EXECUTION COPY
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ATS Medical, Inc., Issuer
Xxxxx Fargo Bank, National Association,
as Trustee
INDENTURE
Dated as of October 7, 2005
6% Convertible Senior Notes due 2025
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CROSS-REFERENCE TABLE*
Provisions of Trust Indenture Act of 1939 and Indenture, dated as of
October 7, 2005, between ATS Medical, Inc. and Xxxxx Fargo Bank, National
Association, as Trustee, providing for the 6% Convertible Senior Notes due 2025:
Section of the Act Section of Indenture
------------------ -----------------------
310(a)(1) and (2) .................................... 8.9
310(a)(3) and (4) .................................... N.A.**
310(b) ............................................... 8.8 and 8.10(b) and (d)
310(c) ............................................... N.A.
311(a) ............................................... 8.13
311(b) ............................................... 8.13
311(c) ............................................... N.A.
312(a) ............................................... 6.1 and 6.2(a)
312(b) ............................................... 6.2(b)
312(c) ............................................... 6.2(c)
313(a) ............................................... 6.3(a)
313(b)(1) ............................................ N.A.
313(b)(2) ............................................ 6.3(a)
313(c) ............................................... 6.3(a)
313(d) ............................................... 6.3(b)
314(a) ............................................... 6.4
314(b) ............................................... N.A.
314(c)(1) and (2) .................................... 17.5
314(c)(3) ............................................ N.A.
314(d) ............................................... N.A.
314(e) ............................................... 17.5
314(f) ............................................... N.A.
315(a), (c) and (d) .................................. 8.1
315(b) ............................................... 7.8
315(e) ............................................... 7.9
316(a)(1) ............................................ 7.7
316(a)(2) ............................................ Not required
316(a) (last sentence) ............................... 9.4
316(b) ............................................... 11.2
----------
* This Cross-Reference Table shall not, for any purpose, be deemed a part of
this Indenture.
** N.A. means Not Applicable.
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS........................................... 1
Section 1.1 Definitions........................................... 1
Section 1.2 Other Definitions..................................... 7
Section 1.3 Rules of Construction................................. 8
ARTICLE II ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND
EXCHANGE OF NOTES..................................... 8
Section 2.1 Designation, Amount and Issue of Notes................ 8
Section 2.2 Form of Notes......................................... 9
Section 2.3 Date and Denomination of Notes; Payments of
Interest.............................................. 10
Section 2.4 Execution of Notes.................................... 11
Section 2.5 Exchange and Registration of Transfer of Notes;
Restrictions on Transfer.............................. 11
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes............ 21
Section 2.7 Temporary Notes....................................... 22
Section 2.8 Cancellation of Notes Paid, Etc....................... 22
Section 2.9 CUSIP Numbers......................................... 22
Section 2.10 Calculation of Original Issue Discount................ 23
ARTICLE III OPTIONAL REDEMPTION OF NOTES.......................... 23
Section 3.1 Redemption Price...................................... 23
Section 3.2 Notice of Redemption; Selection of Notes.............. 23
Section 3.3 Payment of Notes Called for Redemption................ 25
Section 3.4 Conversion Arrangement on Call for Redemption......... 25
ARTICLE IV [RESERVED]............................................ 26
ARTICLE V PARTICULAR COVENANTS OF THE COMPANY................... 26
Section 5.1 Payment of Principal, Premium and Interest............ 26
Section 5.2 Maintenance of Office or Agency....................... 26
Section 5.3 Appointments to Fill Vacancies in Trustee's Office.... 27
Section 5.4 Provisions as to Paying Agent......................... 27
Section 5.5 Existence............................................. 28
Section 5.6 Information Requirement............................... 28
Section 5.7 Stay, Extension and Usury Laws........................ 28
Section 5.8 Compliance Certificate................................ 29
Section 5.9 Further Instruments and Acts.......................... 29
Section 5.10 Notice of Certain Events.............................. 29
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Section 5.11 Limitation on Indebtedness............................ 29
ARTICLE VI NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE....................................... 30
Section 6.1 Noteholders Lists..................................... 30
Section 6.2 Preservation and Disclosure of Lists.................. 30
Section 6.3 Reports by Trustee.................................... 30
Section 6.4 Reports by Company.................................... 31
ARTICLE VII DEFAULTS AND REMEDIES................................. 31
Section 7.1 Events of Default..................................... 31
Section 7.2 Payments of Notes on Default; Suit Therefor........... 34
Section 7.3 Application of Monies and Property Collected by
Trustee............................................... 36
Section 7.4 Proceedings by Noteholder............................. 36
Section 7.5 Proceedings by Trustee................................ 37
Section 7.6 Remedies Cumulative and Continuing.................... 37
Section 7.7 Direction of Proceedings and Waiver of Defaults by
Majority of Noteholders............................... 38
Section 7.8 Notice of Defaults.................................... 38
Section 7.9 Undertaking to Pay Costs.............................. 38
Section 7.10 Delay or Omission Not Waiver.......................... 39
ARTICLE VIII CONCERNING THE TRUSTEE................................ 39
Section 8.1 Duties and Responsibilities of Trustee................ 39
Section 8.2 Reliance on Documents, Opinions, Etc.................. 40
Section 8.3 No Responsibility for Recitals, Etc................... 42
Section 8.4 Trustee, Paying Agents, Conversion Agents or Note
Registrar May Own Notes............................... 42
Section 8.5 Monies to be Held in Trust............................ 42
Section 8.6 Compensation and Expenses of Trustee.................. 42
Section 8.7 Officer's Certificate as Evidence..................... 43
Section 8.8 Conflicting Interests of Trustee...................... 43
Section 8.9 Eligibility of Trustee................................ 43
Section 8.10 Resignation or Removal of Trustee..................... 44
Section 8.11 Acceptance by Successor Trustee....................... 45
Section 8.12 Succession by Merger, Etc............................. 45
Section 8.13 Limitation on Rights of Trustee as Creditor........... 46
ARTICLE IX CONCERNING THE NOTEHOLDERS............................ 46
Section 9.1 Action by Noteholders................................. 46
Section 9.2 Proof of Execution by Noteholders..................... 47
Section 9.3 Who Are Deemed Absolute Owners........................ 47
Section 9.4 Company-Owned Notes Disregarded....................... 47
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Section 9.5 Revocation of Consents; Future Holders Bound.......... 48
Section 9.6 Communications by Holders with Other Holders.......... 48
ARTICLE X NOTEHOLDERS' MEETINGS................................. 48
Section 10.1 Purpose of Meetings................................... 48
Section 10.2 Call of Meetings by Trustee........................... 49
Section 10.3 Call of Meetings by Company or Noteholders............ 49
Section 10.4 Qualifications for Voting............................. 49
Section 10.5 Regulations........................................... 49
Section 10.6 Voting................................................ 50
Section 10.7 No Delay of Rights by Meeting......................... 50
ARTICLE XI AMENDMENTS; SUPPLEMENTAL INDENTURES................... 51
Section 11.1 Amendments; Supplemental Indentures without Consent
of Noteholders........................................ 51
Section 11.2 Amendments; Supplemental Indentures with Consent of
Noteholders........................................... 52
Section 11.3 Effect of Amendments and Supplemental Indentures...... 53
Section 11.4 Notation on Notes..................................... 53
Section 11.5 Evidence of Compliance of Amendment or Supplemental
Indenture to be Furnished to Trustee.................. 53
ARTICLE XII CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE..... 54
Section 12.1 Company May Consolidate, Etc.......................... 54
Section 12.2 Successor Entity to be Substituted.................... 54
Section 12.3 Opinion of Counsel to be Given Trustee................ 55
ARTICLE XIII SATISFACTION AND DISCHARGE OF INDENTURE............... 55
Section 13.1 Discharge of Indenture................................ 55
Section 13.2 Deposited Monies to be Held in Trust by Trustee....... 56
Section 13.3 Paying Agent to Repay Monies Held..................... 56
Section 13.4 Repayment to Company.................................. 56
Section 13.5 Reinstatement......................................... 57
ARTICLE XIV NO RECOURSE AGAINST OTHERS............................ 57
