon conversion
shall receive the rights issued under such plan, whether or not such rights have
separated from the Common Stock at the time of such conversion. If the rights
under such new plan have become separated from the Common Stock prior to the
conversion of a Note, the Holders holding Common Stock issued upon conversion
shall receive the Rights that they would have received if the Note had been
converted immediately prior to the separation of the Rights.
(d) In case the Company or any of its Subsidiaries or any Company
Benefit Plan shall repurchase (including by way of tender offer) shares of
Common Stock, and the fair market value of the sum of (i) the aggregate
consideration paid for such Common Stock, (ii) the aggregate fair market value
of cash dividends and distributions of the type described in clause
23
(iii) of the preceding paragraph (c) paid within the twelve (12) months
preceding the date of purchase of such shares of Common Stock in respect of
which no adjustment pursuant to this Section 4.06 previously has been made, and
(iii) the aggregate fair market value of any amounts previously paid for the
repurchase of Common Stock of a type described in this paragraph (d) within the
twelve (12) months preceding the date of purchase of such shares of Common Stock
in respect of which no adjustment pursuant to this Section 4.6 previously has
been made, exceeds 10% of Market Capitalization on the date of, and after giving
effect to, such repurchase, then the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the date of such distribution or purchase by a
fraction of which the numerator shall be the current market price per share (as
defined in subsection (e) below) of the Common Stock on the date of such
repurchase, less the quotient obtained by dividing the Aggregate Market Premium
involved in such repurchase (as defined hereinafter) by the difference between
the number of shares of Common Stock outstanding before such repurchase and the
number of shares of Common Stock the subject of such repurchase, and of which
the denominator shall be the current market price per share (as defined in
subsection (e) below) of the Common Stock on the date of such repurchase. Such
adjustment shall become effective immediately after the date of such repurchase.
For purposes of this subsection (d), the "Aggregate Market Premium" is the
excess, if any, of the aggregate repurchase price paid for all such Common Stock
over the aggregate current market value per share (as defined in subsection (e)
below) of all such repurchased stock, determined with respect to each share
involved in each such repurchase as of the date of repurchase with respect to
such share.
(e) For the purpose of any computation under subsections (b), (c) and
(d) above, the current market price per share of Common Stock on any date shall
be deemed to be the average of the Closing Prices for 20 consecutive Trading
Days commencing 30 Trading Days before the record date with respect to any
distribution, issuance or other event requiring such computation. The Closing
Price for each day shall be (i) the last sale price, or the closing bid price if
no sale occurred, of such class of stock on the principal securities exchange on
which such class of stock is listed, if the Common Stock is listed or admitted
for trading on any national securities exchange, (ii) the last reported sale
price of Common Stock on The Nasdaq Stock Market, or any similar system of
automated dissemination of quotations of securities prices then in common use,
if so quoted, or (iii) if not quoted as described in clause (i), the mean
between the high bid and low asked quotations for Common Stock as reported by
the National Quotation Bureau Incorporated if at least two securities dealers
have inserted both bid and asked quotations for such class of stock on at least
5 of the 10 preceding days. If the Common Stock is quoted on a national
securities or central market system, in lieu of a market or quotation system
described above, the Closing Price shall be determined in the manner set forth
in clause (iii) of the preceding sentence if bid and asked quotations are
reported but actual transactions are not, and in the manner set forth in clause
(ii) of the preceding sentence if actual transactions are reported. If none of
the conditions set forth above is met, the Closing Price of Common Stock on any
day or the average of such last reported sale prices for any period shall be the
fair market value of such class of stock as determined by a member firm of the
New York Stock Exchange, Inc. selected by the Company. As used herein the term
"Trading Days" with respect to Common Stock means (i) if the Common Stock is
listed or admitted for trading on any national securities exchange, days on
which such national securities exchange is open for business or (ii) if the
Common Stock
24
is quoted on The Nasdaq Stock Market or any similar system of automated
dissemination of quotations of securities prices, days on which trades may be
made on such system.
(f) Rights, warrants or options distributed by the Company to all
holders of Common Stock entitling the holders thereof to subscribe for or
purchase shares of the Company's capital stock (either initially or under
certain circumstances), which rights, warrants or options, until the occurrence
of a specified event or events ("Trigger Event"):
(1) are deemed to be transferred with such shares of
Common Stock,
(2) are not exercisable, and
(3) are also issued in respect of future issuances of
Common Stock,
shall not be deemed distributed for purposes of this Section 4.06 until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights, warrants or options, or any Trigger Event with respect
thereto, that shall have resulted in an adjustment to the Conversion Price under
this Section 4.06, (1) in the case of any such rights, warrants or options which
shall all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder of Common Stock with respect to such
rights, warrants or options (assuming such holder had retained such rights,
warrants or options), made to all holders of Common Stock as of the date of such
redemption or repurchase, and (2) in the case of any such rights, warrants or
options all of which shall have expired without exercise by any holder thereof,
the Conversion Price shall be readjusted as if such issuance had not occurred.
(g) In any case in which this Section 4.06 shall require that an
adjustment be made immediately following a record date established for purposes
of Section 4.06, the Company may elect to defer (but only until five Business
Days following the filing by the Company with the
25
Trustee of the certificate described in Section 4.10) issuing to the holder of
any Note converted after such record date the shares of Common Stock and other
capital stock of the Company issuable upon such conversion over and above the
shares of Common Stock and other capital stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to adjustment; and,
in lieu of the shares the issuance of which is so deferred, the Company shall
issue or cause its transfer agents to issue due bills or other appropriate
evidence of the right to receive such shares.
SECTION 4.07. NO ADJUSTMENT.
No adjustment in the Conversion Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Price as last adjusted; PROVIDED, HOWEVER, that any adjustments which
by reason of this Section 4.07 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article 4 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
No adjustment need be made for rights to purchase Common Stock or
issuances of Common Stock pursuant to a Company plan for reinvestment of
dividends or interest.
No adjustment need be made for a change in the par value or a change to
no par value of the Common Stock.