Section 14.1 Indenture and Notes Solely Corporate Obligations...... 57
ARTICLE XV CONVERSION OF NOTES................................... 57
Section 15.1 Right to Convert...................................... 57
Section 15.2 Exercise of Conversion Privilege; Issuance of Common
Stock on Conversion; Payment of Cash in Lieu of
Issuance of Common Stock.............................. 58
Section 15.3 Company Right to Force Automatic Conversion........... 61
Section 15.4 Cash Payments in Lieu of Fractional Shares............ 63
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Section 15.5 Conversion Price...................................... 63
Section 15.6 Adjustment of Conversion Price........................ 63
Section 15.7 Effect of Reclassification, Consolidation, Merger or
Sale.................................................. 70
Section 15.8 Taxes on Shares Issued................................ 71
Section 15.9 Reservation of Shares; Shares to be Fully Paid;
Listing of Common Stock............................... 71
Section 15.10 Responsibility of Trustee............................. 73
Section 15.11 Notice to Holders Prior to Certain Actions............ 73
Section 15.12 Holder Not Deemed a Shareholder....................... 74
Section 15.13 Adjustment to Conversion Price Following Certain
Changes of Control.................................... 74
Section 15.14 Payment of Additional Conversion Payment and Company
Conversion Provisional Payment........................ 76
ARTICLE XVI REPURCHASE RIGHT...................................... 76
Section 16.1 Repurchase Right...................................... 76
Section 16.2 Notices; Method of Exercising Repurchase Right,
Etc................................................... 77
Section 16.3 Certain Definitions................................... 79
ARTICLE XVII MISCELLANEOUS PROVISIONS.............................. 80
Section 17.1 Provisions Binding on Company's Successors............ 80
Section 17.2 Official Acts by Successor Corporation................ 80
Section 17.3 Addresses for Notices, Etc............................ 80
Section 17.4 Governing Law; Jurisdiction; Jury Trial............... 81
Section 17.5 Evidence of Compliance with Conditions Precedent;
Certificates to Trustee............................... 82
Section 17.6 Legal Holidays........................................ 82
Section 17.7 Trust Indenture Act................................... 83
Section 17.8 Benefits of Indenture................................. 83
Section 17.9 Table of Contents, Headings, Etc...................... 83
Section 17.10 Authenticating Agent.................................. 83
Section 17.11 Execution in Counterparts............................. 84
Section 17.12 No Adverse Interpretation of Other Agreements......... 84
SCHEDULE A Additional Shares
EXHIBIT A Form of 6% Convertible Senior Note due 2025
EXHIBIT B Form of Conversion Notice
EXHIBIT C Form of Option to Elect Repayment Upon a Repurchase Date
EXHIBIT D Form of Certificate of Transfer
EXHIBIT E Form of Certificate of Exchange
EXHIBIT F Form of Transfer Letter of Representations
iv
INDENTURE dated as of October 7, 2005 between ATS Medical, Inc., a
Minnesota corporation (hereinafter sometimes called the "Company", as more fully
set forth in Section 1.1), and Xxxxx Fargo Bank, National Association, a
national banking association, as trustee (hereinafter sometimes called the
"Trustee", as more fully set forth in Section 1.1).
WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the issue of its 6% Convertible Senior Notes due 2025 (hereinafter sometimes
called the "Notes"), initially in an aggregate principal amount not to exceed
Twenty-Three Million Seven Hundred and Fifty Thousand United States Dollars
($23,750,000) and to provide the terms and conditions upon which the Notes are
to be authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by the
Notes, a form of assignment, a form of option to elect repayment upon a
Repurchase Event, a form of option to elect repayment on a Repurchase Date (as
defined herein), and a form of conversion notice and transfer to be borne by the
Notes are to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as provided in this Indenture, the valid, binding and
legal obligations of the Company, and to make this Indenture a valid agreement
of the Company according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes are,
and are to be, authenticated, issued and delivered, and in consideration of the
premises and of the purchase and acceptance of the Notes by the holders thereof,
the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions
144A Global Note: The term "144A Global Note" means the Global Note
substantially in the form of Exhibit A hereto bearing the Global Note Legend and
the Private Placement Legend and deposited with or on behalf of, and registered
in the name of, the Depositary or its nominee that will be issued in a
denomination equal to the outstanding principal amount of the Notes sold in
reliance on Rule 144A.
Affiliate: The term "Affiliate" of any specified Person shall mean any
other person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means the
power to direct or cause the direction of the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Applicable Procedures: The term "Applicable Procedures" shall mean, with
respect to any transfer or exchange of beneficial ownership interests in a
Global Note, the rules and procedures of the Depositary that are applicable to
such transfer or exchange.
Board of Directors: The term "Board of Directors" shall mean the Board of
Directors of the Company or a committee of such Board of Directors duly
authorized to act for it hereunder (to the extent permitted by applicable law).
Board Resolution: The term "Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors, and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
Business Day: The term "Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which the banking
institutions in the City of New York or the city in which the Corporate Trust
Office is located are authorized or obligated by law or executive order to close
or be closed.
Close of business: The term "close of business" means 5 p.m. (Minneapolis
time).
Commission: The term "Commission" shall mean the Securities and Exchange
Commission.
Common Stock: The term "Common Stock" shall mean 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, which is not subject to redemption by the Company and
which entitles the holder thereof to vote generally for the election of
directors. Subject to the provisions of Section 15.6, however, shares issuable
on conversion of Notes shall include only shares of the class designated as
common stock of the Company at the date of this 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 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: The term "Company" shall mean ATS Medical, Inc., a Minnesota
corporation, and subject to the provisions of Article XII, shall include its
successors and assigns.
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Conversion Shares: The term "Conversion Shares" means all shares of Common
Stock into which the Notes are convertible pursuant to Article XV of this
Indenture.
Corporate Trust Office: The term "Corporate Trust Office," or other similar
term, shall mean the office of the Trustee at which at any particular time its
corporate trust business shall be principally administered, which office is, at
the date as of which this Indenture is dated, located at Sixth and Marquette,
Xxxxxxxxxxx, Xxxxxxxxx 00000.
Custodian: The term "Custodian" shall mean the Trustee, as custodian with
respect to the Notes in global form, or any successor entity thereto.
Default: The term "default" shall mean any event that is, or after notice
or passage of time, or both, would be, an Event of Default.
Definitive Note: The term "Definitive Note" shall mean a certificated Note
registered in the name of the holder thereof and issued in accordance with
Section 2.5, substantially in the form of Exhibit A hereto except that such Note
shall not bear the Global Note Legend and shall not have the "Schedule of
Exchanges of Interests in the Global Note" attached thereto.
Depositary: The term "Depositary" shall mean, with respect to the Notes
issuable or issued in whole or in part in global form, The Depository Trust
Company, its nominees, and their respective successors.
Equity Interests: The term "Equity Interests" shall mean capital stock or
warrants, options or other rights to subscribe for, acquire or receive capital
stock (but excluding any debt security which is convertible into, or
exchangeable for, capital stock).
Event of Default: The term "Event of Default" shall mean any event
specified in Section 7.1, continued for the period of time, if any, and after
the giving of notice, if any, therein designated.
Exchange Act: The term "Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
Global Notes: The term "Global Notes" shall mean, individually and
collectively, each of the Restricted Global Notes and the Unrestricted Global
Notes, issued in accordance with Section 2.2, 2.5(c)(iv) or 2.5(e)(ii).
Global Note Legend: The term "Global Note Legend" shall mean the legend set
forth in Section 2.5(h)(iii), which is required to be placed on all Global Notes
issued under this Indenture.
IAI Global Note: The term "IAI Global Note" shall mean the Global Note
substantially in the form of Exhibit A hereto bearing the Global Note Legend and
the Private Placement Legend and deposited with or on behalf of and registered
in the name of the Depositary or its nominee that shall be issued in a
denomination equal to the outstanding principal amount of the Notes held by
Institutional Accredited Investors or Individual Accredited Investors.