To the extent that the Notes become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
SECTION 4.08. EQUIVALENT ADJUSTMENTS.
In the event that, as a result of an adjustment made pursuant to
Section 4.06 above, the holder of any Note thereafter surrendered for conversion
shall become entitled to receive any shares of capital stock of the Company
other than shares of its Common Stock, thereafter the Conversion Price of such
other shares so receivable upon conversion of any Notes shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in this
Article 4.
SECTION 4.09. ADJUSTMENT FOR TAX PURPOSES.
The Company shall be entitled to make such reductions in the Conversion
Price, in addition to those required by Section 4.06, as it in its discretion
shall determine to be advisable in order that any stock dividends, subdivision
of shares, distribution of rights to purchase stock or securities, or a
distribution or securities convertible into or exchangeable for stock hereafter
made by the Company to its stockholders shall not be taxable.
SECTION 4.10. NOTICE OF ADJUSTMENT.
Whenever the Conversion Price is adjusted, or Noteholders become
entitled to other Notes or due bills, the Company shall promptly mail to
Noteholders a notice of the adjustment
26
and file with the Trustee an Officers' Certificate briefly stating the facts
requiring the adjustment and the manner of computing it. The certificate shall
be conclusive evidence of the correctness of such adjustment and the Trustee may
conclusively assume that, unless and until such certificate is received by it,
no such adjustment is required.
SECTION 4.11. NOTICE OF CERTAIN TRANSACTIONS.
In case:
(a) the Company shall declare a dividend (or any other distribution) on
its Common Stock (other than in cash out of retained earnings); or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, warrants or options to subscribe for or purchase any
share of any class or any other rights, warrants or options; or
(c) of any reclassification of the Common Stock of the Company (other
than a subdivision or combination of its outstanding Common Stock, or a change
in par value, or from par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at its address appearing on the list provided for in Section 2.5
of the Indenture, as promptly as possible but in any event at least fifteen days
prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights, warrants or options, 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 or rights are to be determined, or (y) the date on
which such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective or occur, and the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
SECTION 4.12. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON
CONVERSION PRIVILEGE.
If any of the following shall occur, namely:
27
(a) any reclassification or change of outstanding shares of Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination);
(b) any consolidation, combination or merger to which the Company is a
party other than a merger in which the Company is the continuing corporation and
which does not result in any reclassification of, or change (other than a change
in name, or par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination) in, outstanding
shares of Common Stock; or
(c) any sale or conveyance of all or substantially all of the property
or business of the Company,
then the Company, or such successor or purchasing corporation, as the case may
be, shall, as a condition precedent to such reclassification, change,
consolidation, merger, sale or conveyance, execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Note then outstanding
shall have the right to convert such Note into the kind and amount of shares of
stock and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock deliverable upon conversion of such Note
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. Such supplemental indenture shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article 4. The
foregoing, however, shall not in any way affect the right a holder of a Note may
otherwise have, pursuant to clause (2) of the last sentence of subsection (c) of
Section 4.06, to receive Rights upon conversion of a Note. If, in the case of
any such consolidation, merger, sale or conveyance, the stock or other
securities and property (including cash) receivable thereupon by a holder of
Common Stock includes shares of stock or other securities and property of a
corporation other than the successor or purchasing corporation, as the case may
be, in such consolidation, merger, sale or conveyance, then such supplemental
indenture shall also be executed by such other corporation and shall contain
such additional provisions to protect the interests of the Holders of the Notes
as the Board of Directors of the Company shall reasonably consider necessary by
reason of the foregoing. The provision of this Section 4.12 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
Notwithstanding the foregoing, a distribution by the Company to all or
substantially all holders of its Common Stock for which an adjustment to the
Conversion Price or provision for conversion of the Notes may be made pursuant
to Section 4.06 shall not be deemed to be a sale or conveyance of all or
substantially all of the property or business of the Company for purposes of
this Section 4.12.
In the event the Company shall execute a supplemental indenture
pursuant to this Section 4.12, the Company shall promptly file with the Trustee
an Opinion of Counsel stating that such supplemental indenture is authorized or
permitted by this First Supplemental Indenture and an Officers' Certificate
briefly stating the reasons therefor, the kind or amount of shares of stock or
securities or property (including cash) receivable by Holders of the Notes upon
the conversion of their Notes after any such reclassification, change,
consolidation, merger, sale or conveyance,
28
any adjustment to be made with respect thereto and that all conditions precedent
have been complied with.
SECTION 4.13. TRUSTEE'S DISCLAIMER.
The Trustee has no duty to determine when an adjustment under this
Article 4 should be made, how it should be made or what such adjustment should
be made, but may accept as conclusive evidence of the correctness of any such
adjustment, and shall be protected in relying upon, the Officers' Certificate
with respect thereto which the Company is obligated to file with the Trustee
pursuant to Section 4.10. The Trustee shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Notes, and the Trustee shall not be responsible for the
Company's failure to comply with any provisions of this Article 4. Each
Conversion Agent (other than the Company or an Affiliate of the Company) shall
have the same protection under this Section 4.13 as the Trustee.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.12, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 4.12.
SECTION 4.14. VOLUNTARY REDUCTION.
The Company from time to time may reduce the Conversion Price by any
amount for any period of time if the period is at least 20 days or such longer
period as may be required by law and if the reduction is irrevocable during the
period; PROVIDED that in no event may the Conversion Price be less than the par
value of a share of Common Stock.
ARTICLE FIVE
SUBORDINATION
SECTION 5.01. NOTES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each holder of Notes by his
acceptance thereof likewise covenants and agrees, that all Notes are subject to
the provisions of this Article 5; and each Person holding any Note, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions and acknowledges that such provisions are for the
benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness.
Each Holder of Notes authorizes and directs the Trustee on such
Holder's behalf to take such action as may be necessary or appropriate, in the
sole discretion of the Trustee, to acknowledge or effectuate the subordination
between the Holders of Notes and the Holders of
29
Senior Indebtedness as provided in this Article and appoints the Trustee as such
Holder's attorney-in-fact for any and all such purposes.