3
Indenture: The term "Indenture" shall mean this instrument as originally
executed or, if amended or supplemented as herein provided, as so amended or
supplemented.
Individual Accredited Investor: The term "Individual Accredited Investor"
shall mean an individual "accredited investor" as defined in Rule 501(a) (5) or
(6) of Regulation D under the Securities Act.
Indirect Participant: The term "Indirect Participant" shall mean a Person
who holds a beneficial interest in a Global Note through a Participant.
Institutional Accredited Investor: The term "Institutional Accredited
Investor" shall mean an institutional "accredited investor" as such term is
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act or any
entity in which all of the equity owners are accredited investors within the
meaning of Rule 501(a)(1), (2), (3), (5), (6) or (7) under the Securities Act.
Liquidated Damages: The term "Liquidated Damages" means all liquidated
damages then owing pursuant to Section 2(f) of the Registration Rights Agreement
and Section 15.2.
Note or Notes: The terms "Note" or "Notes" shall mean any Note or Notes, as
the case may be, authenticated and delivered under this Indenture.
Noteholder or holder: The terms "Noteholder" or "holder" as applied to any
Note, or other similar terms (but excluding the term "beneficial holder"), shall
mean any Person in whose name at the time a particular Note is registered on the
Note Register.
Officer's Certificate: The term "Officer's Certificate", when used with
respect to the Company, shall mean a certificate signed by one of the President,
the Chief Executive Officer, Chief Financial Officer, Executive or Senior Vice
President or any Vice President, that is delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 17.5 if and to
the extent required by the provisions of such Section.
Opinion of Counsel: The term "Opinion of Counsel" shall mean an opinion in
writing signed by legal counsel, who may be an employee of or counsel to the
Company, which is delivered to the Trustee. Each such opinion shall include the
statements provided for in Section 17.5 if and to the extent required by the
provisions of such Section.
Outstanding: The term "outstanding," when used with reference to Notes,
shall, subject to the provisions of Section 9.4, mean, as of any particular
time, all Notes authenticated and delivered by the Trustee under this Indenture,
except:
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, for the payment, repurchase or
redemption of which monies in the necessary amount shall have been
deposited in trust with the Trustee or with any paying agent (other than
the Company) or shall have been set aside and segregated
4
in trust by the Company (if the Company shall act as its own paying agent)
on the date set for such payment, repurchase or redemption; provided that
if such Notes are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as provided in Section 3.2, or
provision satisfactory to the Trustee shall have been made for giving such
notice;
(c) Notes in lieu of which, or in substitution for which, other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.6 unless proof satisfactory to the Company is presented that any
such Notes are held by bona fide holders in due course; and
(d) Notes converted into Common Stock pursuant to Article XV.
Participant: The term "Participant" shall mean, with respect to the
Depositary, a Person who has an account with the Depositary.
Person: The term "Person" shall mean an individual, a corporation, a
limited liability company, an association, a partnership, a joint venture, a
joint stock company, a trust, an unincorporated organization or a government or
an agency or a political subdivision thereof.
Predecessor Note: The term "Predecessor Note" of any particular Note shall
mean every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purposes of this definition, any
Note authenticated and delivered under Section 2.6 in lieu of a lost, destroyed
or stolen Note shall be deemed to evidence the same debt as the lost, destroyed
or stolen Note that it replaces.
Private Placement Legend: The term "Private Placement Legend" shall mean
the legend set forth in Section 2.5(h)(i) and required to be placed on all Notes
issued under this Indenture except where otherwise permitted by the provisions
of this Indenture.
QIB: The term "QIB" shall mean a "qualified institutional buyer" as defined
in Rule 144A.
Registration Rights Agreement: The term "Registration Rights Agreement"
means that certain Registration Rights Agreement, dated as of October 7, 2005,
among the Company and the Buyers as defined therein, as such agreement may be
amended from time to time.
Registration Statement: The term "Registration Statement" means the
Registration Statement contemplated by the Registration Rights Agreement.
Responsible Officer: The term "Responsible Officer" shall mean, when used
with respect to the Trustee, any officer within the corporate trust department
of the Trustee, including any vice president, assistant vice president,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.
5
Restricted Definitive Note: The term "Restricted Definitive Note" means a
Definitive Note bearing the Private Placement Legend.
Restricted Global Note: The term "Restricted Global Note" shall mean a
permanent Global Note substantially in the form of Exhibit A attached hereto
that bears the Global Note Legend and that has the "Schedule of Exchanges of
Interests in the Global Note" attached thereto, and that is deposited with or on
behalf of and registered in the name of the Depositary, that bears the Private
Placement Legend.
Rule 144: The term "Rule 144" shall mean Rule 144 promulgated under the
Securities Act.
Rule 144A: The term "Rule 144A" shall mean Rule 144A promulgated under the
Securities Act.
Securities Act: The term "Securities Act" means the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
Securities Purchase Agreement: The term "Securities Purchase Agreement"
means that certain Securities Purchase Agreement, dated as of October 6, 2005,
among the Company and the parties listed on the Schedule of Buyers attached
thereto as Exhibit A, as such agreement may be amended from time to time.
Significant Subsidiary: The term "Significant Subsidiary" shall have the
meaning assigned to that term in Rule 1-02(w) of Regulation S-X promulgated
under the Securities Exchange Act of 1934, as amended.
Subsidiary: The term "Subsidiary" means a Person more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock or other interests (including partnership interests and limited liability
company units) which ordinarily has voting power for the election of directors,
managers, general partners, trustees or other persons holding similar powers
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.
Transaction Documents: The term "Transaction Documents" shall mean the
Securities Purchase Agreement, the Registration Rights Agreement, the Notes, the
Indenture and each of the other agreements entered into by the parties thereto
in connection with the transactions contemplated by the Securities Purchase
Agreement.
Trust Indenture Act: The term "Trust Indenture Act" shall mean the Trust
Indenture Act of 1939, as amended, as it was in force at the date of execution
of this Indenture, except as provided in Sections 11.3, 15.7 and 17.7; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after the
date hereof, the term "Trust Indenture Act" shall mean, to the extent required
by such amendment, the Trust Indenture Act of 1939 as so amended.
6
Trustee: The term "Trustee" shall mean Xxxxx Fargo Bank, National
Association and its successors and any entity resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee at the time serving as successor trustee hereunder.
Unrestricted Global Note: The term "Unrestricted Global Note" shall mean a
permanent Global Note substantially in the form of Exhibit A attached hereto
that bears the Global Note Legend and that has the "Schedule of Exchanges of
Interests in the Global Note" attached thereto, and that is deposited with or on
behalf of and registered in the name of the Depositary, that does not bear and
is not required to bear the Private Placement Legend.
Unrestricted Definitive Note: The term "Unrestricted Definitive Note" shall
mean one or more Definitive Notes that do not bear and are not required to bear
the Private Placement Legend.