The payment of the principal of, premium, if any, and interest on and
any other payment due pursuant to this First Supplemental Indenture or any Notes
issued under the First Supplemental Indenture (including, without limitation,
the payment or deposit of the Redemption Price or Repurchase Price pursuant to
Article 3 and any deposit pursuant to Section 6.02) shall, to the extent and in
the manner hereinafter set forth, be subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness, whether
outstanding at the date of this First Supplemental Indenture or thereafter
created, incurred, assumed or guaranteed.
SECTION 5.02. NOTES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
INDEBTEDNESS ON DISSOLUTION, LIQUIDATION, REORGANIZATION,
ETC., OF THE COMPANY.
Upon any payment or distribution of the assets of the Company of any
kind or character, whether in cash, property or securities (including any
collateral at any time securing the Notes), to creditors upon any dissolution,
winding-up, total or partial liquidation, or reorganization of the Company
(whether voluntary or involuntary, or in bankruptcy, insolvency, reorganization,
liquidation, or receivership proceedings, or upon an assignment for the benefit
of creditors, or any marshalling of the assets and liabilities of the Company,
or otherwise), then in such event:
(a) all Senior Indebtedness (including principal thereof and interest
thereon) shall first be paid in full before any Payment of the Notes (as defined
in Section 5.05) is made;
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (including any collateral at
any time securing the Notes) (other than Reorganization Notes), to which the
Holders or the Trustee on behalf of the Holders would be entitled except for the
provisions of this Article 5, including any such payment or distribution which
may be payable or deliverable by reason of the payment of another debt of the
Company being subordinated to the payment of the Notes, shall be paid or
delivered by any debtor, Custodian or other person making such payment or
distribution, directly to the holders of the Senior Indebtedness or their
Representative or Representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of and interest on the Senior
Indebtedness held or represented by each, for application to payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full after giving effect to any concurrent payment or
distribution, or provision therefor, to the holders of such Senior Indebtedness;
and
(c) in the event that, notwithstanding the foregoing provisions of this
Section 5.02, any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than Reorganization
Notes), shall be received by the Trustee or the Holders before all Senior
Indebtedness is paid in full, such payment or distribution (subject to the
provisions of Sections 5.06 and 5.07) shall be held in trust for the benefit of,
and shall be immediately paid or delivered by the Trustee or such Holders, as
the case may be, to the holders of Senior Indebtedness remaining unpaid, or
their Representative or Representatives, ratably according to the aggregate
amounts remaining unpaid on account of the principal of and interest
30
on the Senior Indebtedness held or represented by each, for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent necessary to
pay all Senior Indebtedness in full after giving effect to any concurrent
payment or distribution, or provision therefor, to or for the holders of such
Senior Indebtedness.
The Company shall give prompt notice to the Trustee of any dissolution,
winding-up, liquidation or reorganization of the Company.
Upon any distribution of assets of the Company referred to in this
Article 5, the Trustee, subject to the provisions of Sections 7.01 and 7.02 of
the Indenture, and the Holders shall be entitled to conclusively rely upon any
order or decree by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceeding is pending, or
a certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee or to the Holders, for the purpose of ascertaining
the persons entitled to participate in such distribution, the holders of the
Senior Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 5; PROVIDED that the foregoing shall
apply only if such court, trustee, liquidating trustee or other person has been
fully apprised of the provisions of this Article.
SECTION 5.03. NOTEHOLDERS TO BE SUBROGATED TO RIGHT OF HOLDERS OF SENIOR
INDEBTEDNESS.
Subject to the prior payment in full of all Senior Indebtedness, the
Holders shall be subrogated (equally and ratably with the holders of all
indebtedness of the Company which by its express terms is subordinated to
indebtedness of the Company to substantially the same extent as the Notes are
subordinated and is entitled to like rights of subrogation) to the rights of the
holders of Senior Indebtedness to receive payments or distributions of assets of
the Company applicable to the Senior Indebtedness until the principal of and
interest on the Notes shall be paid in full, and for purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of assets, whether in cash, property or securities, distributable to the holders
of Senior Indebtedness under the provisions hereof to which the Holders would be
entitled except for the provisions of this Article 5, and no payment pursuant to
the provisions of this Article 5 to the holders of Senior Indebtedness by the
Holders shall, as among the Company, its creditors other than the holders of
Senior Indebtedness, and the Holders, be deemed to be a payment by the Company
to or on account of Senior Indebtedness, it being understood that the provisions
of this Article 5 are, and are intended, solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of Senior
Indebtedness, on the other hand.
SECTION 5.04. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article 5 or elsewhere in this First
Supplemental Indenture or in any Note is intended to or shall impair the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of and interest on the Notes, as and when the same shall
become due and payable in accordance with the terms of the Notes, or to affect
the relative rights of the Holders and other creditors of the Company other than
the holders of Senior Indebtedness, nor shall anything herein or therein prevent
the Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon the happening of an Event of
31
Default under this First Supplemental Indenture or the Indenture, subject to the
provisions of Article 6 of the Indenture, and the rights, if any, under this
Article 5 of the holders of Senior Indebtedness in respect of assets, whether in
cash, property or securities, of the Company received upon the exercise of any
such remedy.
SECTION 5.05. COMPANY NOT TO MAKE PAYMENT WITH RESPECT TO NOTES IN CERTAIN
CIRCUMSTANCES.
Upon the occurrence of a Payment Default on Senior Indebtedness, unless
and until the amount of such Senior Indebtedness then due shall have been paid
in full, or such default shall have been cured or waived or shall have ceased to
exist, the Company shall not pay principal of, premium, if any, or interest on
the Notes or any other amount due pursuant to this First Supplemental Indenture
or any Notes or make any deposit pursuant to Article 3 or Section 6.02 or
Section 8.01 of the Indenture and shall not repurchase, redeem or otherwise
retire any Notes (other than a repurchase of Notes with shares of Common Stock
pursuant to the provisions of Section 3.08) (collectively, "Payment of the
Notes").