Section 1.2 Other Definitions
Defined in
Term Section
---- ----------
"Additional Securities"............................................ 15.6(d)
"Additional Shares"................................................ 15.13
"Agent Members".................................................... 2.2(b)
"AMEX"............................................................. 16.3(f)
"Approval Date".................................................... 15.9
"Authentication Order"............................................. 2.1
"Automatic Conversion"............................................. 15.3
"Automatic Conversion Date"........................................ 15.3
"Automatic Conversion Notice"...................................... 15.3
"Cash Settlement Averaging Period"................................. 15.2
"Cash Settlement Notice Period".................................... 15.2
"Change in Control"................................................ 16.3(e)
"Closing Price".................................................... 15.6(e)(1)
"Company".......................................................... Preamble
"Company Conversion Provisional Payment"........................... 15.3
"Company Notice"................................................... 16.2(a)
"Continuing Director".............................................. 16.3(c)
"Conversion Date".................................................. 15.2
"Conversion Notice"................................................ 15.2
"Conversion Price"................................................. 15.5
"Conversion Revocation Period"..................................... 15.2
"Current Market Price"............................................. 15.6(e)(2)
"Default Interest"................................................. 2.3
"Effective Date"................................................... 15.13
"fair market value"................................................ 15.6(e)(3)
"Interest Payment Date"............................................ 2.3
"NASDAQ"........................................................... 16.3(f)
7
Defined in
Term Section
---- ----------
"NYSE"............................................................. 16.3(f)
"non-electing share"............................................... 15.7
"Note Register".................................................... 2.5(a)
"Note Registrar"................................................... 2.5(a)
"Notes"............................................................ Preamble
"record date"...................................................... 2.3
"Record Date"...................................................... 15.6(e)(4)
"Redemption Date".................................................. 3.2
"Reference Period"................................................. 15.6(d)
"Repurchase Date".................................................. 16.1
"Repurchase Event"................................................. 16.3(d)
"Repurchase Notice................................................. 16.2(b)
"Repurchase Price"................................................. 16.1
"Restricted Securities"............................................ 2.5(h)(i)
"Statutory Exchange"............................................... 15.7
"Stock Price"...................................................... 15.13
"Termination of Trading"........................................... 16.3(f)
"Trading Day"...................................................... 15.6(e)(5)
"Trigger Event".................................................... 15.6(d)
"Trustee".......................................................... Preamble
"Vice President"................................................... 2.1
"Voting Stock"..................................................... 16.3(e)
Section 1.3 Rules of Construction
All other terms used in this Indenture, which are defined in the Trust
Indenture Act or which are by reference therein defined in the Securities Act
(except as herein otherwise expressly provided or unless the context otherwise
requires) shall have the meanings assigned to such terms in the Trust Indenture
Act and in the Securities Act as in force at the date of the execution of this
Indenture. The words "herein," "hereof," "hereunder," and words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision. The terms defined in this Article I include the
plural as well as the singular. "Including" means "including, without
limitation." "Or" is not exclusive.
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
Section 2.1 Designation, Amount and Issue of Notes
The Notes shall be designated as "6% Convertible Senior Notes due 2025."
Notes not to exceed the aggregate principal amount outstanding of Twenty-Three
Million Seven Hundred and Fifty Thousand United States Dollars ($23,750,000)
upon the execution of this Indenture or (except
8
as provided in Section 2.6) from time to time thereafter, may be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Notes upon the written order of the
Company (the "Authentication Order"), signed by the Company's (a) President,
Chief Executive Officer, Executive or Senior Vice President or any Vice
President (each such, whether or not designated by a number or numbers or word
or words added before or after the title, a "Vice President") and (b) Chief
Financial Officer, Treasurer or Assistant Treasurer or its Secretary or any
Assistant Secretary, without any further action by the Company hereunder.
Section 2.2 Form of Notes
(a) Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Note Legend thereon and the
"Schedule of Exchanges of Interests in the Global Note" attached thereto), which
is incorporated in and made a part of this Indenture. Notes issued in definitive
form shall be substantially in the form of Exhibit A attached hereto (but
without the Global Note Legend thereon and without the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Each Global Note shall
represent such of the outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect purchases, conversions and
redemptions. Any endorsement of a Global Note to reflect the amount of any
decrease or increase in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Custodian, at the
direction of the Trustee, in accordance with instructions given by the holder
thereof as required by Section 2.5.
The Trustee's certificate of authentication to be borne by such Notes shall
be substantially in the form set forth in Exhibit A.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and 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
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
securities exchange or automated quotation system on which the Notes may be
listed or designated for issuance, or to conform to usage.
The terms and provisions contained in the form of Note attached as Exhibit
A hereto shall constitute, and are hereby expressly made, a part of this
Indenture and to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
(b) Members of, or Participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary or under any Global Note, and the Depositary
(including, for this purpose, its nominee) may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner and
holder of such Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing
9
herein shall (i) prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or (ii) impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a beneficial holder of any Note.
Section 2.3 Date and Denomination of Notes; Payments of Interest
The Notes shall be issuable in registered form without coupons in
denominations of One Thousand United States Dollars ($1,000) principal amount
and integral multiples thereof. Every Note shall be dated the date of its
authentication, and shall bear interest on the principal sum outstanding from
time to time under the Note, at the rate per annum specified in the title of the
form of Note attached as Exhibit A hereto, accrued from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance of the Note and payable semi-annually on April 15 and October 15 of
each year (each, an "Interest Payment Date"), commencing April 15, 2006, as
specified on the face of the form of Note attached as Exhibit A hereto. Each
payment of interest on the Notes shall include interest to, but excluding, the
date of such payment. Interest on the Notes shall be deemed to have commenced
accruing on October 7, 2005. Interest on the Notes shall be computed on the
basis of a 360-day year comprised of twelve 30-day months. Any accrued and
unpaid interest which is not paid within five (5) Business Days of the Interest
Payment Date on which such payment of interest was due shall bear interest at
the rate of 6% per annum from such Interest Payment Date until the same is paid
in full (or, if less, the maximum interest rate then permitted by applicable
law) (the "Default Interest").
The Person in whose name any Note, or portion thereof (or its Predecessor
Note) is registered at the close of business on any record date with respect to
any Interest Payment Date (including any Note that is converted after the record
date and on or before the Interest Payment Date) shall (except as otherwise
provided in Section 15.3 with respect to Automatic Conversions of Notes or
portions thereof) be entitled to receive the interest payable on such Interest
Payment Date notwithstanding the cancellation of such Note upon any transfer,
exchange, redemption or conversion subsequent to the record date and on or prior
to such Interest Payment Date. Interest may, at the option of the Company, be
paid by check mailed to the address of such Person on the Note Register;
provided that, with respect to any holder of Notes with an aggregate principal
amount equal to or in excess of Five Hundred Thousand United States Dollars
($500,000), interest on such holder's Notes shall be paid by wire transfer in
immediately available funds to any bank located in the United States in
accordance with the wire transfer instruction supplied by such holder from time
to time to the Trustee and paying agent (if different from Trustee) in writing
at least five (5) Business Days prior to the applicable record date. The term
"record date" with respect to any Interest Payment Date shall mean the 4th day
of the month in which the Interest Payment Date shall occur, whether or not such
date is a Business Day.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner plus, to the extent lawful, the
Default Interest, to the Persons who are holders on a subsequent special record
date. The Company shall promptly notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Note and the date of the proposed
payment. The Company shall fix or cause to be fixed each such special record
date and
10
payment date, provided that no such special record date shall be less than ten
(10) days prior to the related payment date for such defaulted interest. At
least fifteen (15) days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall send or cause to be sent to holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
Section 2.4 Execution of Notes
The Notes shall be signed in the name and on behalf of the Company by the
facsimile signature of its President, its Chief Executive Officer, or any of its
Vice Presidents, and attested by the facsimile signature of its Chief Financial
Officer, Treasurer or its Assistant Treasurer, or Secretary or any of its
Assistant Secretaries (which may be printed, engraved or otherwise reproduced
thereon, by facsimile or otherwise). Only such Notes as shall bear thereon a
certificate of authentication substantially in the form set forth on the form of
Note attached as Exhibit A hereto, manually executed by the Trustee (or an
authenticating agent appointed by the Trustee as provided by Section 17.10),
shall be entitled to the benefits of this Indenture or be valid or obligatory
for any purpose. Such certificate by the Trustee (or such authenticating agent)
upon any Note executed by the Company shall be conclusive evidence that the Note
so authenticated has been duly authenticated and delivered hereunder and that
the holder thereof is entitled to the benefits of this Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.5 Exchange and Registration of Transfer of Notes; Restrictions on
Transfer
(a) Note Register. The Company shall cause to be kept at the Corporate
Trust Office a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 5.2 being herein
sometimes collectively referred to as the "Note Register") in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Notes and of transfers of Notes. Such register shall be in
written form or in any form capable of being converted into written form within
a reasonable period of time. The Trustee is hereby appointed "Note Registrar"
for the purpose of registering Notes and transfers of Notes as herein provided.
The Company may appoint one or more co-registrars in accordance with Section
5.2.