Unless Section 5.02 shall be applicable, upon (1) the occurrence of a
default on Senior Indebtedness (other than a Payment Default) that occurs and is
continuing that permits the holders of such Senior Indebtedness (or their
Representative or Representatives) to accelerate its maturity and (2) receipt by
the Company and the Trustee from the Senior Agent of written notice of such
occurrence and the imposition of a Payment Blockage Period hereunder, then the
Company shall not make any Payment of the Notes for a period (the "Payment
Blockage Period") commencing on the earlier of the date of receipt by the
Company or the Trustee of such notice from the Senior Agent and ending on the
earlier of (subject to any blockage of payments that may then be in effect under
this Section 5.05) (x) the date 179 days after such date, (y) the date such
default shall have been cured or waived in writing or shall have ceased to exist
or such Senior Indebtedness shall have been discharged, or (z) the date such
Payment Blockage Period shall have been terminated by written notice to the
Company or the Trustee from the Senior Agent, after which, in case of clause
(x), (y) or (z), as the case may be, the Company shall resume making any and all
required payments. Notwithstanding any other provision of this Agreement, only
one Payment Blockage Period may be commenced within any consecutive 365-day
period, and no event of default with respect to any Senior Indebtedness which
existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to such Senior Indebtedness shall be, or can be
made, the basis for the commencement of a second Payment Blockage Period whether
or not within a period of 365 consecutive days unless such event of default
shall have been cured or waived for a period of not less than 90 consecutive
days. In no event will a Payment Blockage Period extend beyond 179 days.
In the event that, notwithstanding the foregoing provisions of this
Section 5.05, any Payment of the Notes shall be made by or on behalf of the
Company and received by the Trustee, any Holder or any Paying Agent (or, if the
Company is acting as its own Paying Agent, money for any such payment shall be
segregated and held in trust), which payment was prohibited by this Section
5.05, then, unless and until the amount of Senior Indebtedness then due, as to
which a default shall have occurred, shall have been paid in full, or such
default shall have been cured or waived, such payment (subject, in each case, to
the provisions of Sections 5.06 and 5.07) shall be held in trust for the benefit
of, and shall be immediately paid over to, the holders of Senior
32
Indebtedness or their Representative or Representatives, ratably according to
the aggregate amounts remaining unpaid on account of the principal of and
interest on the Senior Indebtedness held or represented by each, for application
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the benefit of
the holders of Senior Indebtedness. The Company shall give prompt written notice
to the Trustee of any default under any Senior Indebtedness or under any
agreement pursuant to which Senior Indebtedness may have been issued.
SECTION 5.06. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes. Notwithstanding the provisions of this Article
5 or any other provision of this First Supplemental Indenture, the Trustee shall
not at any time be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Trustee, unless and until
the Trustee shall have received written notice thereof from the Company or from
the holder or holders of Senior Indebtedness or from their Representative or
Representatives; and, prior to the receipt of any such notice, the Trustee,
subject to the provisions of Sections 7.01 and 7.02 of the Indenture, shall be
entitled to assume conclusively that no such facts exist.
The Trustee shall be entitled to conclusively rely on the delivery to
it of a written notice by a person representing himself to be a holder of Senior
Indebtedness (or a Representative of such holder) to establish that such notice
has been given by a holder of Senior Indebtedness or a Representative of any
such holder. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article 5, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
each person under this Article 5, and if such evidence is not furnished, the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.
SECTION 5.07. APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT.
Money or U.S. Government Obligations deposited in trust with the
Trustee pursuant to Section 6.02 of this First Supplemental Indenture and
Section 8.01 of the Indenture and not in violation of this Article 5 shall be
for the sole benefit of Noteholders and shall thereafter not be subject to the
subordination provisions of this Article 5. Otherwise, any deposit of monies by
the Company with the Trustee or any Paying Agent (whether or not in trust) for
the payment of the principal of or interest on any Notes shall be subject to the
provisions of Sections 5.01, 5.02, 5.03 and 5.05; except that, if at least three
Business Days prior to the date on which by the terms of this Indenture any such
monies may become payable for any purpose (including, without limitation, the
payment of either the principal of or interest on any Note), a Trust Officer of
the Trustee shall not have received with respect to such monies the notice
provided for in Section 5.06, then the Trustee or any Paying Agent shall have
full power and authority to receive such
33
monies and to apply such monies to the purpose for which they were received, and
shall not be affected by any notice to the contrary which may be received by it
within three Business Days prior to or after such date. This Section 5.07 shall
be construed solely for the benefit of the Trustee and the Paying Agent and
shall not otherwise affect the rights that holders of Senior Indebtedness may
have to recover any such payments from the Holders in accordance with the
provisions of this Article 5.
SECTION 5.08. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination, as herein provided, shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
First Supplemental Indenture, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of any Senior
Indebtedness may extend, renew, modify or amend the terms of such Senior
Indebtedness or any security therefor and release, sell or exchange such
security and otherwise deal freely with the Company, all without affecting the
liabilities and obligations of the parties to this First Supplemental Indenture
or the Holders. No amendment of this Article 5 or any defined terms used herein
or any other Sections referred to in this Article 5 which adversely affects the
rights hereunder of holders of Senior Indebtedness, shall be effective unless
the holders of such Senior Indebtedness (required pursuant to the terms of such
Senior Indebtedness to give such consent) have consented thereto.
SECTION 5.09. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each holder of a Note by his acceptance thereof authorizes and directs
the Trustee in his behalf to take such action as may be necessary or appropriate
to acknowledge and effectuate the subordination provided in this Article 5 and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 5.10. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee, in its individual capacity, shall be entitled to all of
the rights set forth in this Article 5 in respect of any Senior Indebtedness at
any time held by it to the same extent as any other holder of Senior
Indebtedness, and nothing in this First Supplemental Indenture shall be
construed to deprive the Trustee of any of its rights as such holder. Nothing in
this Article 5 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07 of the Indenture.
SECTION 5.11. ARTICLE 5 NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a Payment of the Notes by reason of any provision
in this Article 5 shall not be construed as preventing the occurrence of an
Event of Default under Section 7.01 of this First Supplemental Indenture or
under Section 6.01 of the Indenture.
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SECTION 5.12. NO FIDUCIARY DUTY CREATED TO HOLDERS OF SENIOR INDEBTEDNESS.
Notwithstanding any other provision in this Article 5, the Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness by virtue of the provisions of this Article 5 or otherwise. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to perform
or to observe only such of its covenants or obligations as are specifically set
forth in this Article 5 and no implied covenants or obligations with respect to
holders of Senior Indebtedness shall be read into this First Supplemental
Indenture against the Trustee.
SECTION 5.13. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 5 shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully for all intents and purposes as if such Paying Agent were named
in this Article 5 in addition to or in place of the Trustee; PROVIDED, HOWEVER,
that Sections 5.06, 5.10 and 5.12 shall not apply to the Company if it acts as
Paying Agent.
SECTION 5.14. CERTAIN CONVERSION DEEMED PAYMENT.
For the purposes of this Article only, (1) the issuance and delivery of
junior securities upon conversion of Notes in accordance with Article 4 shall
not be deemed to constitute a payment or distribution on account of the
principal of or premium or interest on Notes or on account of the purchase or
other acquisition of Notes, (2) the issuance and delivery of Common Stock upon
repurchase of notes in accordance with Section 3.08 shall not be deemed to
constitute a payment or distribution on account of the principal of or premium
or interest on the Notes or on account of the purchase or other acquisition of
Notes, and (3) the payment, issuance or delivery of cash, property or securities
(other than junior securities) upon conversion of a Note shall be deemed to
constitute payment on account of principal of such Note. For the purposes of
this Section, the term "junior securities" means (a) shares of any stock of any
class of the Company and (b) securities of the Company which are subordinated in
right of payment to all Senior Indebtedness which may be outstanding at the time
of issuance or delivery of such securities to substantially the same extent as,
or to a greater extent than, the Notes are so subordinated as provided in this
Article. Nothing contained in this Article or elsewhere in this First
Supplemental Indenture or in the Notes is intended to or shall impair, as among
the Company, its creditors other than holders of Senior Indebtedness and the
Holders of the Notes, the right, which is absolute and unconditional, of the
Holder of any Note to convert such Note in accordance with Article 4.
35
ARTICLE SIX
COVENANTS
SECTION 6.01. PAYMENT OF NOTES.
The Company covenants and agrees that it will duly and punctually pay
or cause to be paid the principal amount at maturity, Redemption Price,
Repurchase Price and interest, in respect of each of the Notes at the places, at
the respective times and in the manner provided herein and in the Notes. Each
installment of interest on the Notes may be paid by mailing checks for the
interest payable to or upon the written order of the holders of Notes entitled
thereto as they shall appear on the registry books of the Company; PROVIDED that
with respect to any holder of Notes with an aggregate principal amount equal to
or in excess of $5 million, at the request of such holder in writing the Company
shall pay interest on such holder's Notes by wire transfer in immediately
available funds.
SECTION 6.02. LIQUIDATION.
Subject to the provisions of Article 5 of the Indenture, insofar as
they may be applicable hereto, the Board of Directors or the stockholders of the
Company may not adopt a plan of liquidation which plan provides for,
contemplates, or the effectuation of which is preceded by (a) the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company otherwise than substantially as an entirety (Article 5 of the Indenture
being the Article which governs any such sale, lease, conveyance or other
disposition substantially as an entirety), and (b) the distribution of all or
substantially all of the proceeds of such sale, lease, conveyance or other
disposition and of the remaining assets of the Company to the holders of the
capital stock of the Company, unless the Company shall in connection with the
adoption of such plan make provision for, or agree that prior to making any
liquidating distributions to the holders of capital stock of the Company it will
make provision for, the satisfaction of the Company's obligations hereunder and
under the Notes as to the payment of principal and interest. The Company shall
be deemed to have made provision for such payments only if (1) the Company
irrevocably deposits in trust with the Trustee money or U.S. Government
Obligations maturing as to principal and interest in such amounts and at such
times as are sufficient, without consideration of any reinvestment of such
interest, to pay the principal of and interest on the Notes then outstanding to
maturity and to pay all other sums payable by it hereunder, or (2) there is an
express assumption of the due and punctual payment of the Company's obligations
hereunder and under the Notes and the performance and observance of all
covenants and conditions to be performed by the Company hereunder, by the
execution and delivery of a supplemental indenture in form reasonably
satisfactory to the Trustee by a person who acquires, or will acquire (otherwise
than pursuant to a lease) a portion of the assets of the Company, and which
person will have Consolidated Net Worth (immediately after the acquisition)
equal to not less than the Consolidated Net Worth of the Company (immediately
preceding such acquisition), and which is a corporation organized under the laws
of the United States, any State thereof or the District of Columbia; PROVIDED,
HOWEVER, that the Company shall not make any liquidating distribution to the
holders of capital stock of the Company described in the first sentence of this
Section 6.02 until after the Company shall have certified to the Trustee with an
Officers'
36
Certificate at least five days prior to the making of any liquidating
distribution that it has complied with the provisions of this Section 6.02. For
purposes of this Section 6.02, "Consolidated Net Worth" means, at any date of
determination with respect to the Company, the total stockholders' equity
(including capital stock, additional paid-in capital and retained earnings after
deducting any treasury stock) of the Company appearing on its most recent
consolidated balance sheet prepared in accordance with generally accepted
accounting principles applied on a consistent basis.
SECTION 6.03. NOTICE OF DEFAULTS.
The Company will give notice to the Trustee, promptly, and in any event
within five days, upon becoming aware thereof, of the existence of any Event of
Default or an event which, with notice or the lapse of time or both would
constitute an Event of Default hereunder.
SECTION 6.04. CORPORATE EXISTENCE.