(b) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes only if (i) the Company delivers to the Trustee
11
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names and in an aggregate principal amount equal to that of the Global
Notes so exchanged as the Depositary shall instruct the Trustee. Global Notes
also may be exchanged or replaced, in whole or in part, as provided in Sections
2.6 and 2.7. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof pursuant to Section 2.6 or 2.7 shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.5(b), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.5(c).
(c) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, if applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend. Beneficial
interests in any Unrestricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in the same
Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Note Registrar to effect the transfers
described in this Section 2.5(c)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.5(c)(i) above, the transferor
of such beneficial interest must deliver to the Note Registrar either (A)
(1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Note Registrar containing information regarding the
Person in whose name such
12
Definitive Note shall be registered to effect the transfer or exchange
referred to in (1) above. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Notes contained in
this Indenture and the Notes or otherwise applicable under the Securities
Act, the Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.5(l).
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.5(c)(ii) above and the Note
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit D hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit D hereto, including the
certifications and certificates and Opinion of Counsel required by
item (2)(b) thereof; and
(C) if the transferee is the Company or any of its Subsidiaries,
a certificate to the effect set forth in Exhibit D hereto, including
the certifications in item (2)(a) thereof.
(iv) Transfer or Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be transferred to a
Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note if the transfer complies with the requirements
of Section 2.5(c)(ii) above and the Note Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate from
such holder in the form of Exhibit E hereto, including the
certifications in item (1)(a) thereof; or
(B) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a beneficial interest
in an Unrestricted Global Note, a certificate from such holder in the
form of Exhibit D hereto, including one of the certifications in item
(3) thereof;
and, in each case set forth above (other than a transfer pursuant to
an effective registration statement), if the Note Registrar so
requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Note Registrar to the
effect that such exchange or transfer is in compliance with the
13
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) above at a
time when an Unrestricted Global Note has not yet been issued, the Company shall
issue and, upon receipt of an Authentication Order in accordance with Section
2.1, the Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the aggregate principal amount of beneficial
interests transferred pursuant to subparagraph (B) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(d) Transferor Exchange of Beneficial Interests for Definitive Notes.
Beneficial interests in Global Notes may only be exchanged for Definitive Notes
upon satisfaction of the conditions contained in Section 2.5(b). If a beneficial
owner requests, in accordance with the Applicable Procedures, that such
beneficial owner's beneficial interest be transferred in connection with such an
exchange, or that such beneficial owner's beneficial interest be exchanged for
an Unrestricted Definitive Note or Notes, then such request shall also be
subject to the applicable requirements of this Section 2.5(d).
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If a holder of a beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Restricted Definitive
Note, then, upon receipt by the Note Registrar of the following
documentation:
(A) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit D hereto,
including the certifications in item (1) thereof;
(B) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than that listed in subparagraph (B) above, a certificate to the
effect set forth in Exhibit D hereto, including the
certifications, certificates and Opinions of Counsel required by
item (2)(b) thereof, as applicable; or
(C) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit D hereto, including the certifications in
item (2)(a) thereof;
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.5(l), and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a
14
beneficial interest in a Restricted Global Note pursuant to this Section
2.5(d) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest
shall instruct the Note Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.5(d)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or Notes or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note only if the Note Registrar receives the
following:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for an Unrestricted Definitive Note or Notes, a
certificate from such holder in the form of Exhibit E hereto,
including the certifications in item (1)(b) thereof; or
(B) if the holder of such beneficial interest in a
Restricted Global Notes proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of an Unrestricted Definitive Note, a certificate from such
holder in the form of Exhibit D hereto, including the one of the
certifications in item (3) thereof;
and, in each case set forth above (other than a transfer pursuant to
an effective registration statement), if the Note Registrar so
requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Note Registrar to the
effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note, then, upon satisfaction of the
conditions set forth in Section 2.5(c)(ii), the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be
reduced accordingly pursuant to Section 2.5(l), and the Company shall
execute and the Trustee shall authenticate and deliver to the Person
designated in the instructions an Unrestricted Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.5(d)(iii) shall
be registered in such name or names and in such authorized
denomination or denominations as the holder of such
15
beneficial interest shall instruct the Note Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Unrestricted Definitive
Notes to the Persons in whose names such Notes are so registered. Any
Unrestricted Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.5(d)(iii) shall not bear the
Private Placement Legend.
(e) [Reserved.]
(f) Transfer and Exchange of Definitive Notes. Upon request by a holder of
Definitive Notes and such holder's compliance with the provisions of this
Section 2.5(f), the Note Registrar shall register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or exchange, the
requesting holder shall present or surrender to the Note Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Note Registrar duly executed by such holder
or by its attorney, duly authorized in writing. In addition, the requesting
holder shall provide any additional certifications, documents and information,
as applicable, required pursuant to the following provisions of this Section
2.5(f).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Note Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit D hereto, including the certifications in item (1)
thereof; and
(B) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit D hereto,
including the certifications, certificates and Opinion of Counsel
required by item (2) thereof, as applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) any such transfer is effected pursuant to a registration
statement filed in accordance with the Registration Rights Agreement;
or
(B) the Note Registrar receives the following:
(1) if the holder of such Restricted Definitive Note
proposes to exchange such Note for an Unrestricted Definitive
Note, a certificate from such holder in the form of Exhibit E
hereto, including the certifications in item (1)(d) thereof; or
16
(2) if the holder of such Restricted Definitive Note
proposes to transfer such Note to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note,
a certificate from such holder in the form of Exhibit D hereto,
including the certifications in item (3) thereof, as applicable;
and, in each such case set forth in this subparagraph (B), if the Note
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes.
A holder of Unrestricted Definitive Notes may transfer such Notes to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note. Upon receipt of a request to register such a transfer, the Note
Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the holder thereof.
(g) General Provisions Relating to Transfers and Exchanges. Upon surrender
for registration of transfer of any Note to the Note Registrar or any
co-registrar, and satisfaction of the requirements for such transfer set forth
in this Section 2.5, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a like
aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
No service charge shall be charged to the Noteholder for any exchange or
registration of transfer of Notes, but the Company may require payment of a sum
sufficient to cover any tax, assessments or other governmental charges that may
be imposed in connection therewith.
None of the Company, the Trustee, the Note Registrar or any co-registrar
shall be required to exchange or register a transfer of (a) any Notes for a
period of fifteen (15) days next preceding the sending of any notice of
redemption or (b) any Notes called for redemption or, if a portion of any Note
is selected or called for redemption, such portion thereof selected or called
for redemption or (c) any Notes surrendered for conversion or, if a portion of
any Note is surrendered for conversion, such portion thereof surrendered for
conversion or (d) any Notes, or a portion of any Note, surrendered for
repurchase (and not withdrawn) in connection with a Repurchase Event or (e) any
Notes, or a portion of any Note, surrendered for repurchase (and not withdrawn)
in connection with a Repurchase Date.
All Notes issued upon any transfer or exchange of Notes in accordance with
this Indenture shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture as the Notes
surrendered upon such registration of transfer or exchange.
Prior to due presentment for the registration of a transfer of any Note,
the Trustee, any agent and the Company may deem and treat the Person in whose
name any Note is registered as the absolute owner of such Note for the purpose
of receiving payment of principal of and interest on
17
such Notes and for all other purposes, and none of the Trustee, any agent or the
Company shall be affected by notice to the contrary.
The Trustee shall authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.1.
(h) Legends.
(i) Private Placement Legend on the Notes. Every Note that bears or is
required under this Section 2.5(h)(i) to bear the legend set forth in this
Section 2.5(h)(i) (together with any Common Stock issued upon conversion of
the Notes and required to bear the legend set forth in Section 2.5(h)(ii),
collectively, the "Restricted Securities") shall be subject to the
restrictions on transfer set forth in this Section 2.5(h)(i) (including the
legend set forth below), unless such restrictions on transfer shall be
waived by written consent of the Company, and the holder of each such
Restricted Security, by such holder's acceptance thereof, agrees to be
bound by all such restrictions on transfer. As used in Sections 2.5(h)(i)
and 2.5(h)(ii), the term "transfer" encompasses any sale, transfer or other
disposition (excluding any pledge unless or until any foreclosure on such
pledge) whatsoever of any Restricted Security.