Subject to Section 6.02, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and rights (charter and statutory); PROVIDED, HOWEVER, that the
Company shall not be required to preserve any right if the Company shall
determine that the preservation is no longer desirable in the conduct of the
Company's business and that the loss thereof is not, and will not be, adverse in
any material respect to the Holders.
SECTION 6.05. FURTHER INSTRUMENTS AND ACTS.
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this First Supplemental
Indenture and the Indenture.
ARTICLE SEVEN
DEFAULT AND REMEDIES
SECTION 7.01. EVENTS OF DEFAULT.
In addition to the events that constitute an Event of Default in
Section 6.01 of the Indenture, an "Event of Default" occurs if:
(1) the Company fails to pay when due the principal of or interest on
indebtedness for money borrowed by the Company or its subsidiaries in excess of
$20.0 million, or the acceleration of that indebtedness that is not withdrawn
within 15 days after the date of written notice to the Company by the Trustee or
to the Company and the Trustee by the holders of at least 25% in principal
amount of the outstanding Notes.
37
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE.
In addition to the obligations set forth in Section 8.01 of the
Indenture, the Company's obligations in paragraphs 9 and 12 of the Notes shall
survive until the Notes are no longer outstanding. Thereafter, the Company's
obligations in such paragraph 12 shall survive.
38
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first above
written.
NATURAL MICROSYSTEMS CORPORATION
By: ________________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: ________________________________________
Name:
Title:
EXHIBIT A
FORM OF SECURITY
[GLOBAL NOTE LEGEND:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO NATURAL
MICROSYSTEMS CORPORATION 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.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFER IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.]
A-1
[FORM OF FACE OF SECURITY]
NATURAL MICROSYSTEMS CORPORATION
Number ______ CUSIP No. ___________
[____]% Convertible Subordinated Note Due 2005
Natural MicroSystems Corporation, a Delaware corporation, promises to
pay to __________________ or registered assigns, the principal sum of
________________________ Dollars ($__________) on [_______________], 2005 and to
pay interest on the principal amount of this Note beginning the most recent date
to which interest has been paid or, if no interest has been paid, beginning
[____________], 2000 at the rate of [_____]% per annum. Interest Payment Dates:
[_____________] and [_____________] Record Dates: [_____________] and
[_____________]
This Note is convertible at such times and as specified on the other
side of this Note. Additional provisions of this Note are set forth on the other
side of this Note.
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IN WITNESS WHEREOF, the Company has caused this [____]% Convertible
Subordinated Note due 2005 to be signed by its duly authorized officers.
Dated: ___________________________ NATURAL MICROSYSTEMS CORPORATION
By: _________________________________
Name:
Title:
By: _________________________________
Name:
Title:
Trustee's Certificate of
Authentication:
Dated: _____________________________
This is one of the Notes
referred to in the within mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY, as Trustee
By: ___________________________________________
Authorized Signatory
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[FORM OF REVERSE SIDE OF SECURITY]
NATURAL MICROSYSTEMS CORPORATION
[____]% Convertible Subordinated Note Due 2005
1. INTEREST.
Natural MicroSystems Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. The Company shall pay interest semi-annually on
[_____________] and [_____________] of each year, commencing [_____________],
2000. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from [_____________],
2000. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. METHOD OF PAYMENT.
The Company will pay interest on this Note (except defaulted interest)
to the person who is the registered Holder of this Note at the close of business
on the [_____________] and [_____________] next preceding the interest payment
date. The Holder must surrender this Note to the Paying Agent to collect payment
of principal. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. The Company, however, may pay principal and interest by its check
payable in such money. It may mail an interest check to the Holder's registered
address.
3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT.
Initially, State Street Bank and Trust Company (the "Trustee") will act
as Paying Agent, Registrar and Conversion Agent. The Company may change any
Paying Agent, Registrar or Conversion Agent without notice to the holder. The
Company or any of its Subsidiaries may act as Paying Agent, Registrar or
Conversion Agent.
4. INDENTURE; LIMITATIONS.
This Note is one of a duly authorized issue of Notes of the Company
designated as its [____]% Convertible Subordinated Notes Due 2005 (the "Notes"),
issued under an Indenture dated as of [_____________], 2000 (the "Indenture")
and a First Supplemental Indenture dated as of [_____________], 2000 (the "First
Supplemental Indenture"), between the Company and the Trustee. The terms of this
Note include those stated in the First Supplemental Indenture and in the
Indenture and those made part of the First Supplemental Indenture and the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as amended by the Trust Indenture Reform Act of 1990, as in
effect on the date hereof or, from and after the date that the First
Supplemental Indenture and the Indenture shall be qualified thereunder, as in
effect on such date. This Note is subject to all such terms, and the holder of
this Note is referred to the First Supplemental Indenture and the Indenture and
said Act for a statement of them.
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The Notes are subordinated unsecured obligations of the Company
initially limited to up to $175,000,000 aggregate principal amount plus an
additional principal amount not exceeding $26,250,000 in the aggregate as may be
issued upon the exercise by the Underwriters, in whole or in part, of the
Purchase Option.
5. OPTIONAL REDEMPTION.
At any time on and after October 16, 2003, and prior to
maturity, if the closing price of the Common Stock shall have exceeded 130% of
the conversion price then in effect for at least 20 trading days in the
consecutive 30-trading day period ending on the trading day prior to the date of
mailing of a notice of optional redemption, the Company may, at its option,
redeem all or any part of the Notes, upon mailing a notice of such redemption
not less than thirty (30) days before the date fixed for redemption to the
holders of Notes, at the following optional redemption prices (expressed as
percentages of the principal amount):
If redeemed during the period beginning October 16, 2003 and ending on
October 14, 2004, at a redemption price of [___]%, and if redeemed during the
period beginning October 15, 2004 and ending on October 15, 2005, at a
redemption price of [___]%, together in the case of any such redemption with
accrued interest to the date of redemption, but any interest payment that is due
and payable on or prior to such date of redemption will be payable to the
Holders of such Notes, or one or more predecessor Notes, of record at the close
of business on the relevant record dates referred to on the face hereof, all as
provided in the First Supplemental Indenture and the Indenture.
6. NOTICE OF REDEMPTION.
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Notes to be redeemed at his registered address. Notes in denominations larger
than $1,000 may be redeemed in part, but only in whole multiples of $1,000. On
and after the redemption date, subject to the deposit with the Paying Agent of
funds sufficient to pay the redemption price, interest ceases to accrue on Notes
or portions of them called for redemption.
7. REPURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL.
If at any time that Notes remain outstanding there shall have occurred
a Change in Control (as defined in the First Supplemental Indenture and in the
Indenture), at the option of the Holder and subject to the terms and conditions
of the First Supplemental Indenture and the Indenture, the Company shall become
obligated to repurchase all or any part specified by the Holder (so long as the
principal amount of such part is $1,000 or an integral multiple thereof) of the
Notes held by such Holder on the Repurchase Date. The Holder shall have the
right to withdraw any Repurchase Notice by delivering a written notice of
withdrawal to the Paying Agent in accordance with the terms of the First
Supplemental Indenture and the Indenture. At the option of the Company, the
Repurchase Price may be paid in cash or, subject to the fulfillment by the
Company of the conditions set forth in Section 3.08(b) of the First
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Supplemental Indenture, by delivery of shares of Common Stock having a fair
market value equal to the Repurchase Price.
8. CONVERSION.
At any time after 90 days following the latest date of original
issuance of the Notes and prior to the close of business on [_________________],
2005, a Holder of a Note may convert such Note into shares of Common Stock of
the Company; PROVIDED, HOWEVER, that if the Note is called for redemption, the
conversion right will terminate at the close of business on the third Business
Day before the redemption date of such Note (unless the Company shall default in
making the redemption payment when due, in which case the conversion right shall
terminate at the close of business on the date such default is cured and such
Note is redeemed). The initial conversion price is [$________________] per
share, subject to adjustment under certain circumstances as described in the
First Supplemental Indenture and the Indenture. The number of shares issuable
upon conversion of a Note is determined by dividing the principal amount
converted by the conversion price in effect on the conversion date. Upon
conversion, no adjustment for interest or dividends will be made. No fractional
shares will be issued upon conversion; in lieu thereof, an amount will be paid
in cash based upon the current market price (as defined in the First
Supplemental Indenture and the Indenture) of the Common Stock on the last
trading day prior to the date of conversion.
To convert a Note, a Holder must (a) complete and sign the conversion
notice set forth below and deliver such notice to the Conversion Agent, (b)
surrender the Note to the Conversion Agent, if certificated, (c) furnish
appropriate endorsements and transfer documents if required by the Registrar or
the Conversion Agent, (d) pay any transfer or similar tax, if required and (e)
if the Note is held in book-entry form, complete and deliver to the Depositary
appropriate instructions pursuant to the Depositary's book-entry conversion
programs. If a Holder surrenders a Note for conversion between the record date
for the payment of an installment of interest and the next interest payment
date, the Note must be accompanied by payment of an amount equal to the interest
payable on such interest payment date on the principal amount of the Note or
portion thereof then converted; PROVIDED, HOWEVER, that no such payment shall be
required if such Note has been called for redemption on a redemption date within
the period between and including such record date and such interest payment
date, or if such Note is surrendered for conversion on the interest payment
date. A Holder may convert a portion of a Note equal to $1,000 or any integral
multiple thereof.
A Note in respect of which a Holder had delivered a Repurchase Notice
exercising the option of such Holder to require the Company to repurchase such
Note may be converted only if the Repurchase Notice is withdrawn as provided
above and in accordance with the terms of the Indenture.
9. SUBORDINATION.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the First Supplemental Indenture and the Indenture,
subordinate and junior in right of payment to the prior payment in full of all
Senior Indebtedness of the Company, as defined in the First
A-6
Supplemental Indenture. Any Holder by accepting this Note agrees to and shall be
bound by such subordination provisions and authorizes the Trustee to give them
effect.
In addition to all other rights of Senior Indebtedness described in the
First Supplemental Indenture and the Indenture, the Senior Indebtedness shall
continue to be Senior Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any terms of any instrument relating to the Senior Indebtedness or any
extension or renewal of the Senior Indebtedness.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples thereof. A Holder may register the transfer of or
exchange Notes in accordance with the First Supplemental Indenture and the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes or other
governmental charges that may be imposed by law or permitted by the First
Supplemental Indenture and the Indenture.
[Global Note Insert:
The aggregate principal amount of the Note in global form represented
hereby may from time to time be reduced to reflect conversions or
redemptions of a part of this Note in global form or cancellations of a
part of this Note in global form, in each case, and in any such case,
by means of notations on the Global Note Transfer Schedule on the last
page hereof. Notwithstanding any provision of this Note to the
contrary, conversions or redemptions of a part of this Note in global
form and cancellations of a part of this Note in global form, may be
effected without the surrendering of this Note in global form, PROVIDED
that appropriate notations on the Global Note Transfer Schedule are
made by the Trustee, or the Custodian at the direction of the Trustee,
to reflect the appropriate reduction or increase, as the case may be,
in the aggregate principal amount of this Note in a global form
resulting therefrom or as a consequence thereof.]
11. PERSONS DEEMED OWNERS.
The registered holder of a Note may be treated as the owner of it for
all purposes.
12. UNCLAIMED MONEY.
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent will pay the money back to the Company at
its request. After that, Holders entitled to money must look to the Company for
payment unless an abandoned property law designates another person.
13. AMENDMENT, SUPPLEMENT, WAIVER.
Subject to certain exceptions, the First Supplemental Indenture, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of a majority in
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aggregate principal amount of the Notes then outstanding and any past default or
compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without the consent of or notice to any Holder, the Company
and the Trustee may amend or supplement the First Supplemental Indenture, the
Indenture or the Notes to, among other things, cure any ambiguity, omission,
defect or inconsistency or make any other change that does not adversely affect
the rights of any Holder.