Subject to Section 5 of the Securities Purchase Agreement, until two
(2) years after the original issuance date of any Note, any certificate
evidencing such Note (and all securities issued in exchange therefor or
substitution thereof, other than Common Stock, if any, issued upon
conversion thereof which shall bear the legend set forth in Section
2.5(h)(ii), if applicable) shall bear a legend in substantially the
following form (unless such Note has been transferred pursuant to a
registration statement that has been declared effective under the
Securities Act (and which continues to be effective at the time of such
transfer), or the Note has been transferred pursuant to the exemption from
registration provided by Rule 144 under the Securities Act, or unless
otherwise agreed by the Company in writing, with notice thereof to the
Trustee):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM.
Any Note (or security issued in exchange or substitution therefor) as
to which such restrictions on transfer shall have expired in accordance
with their terms may, upon surrender of such Note for exchange to the Note
Registrar in accordance with the provisions of this Section 2.5, be
exchanged for a new Note or Notes, of like tenor and aggregate principal
amount, which shall not bear the restrictive legend required by this
Section 2.5(h)(i).
18
(ii) Private Placement Legend on Stock Certificate. Until two (2)
years after the original issuance date of any Note, any stock certificate
representing Common Stock issued upon conversion of such Note shall bear a
legend in substantially the following form (unless such Common Stock has
been transferred pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be
effective at the time of such transfer), or the Notes from which such
Common Stock was converted were transferred pursuant to a registration
statement that has been declared effective under the Securities Act and
which was effective at the time of such transfer, or the Common Stock has
been transferred pursuant to an exemption from registration provided by
Rule 144 under the Securities Act, or unless otherwise agreed by the
Company in writing with written notice thereof to the Trustee and any
transfer agent for the Common Stock):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM.
Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms may, upon surrender of the
certificates representing such shares of Common Stock for exchange in
accordance with the procedures of the transfer agent for the Common Stock,
be exchanged for a new certificate or certificates for a like aggregate
number of shares of Common Stock, which shall not bear the restrictive
legend required by this Section 2.5(h)(ii).
(iii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE 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.
(i) Resale of Notes Purchased by the Company or an Affiliate. Any Note or
Common Stock issued upon the conversion or exchange of a Note that, prior to the
expiration of the holding
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period applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor rule), is purchased or owned by the Company or any Affiliate
thereof may not be resold by the Company or such Affiliate unless registered
under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction that results in
such Notes or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).
(j) Changes in Law. Notwithstanding any provision of Section 2.5 to the
contrary, in the event Rule 144(k) as promulgated under the Securities Act (or
any successor rule) is amended to change the two-year period under Rule 144(k)
(or the corresponding period under any successor rule), from and after receipt
by the Trustee of the Officer's Certificate and Opinion of Counsel provided for
in this Section 2.5(j), (i) each reference in Section 2.5(h)(i) to "two (2)
years" shall be deemed for all purposes hereof to be references to such changed
period, (ii) each reference in Section 2.5(h)(ii) to "two (2) years" shall be
deemed for all purposes hereof to be references to such changed period and (iii)
all corresponding references in the Notes shall be deemed for all purposes
hereof to be references to such changed period, provided that such changes shall
not become effective if they are otherwise prohibited by, or would otherwise
cause a violation of, the then-applicable federal securities laws. As soon as
practicable after the Company has knowledge of the effectiveness of any such
amendment to change the two-year period under Rule 144(k) (or the corresponding
period under any successor rule), unless such changes would otherwise be
prohibited by, or would otherwise cause a violation of, the then-applicable
securities law, the Company shall provide to the Trustee an Officer's
Certificate and Opinion of Counsel informing the Trustee of the effectiveness of
such amendment and the effectiveness of the foregoing changes to Sections
2.5(h)(i) and 2.5(h)(ii) and the Notes. The provisions of this Section 2.5(j)
will not be effective until such time as the Opinion of Counsel and Officer's
Certificate have been received by the Trustee hereunder. This Section 2.5(j)
shall apply to successive amendments to Rule 144(k) (or any successor rule)
changing the holding period thereunder.
(k) Limitation on Trustee's Duties. The Trustee shall have no obligation or
duty to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any 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 Indenture, and
to examine the same to determine substantial compliance as to form with the
express requirements hereof.
(l) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.8. At any time
prior to such cancellation, if any beneficial interest in a Global Note is
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note or for Definitive Notes,
the principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a Person
who will take delivery thereof in the form
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of a beneficial interest in another Global Note, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note by
the Trustee or by the Depositary at the direction of the Trustee to reflect such
increase.
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes
In case any Note shall become mutilated or be destroyed, lost or stolen,
the Company in its discretion may execute, and upon its request the Trustee or
an authenticating agent appointed by the Trustee shall authenticate and deliver,
a new Note, bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Note, or in lieu of and in substitution for the
Note so destroyed, lost or stolen. In every case the applicant for a substituted
Note shall furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent such security or indemnity as reasonably required by them
to save each of them harmless for any loss, liability, cost or expense caused by
or connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent evidence to their reasonable
satisfaction of the destruction, loss or theft of such Note and of the ownership
thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may reasonably require. Upon the issuance of any substituted Note, the
Company may require the payment by the holder of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith. Once any substitute Note has been issued
pursuant to this Section 2.6, the original Note being replaced by such
substitute Note shall automatically be deemed canceled. In case any Note which
has matured or is about to mature or has been called for redemption or is about
to be converted into Common Stock shall become mutilated or be destroyed, lost
or stolen, the Company may, instead of issuing a substitute Note, pay or
authorize the payment of or convert or authorize the conversion of the same
(without surrender thereof except in the case of a mutilated Note), as the case
may be, if the applicant for such payment or conversion shall furnish to the
Company, to the Trustee and, if applicable, to such authenticating agent such
security or indemnity as may be reasonably required by them to save each of them
harmless for any loss, liability, cost or expense caused by or connected with
such substitution, and, in case of destruction, loss or theft, evidence
reasonably satisfactory to the Company, the Trustee and, if applicable, any
paying agent or conversion agent of the destruction, loss or theft of such Note
and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section 2.6
by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the
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replacement or payment or conversion of negotiable instruments or other
securities without their surrender.
Section 2.7 Temporary Notes
Pending the preparation of definitive Notes, the Company may execute and
the Trustee or an authenticating agent appointed by the Trustee shall, upon
written request of the Company, authenticate and deliver temporary Notes
(printed or lithographed). Temporary Notes shall be issuable in any authorized
denomination, and substantially in the form of the Global Notes or the
Definitive Notes, as the case may be, but with such omissions, insertions and
variations as may be appropriate for temporary Notes, all as may be determined
by the Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the Definitive Notes or Global Notes. Without unreasonable delay the Company
will execute and deliver to the Trustee or such authenticating agent Definitive
Notes and Global Notes and thereupon any or all temporary Notes may be
surrendered in exchange for the applicable replacement Note, at each office or
agency maintained by the Company pursuant to Section 5.2 and the Trustee or such
authenticating agent shall authenticate and deliver in exchange for such
temporary Notes an equal aggregate principal amount of Definitive Notes or
Global Notes, as the case may be. Such exchange shall be made by the Company at
its own expense and without any charge therefor. Until so exchanged, the
temporary Notes shall in all respects be entitled to the same benefits and
subject to the same limitations under this Indenture as Definitive Notes or
Global Notes, as the case may be, authenticated and delivered hereunder.
Section 2.8 Cancellation of Notes Paid, Etc.
All Notes surrendered for the purpose of payment, redemption, repurchase,
conversion, exchange or registration of transfer, shall, if surrendered to the
Company or any paying agent or any Note Registrar or any conversion agent, be
surrendered to the Trustee and promptly canceled by it, or, if surrendered to
the Trustee, shall be promptly canceled by it, and no Notes shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Indenture. Upon written instructions of the Company, the Trustee shall dispose
of canceled Notes in accordance with its customary procedures. If the Company
shall acquire any of the Notes, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes unless
and until the same are delivered to the Trustee for cancellation.