14. SUCCESSOR CORPORATION.
When a successor corporation assumes all the obligations of its
predecessor under the Notes, the First Supplemental Indenture and the Indenture,
the predecessor corporation will be released from those obligations.
15. DEFAULTS AND REMEDIES.
An Event of Default is: default for 30 days in payment of interest on
the Notes; default in payment of principal on the Notes when due; failure by the
Company for 60 days after notice to it to comply with any of its other
agreements contained in the First Supplemental Indenture, the Indenture or the
Notes; default by the Company or any Subsidiary with respect to its obligation
to pay principal of or interest on indebtedness for borrowed money aggregating
more than $20.0 million or the acceleration of such indebtedness if not
withdrawn within 15 days from the date of such acceleration; and certain events
of bankruptcy, insolvency or reorganization of the Company or any of its
subsidiaries, all as and to the extent provided in the First Supplemental
Indenture and the Indenture. If an Event of Default (other than as a result of
certain events of bankruptcy, insolvency or reorganization) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Notes then outstanding may declare all unpaid principal of and accrued
interest to the date of acceleration on the Notes then outstanding to be due and
payable immediately, all as and to the extent provided in the First Supplemental
Indenture and the Indenture. If an Event of Default occurs as a result of
certain events of bankruptcy, insolvency or reorganization, all unpaid principal
of and accrued interest on the Notes then outstanding shall become due and
payable immediately without any declaration or other act on the part of the
Trustee or any Holder, all as and to the extent provided in the First
Supplemental Indenture and the Indenture. Holders may not enforce the First
Supplemental Indenture, the Indenture or the Notes except as provided in the
First Supplemental Indenture and the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the First Supplemental
Indenture, the Indenture or the Notes. Subject to certain limitations, Holders
of a majority in principal amount of the Notes then outstanding may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company is required to file periodic reports with the Trustee as
to the absence of default.
A-8
16. TRUSTEE DEALINGS WITH THE COMPANY.
State Street Bank and Trust Company, the Trustee under the First
Supplemental Indenture and the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or an Affiliate of the Company, and may otherwise deal with the Company
or an Affiliate of the Company, as if it were not the Trustee.
17. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the Notes,
the First Supplemental Indenture and the Indenture or for any claim based on, in
respect or by reason of, such obligations or their creation. The Holder of this
Note by accepting this Note waives and releases all such liability. The waiver
and release are part of the consideration for the issue of this Note.
18. DISCHARGE PRIOR TO MATURITY.
If the Company deposits with the Trustee or the Paying Agent money or
U.S. Government Obligations sufficient to pay the principal of and interest on
the Notes to maturity as provided in the First Supplemental Indenture and the
Indenture, the Company will be discharged from the First Supplemental Indenture
and the Indenture except for certain Sections thereof.
19. AUTHENTICATION.
This Note shall not be valid until the Trustee or an authenticating
agent signs the certificate of authentication on the other side of this Note.
20. ABBREVIATIONS AND DEFINITIONS.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
All capitalized terms used in this Note and not specifically defined
herein are defined in the First Supplemental Indenture or in the Indenture and
are used herein as so defined.
21. INDENTURE TO CONTROL.
In the case of any conflict between the provisions of this Note and the
First Supplemental Indenture and the Indenture, the provisions of the First
Supplemental Indenture and the Indenture shall control.
The Company will furnish to any Holder, upon written request and
without charge, a copy of the First Supplemental Indenture and the Indenture.
Requests may be made to: Natural MicroSystems Corporation, 000 Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Chief Financial Officer.
A-9
TRANSFER NOTICE
This Transfer Notice relates to $__________ principal amount of the [____]%
Convertible Subordinated Notes Due 2005 of Natural MicroSystems Corporation, a
Delaware corporation, held by ______________________________ (the "Transferor").
(I) or (we) assign and transfer this Note to
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
(Insert assignee's social security or tax I.D. no.)
and irrevocably appoint _______________________________ agent to transfer this
Note on the books of the Company. The agent may substitute another to act for
him.
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this
Convertible Note)
Date: _________________________________________________________________
Signature Guarantee:(1) _______________________________________________
_________
(1) Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
A-10
CONVERSION NOTICE
To Natural MicroSystems Corporation:
The undersigned owner of this Note hereby irrevocably exercises the
option to convert this Note, or the portion below designated, into Common Stock
of Natural MicroSystems Corporation in accordance with the terms of the First
Supplemental Indenture and the Indenture referred to in this Note, and directs
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the assignment
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
/ / Convert whole / / Convert in part
Amount of Note to be converted
($1,000 or integral multiples
thereof):
$___________________________
________________________________________
Signature (sign exactly as name
appears on the other side of this Note)
________________________________________
Signature Guarantee:(2)
___________
(2) Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
A-11
If you want the stock certificate made out in another person's name, complete
the following for such person:
______________________________________________________
Name
______________________________________________________
Social Security or Taxpayer Identification Number
______________________________________________________
Street Address
______________________________________________________
City, State and Zip Code
A-12
OPTION OF HOLDER TO ELECT REPURCHASE
If you want to elect to have this Note repurchased by the Company
pursuant to Section 3.08 of the First Supplemental Indenture, check the box:
If you want to elect to have only part of this Note repurchased by the
Company pursuant to Section 3.08 of the First Supplemental Indenture, state the
principal amount (which shall be $1,000 or a multiple thereof) to be
repurchased: $____________________
Dated: ________________________________ _______________________________________
Signature (sign exactly as name appears
on the other side of this Note)
_______________________________________
Signature Guarantee:(3)
_____________
(3) Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
A-13
[Schedule A to Exhibit A
GLOBAL NOTE TRANSFER SCHEDULE
Changes to Principal Amount of Global Note
===================================================================================================================
Date Principal Amount of Notes by Remaining Principal Amount of this Authorized Signature
which this Global Note Is to Be Global Note of officer of Trustee
Reduced and Reason for Reduction (following decrease) or Note Custodian
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===================================================================================================================
Schedule to be maintained by Depositary in cooperation with Trustee.]
A-14