Section 2.9 CUSIP Numbers
The Company in issuing the Notes shall use "CUSIP" numbers and the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.
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Section 2.10 Calculation of Original Issue Discount
The Company shall file with the Trustee promptly at the end of each
calendar year (i) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on the Notes as of
the end of such year and (ii) such other specific information relating to such
original issue discount as may then be relevant under the Internal Revenue Code
of 1986, as amended from time to time.
ARTICLE III
OPTIONAL REDEMPTION OF NOTES
Section 3.1 Redemption Price
From and after October 20, 2008 the Company may, at its option, redeem all
or any part of the Notes, upon notice as set forth in Section 3.2, and the
Company shall pay each holder of Notes redeemed a redemption price equal to the
principal amount of such Notes, plus accrued and unpaid interest thereon, if
any, to, but excluding, the date of redemption (subject to the provisions of the
first paragraph of Section 3.3); provided that, to the extent that the
Registration Statement is required by the terms of the Registration Rights
Agreement to remain effective as of the date that notice of redemption is
provided in accordance with Section 3.2, the Registration Statement is effective
and available during the 30 day period prior to the giving of such notice and at
all times from the date of such notice until the earlier of 30 days following
the redemption date or the last date on which the Registration Statement is
required to remain effective. The Company may only elect to redeem all or any
part of the Notes if it has, as of the date of the notice of redemption required
by Section 3.2, sufficient shares of Common Stock authorized and available for
issuance to enable the holders of all of the Notes (or parts thereof) called for
redemption to convert such Notes (or parts thereof) into Common Stock pursuant
to Section 15.1.
Section 3.2 Notice of Redemption; Selection of Notes
In case the Company shall desire to exercise the right to redeem all or, as
the case may be, any part of the Notes pursuant to Section 3.1, it shall fix a
date for redemption, and it, or at its request (which must be received by the
Trustee at least ten (10) Business Days prior to the date the Trustee is
requested to give notice as described below unless a shorter period is agreed to
by the Trustee), the Trustee in the name of and at the expense of the Company,
shall send or cause to be sent a notice of such redemption at least twenty (20)
and not more than ninety (90) days prior to the date fixed for redemption (the
"Redemption Date") to the holders of Notes so to be redeemed as a whole or in
part at their last addresses as the same appear on the Note Register (provided
that if the Company shall give such notice, it shall also give such notice, and
notice of the aggregate amount of Notes to be redeemed, to the Trustee). Such
notice shall be irrevocable. The notice if sent in the manner herein provided
shall be conclusively presumed to have been duly given, whether or not the
holder receives such notice. In any case, failure to give such notice or any
defect in the notice to the holder of any Note designated for redemption as a
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Note.
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Each such notice of redemption shall specify the aggregate principal amount
of Notes to be redeemed, the "CUSIP" number or numbers of such Notes, the
Redemption Date, the redemption price at which Notes are to be redeemed, the
place or places of payment, that payment will be made upon presentation and
surrender of such Notes, that interest accrued to, but excluding, the Redemption
Date will be paid as specified in said notice, and that on and after said date
interest thereon or on the portion thereof to be redeemed will cease to accrue.
Such notice shall also state the current Conversion Price and the date on which
the right to convert such Notes or portions thereof into Common Stock will
expire, which shall be the close of business on the last Business Day prior to
the Redemption Date. If fewer than all the Notes are to be redeemed, the notice
of redemption shall identify the Notes to be redeemed. In case any Note is to be
redeemed in part only, the notice of redemption shall state the portion of the
principal amount thereof to be redeemed and shall state that on and after the
Redemption Date, upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion thereof will be issued.
On or prior to the Redemption Date, the Company will deposit with the
Trustee or with one or more paying agents (or, if the Company is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
5.4) an amount of money sufficient to redeem on the Redemption Date all the
Notes (or portions thereof) so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued interest to, but excluding, the
Redemption Date; provided that if such deposit is made on the Redemption Date it
must be received by the Trustee or paying agent, as the case may be, by 1:00
p.m. Minneapolis time, on such date. If any Note called for redemption is
converted pursuant hereto, any money deposited with the Trustee or any paying
agent or so segregated and held in trust for the redemption of such Note shall
be paid to the Company upon its request, or, if then held by the Company shall
be discharged from such trust.
If fewer than all the Notes are to be redeemed, the Company will give the
Trustee written notice in the form of an Officer's Certificate not fewer than
forty-five (45) days (or such shorter period of time as may be acceptable to the
Trustee) prior to the Redemption Date as to the aggregate principal amount of
Notes to be redeemed, and the Company, or at its request, the Trustee in the
name of and at the expense of the Company, shall give the holders at least
twenty (20) days' notice in advance of the Redemption Date as to the aggregate
principal amount of Notes to be redeemed. If fewer than all the Notes are to be
redeemed, the Trustee, subject to any applicable rules of the Depositary, shall
select the Notes or portions thereof to be redeemed (in principal amounts of One
Thousand United States Dollars ($1,000) or integral multiples thereof), on a pro
rata basis, by lot or by any other method that the Trustee considers fair and
appropriate. If any Note selected for partial redemption is converted in part
after such selection, the converted portion of such Note shall be deemed (so far
as is possible) to be the portion to be selected for redemption. The Notes (or
portions thereof) so selected shall be deemed duly selected for redemption for
all purposes hereof, notwithstanding that any such Note is converted as a whole
or in part before the sending of the notice of redemption.
Upon any redemption of less than all Notes, the Company and the Trustee may
(but need not) treat as outstanding any Notes surrendered for conversion during
the period of fifteen (15) days next preceding the sending of a notice of
redemption and may (but need not) treat as not outstanding any
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Note authenticated and delivered during such period in exchange for the
unconverted portion of any Note converted in part during such period.
Section 3.3 Payment of Notes Called for Redemption
If notice of redemption has been given as above provided, the Notes or
portion of Notes with respect to which such notice has been given shall, unless
converted into Common Stock pursuant to the terms hereof, become due and payable
on the date and at the place or places stated in such notice at the applicable
redemption price, and interest accrued to, but excluding, the Redemption Date,
and on and after said date (unless the Company shall default in the deposit of
the amount of money sufficient to redeem such Notes) interest on the Notes or
portion of Notes so called for redemption shall cease to accrue and such Notes
shall cease at the close of business on the last Business Day prior to the
Redemption Date to be convertible into Common Stock and, except as provided in
Sections 8.5 and 13.4, to be entitled to any benefit or security under this
Indenture, and the holders thereof shall have no right in respect of such Notes
except the right to receive the redemption price thereof and unpaid interest to,
but excluding, the Redemption Date. On presentation and surrender of such Notes
at a place of payment specified in said notice, the said Notes or the specified
portions thereof to be redeemed shall be paid and redeemed by the Company at the
applicable redemption price and interest accrued thereon to, but excluding, the
Redemption Date; provided that, if the applicable Redemption Date falls after
the record date for an Interest Payment Date and before the relevant Interest
Payment Date, the semi-annual payment of interest becoming due on such Interest
Payment Date shall be paid to the holders of such Notes registered as such on
the relevant record date in the manner provided in Section 2.3 and shall not be
paid to the holders surrendering the Notes when they do so.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the holder thereof, at
the expense of the Company, a new Note or Notes, of authorized denominations, in
principal amount equal to the unredeemed portion of the Notes so presented.
Notwithstanding the foregoing, the Company shall not redeem any Notes or
send any notice of optional redemption during the continuance of a default in
payment of interest or premium on the Notes or of any Event of Default.
Section 3.4 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 not converted prior to the expiration of
such conversion right 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 Noteholders, on or before the Redemption Date, an amount not less than the
applicable redemption price and interest accrued to the Redemption Date, of such
Notes. Notwithstanding anything to the contrary contained in this Article III,
the obligation of the Company to pay the redemption price of such Notes and
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
to such Noteholders. If such an agreement is entered into, a copy of which,
25
certified as true and correct by the Secretary or Assistant Secretary of the
Company will 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 XV) 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 written
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.
ARTICLE IV
[RESERVED]
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 Payment of Principal, Premium and Interest
The Company covenants and agrees that it will duly and punctually pay or
cause to be paid the principal of and premium, if any, and interest on each of
the Notes at the places, at the respective times and in the manner provided
herein and in the Notes. Liquidated Damages paid pursuant to Section 15.2, if
any, shall be paid within ten (10) Business Days after the end of each month
with respect to which such liquidated damages have accrued pursuant to Section
15.2 in the same manner as interest is paid pursuant to Section 2.3. Liquidated
Damages on the Notes paid pursuant to Section 2(f) of the Registration Rights
Agreement, if any, shall be paid at the times and in the manner provided
therein. All payments shall be considered made on the date due if on such date
the Company has deposited (in the manner provided in Sections 3.2 and 5.4(a))
with the Trustee or with one or more paying agents (or, if the Company is acting
as its own paying agent, has set aside, segregated and is holding in trust as
provided in Section 5.4) an amount of money sufficient to make such payment.
Section 5.2 Maintenance of Office or Agency
The Company will maintain in Minneapolis, Minnesota, an office or agency
where the Notes may be presented for registration of transfer or exchange or for
presentation for payment or for conversion, redemption or repurchase and where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served, which may be an office of the Trustee. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency not designated or appointed by the Trustee.
If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
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The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in Minneapolis, Minnesota, for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the Trustee as paying agent, Note
Registrar, Custodian and conversion agent and the office or agency of the
Trustee in Minneapolis, Minnesota (which initially shall be the Corporate Trust
Office of the Trustee), as one such office or agency of the Company for each of
the aforesaid purposes.
So long as the Trustee is the Note Registrar, the Trustee agrees to send,
or cause to be sent, the notices set forth in Section 8.10(a) and the third
paragraph of Section 8.11.
Section 5.3 Appointments to Fill Vacancies in Trustee's Office The Company,
whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 8.10, a Trustee, so that there shall
at all times be a Trustee hereunder.
Section 5.4 Provisions as to Paying Agent
(a) If the Company shall appoint a paying agent other than the Trustee or
if the Trustee shall appoint such a paying agent, it will cause such paying
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 5.4:
(1) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, or interest (including
Liquidated Damages, if any) on the Notes (whether such sums have been paid
to it by the Company or by any other Person) in trust for the benefit of
the holders of the Notes;
(2) that it will give the Trustee notice of any failure by the Company
(or by any other Person) to make any payment of the principal of and
premium, if any, or interest (including Liquidated Damages, if any) on the
Notes when the same shall be due and payable; and
(3) that at any time during the continuance of an Event of Default,
upon request of the Trustee, it will forthwith pay to the Trustee all sums
so held in trust.
The Company shall, on or before each due date of the principal of, premium,
if any, or interest on the Notes, deposit with the paying agent a sum sufficient
to pay such principal, premium, if any, or interest, and (unless such paying
agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action, provided that if such deposit is made on the due
date, such deposit must be received by the paying agent by 10:00 a.m.,
Minneapolis time, on such date.
27
(b) If the Company shall act as its own paying agent, it will, on or before
each due date of the principal of, premium, if any, or interest (including
Liquidated Damages, if any) on the Notes, set aside, segregate and hold in trust
for the benefit of the holders of the Notes a sum sufficient to pay such
principal, premium, if any, or interest (including Liquidated Damages, if any)
so becoming due and will notify the Trustee of any failure to take such action
and of any failure by the Company (or any other Person) to make any payment of
the principal of, premium, if any, or interest (including Liquidated Damages, if
any) on the Notes when the same shall become due and payable.
(c) Anything in this Section 5.4 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any paying agent hereunder
as required by this Section 5.4, such sums to be held by the Trustee upon the
trusts herein contained and upon such payment by the Company or any paying agent
to the Trustee, the Company or such paying agent shall be released from all
further liability with respect to such sums.
(d) Anything in this Section 5.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 5.4 is subject to
Sections 13.3 and 13.4.
Section 5.5 Existence
Subject to Article XII, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence.
Section 5.6 Information Requirement
Within the period prior to the expiration of the holding period applicable
to sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), the Company covenants and agrees that it shall, during any period in
which it is not subject to Section 13 or 15(d) under the Exchange Act, make
available to any holder or beneficial holder of Notes which continue to be
Restricted Securities, in connection with any sale thereof and any prospective
purchaser of Notes from such holder or beneficial holder, the information
required pursuant to Rule 144A(d)(4) under the Securities Act upon the request
of any holder or beneficial holder of the Notes and it will take such further
action as any holder or beneficial holder of such Notes may reasonably request
in connection with qualification of such sale for exemption from registration
under Rule 144A.
Section 5.7 Stay, Extension and Usury Laws
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Notes as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law has been enacted.
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Section 5.8 Compliance Certificate
The Company shall deliver to the Trustee within one hundred twenty (120)
days after the end of each fiscal year of the Company (beginning with the fiscal
year ending on December 31, 2005) an Officer's Certificate, signed by the
principal executive, principal financial officer or principal accounting officer
of the Company, stating whether or not the signers know of any default or Event
of Default that occurred during such period. Such Officer's Certificate shall
describe in reasonable detail the default or Event of Default, if any, and its
status.
Section 5.9 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 Indenture.
Section 5.10 Notice of Certain Events
(a) The Company will promptly notify the Trustee as soon as practicable
when the Notes are listed on any stock exchange or automated quotation system
and when any such listing is discontinued.
(b) The Company shall deliver to the Trustee, as soon as possible and in
any event within three (3) Business Days after the Company becomes aware of the
occurrence of any Event of Default or any event which, with notice or the lapse
of time or both, would constitute an Event of Default, an Officer's Certificate
setting forth the details of such Event of Default or event and the action which
the Company proposes to take with respect thereto.
Section 5.11 Limitation on Indebtedness
Unless and until the aggregate principal amount of Notes outstanding is
less than $5 million, the Company shall not, directly or indirectly, create,
incur, issue, assume, guaranty or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness that is senior to or on a par with the Notes in an aggregate
principal amount outstanding in excess of $12 million, without the prior consent
of holders of a majority in aggregate principal amount of the Notes then
outstanding. The foregoing limitation shall not apply to (i) the incurrence by
the Company of Indebtedness represented by mortgage financings or purchase money
obligations, in each case incurred for the purpose of financing all or any part
of the purchase price or cost of construction or improvement of property used in
the business of the Company, or (ii) the incurrence by the Company of
Indebtedness represented by the Notes. For the purposes of this Section 5.11,
the term "Indebtedness" shall mean any indebtedness of the Company in respect of
borrowed money, whether or not contingent and whether or not evidenced by bonds,
notes, debentures or similar instruments.
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ARTICLE VI
NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
Section 6.1 Noteholders Lists
The Company covenants and agrees that it will furnish or cause to be
furnished to the Trustee, semi-annually, not more than fifteen (15) days after
each April 1 and October 1 in each year beginning with April 1, 2006 and at such
other times as the Trustee may request in writing, within thirty (30) days after
receipt by the Company of any such request (or such lesser time as the Trustee
may reasonably request in order to enable it to timely provide any notice to be
provided by it hereunder), a list in such form as the Trustee may reasonably
require of the names and addresses of the holders of Notes as of a date not more
than fifteen (15) days (or such other date as the Trustee may reasonably request
in order to so provide any such notices) prior to the time such information is
furnished, except that no such list need be furnished so long as the Trustee is
acting as Note Registrar.
Section 6.2 Preservation and Disclosure of Lists
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of
Notes contained in the most recent list furnished to it as provided in Section
6.1 or maintained by the Trustee in its capacity as Note Registrar, if so
acting. If the Trustee is not the Note Registrar, the Trustee may destroy any
list furnished to it as provided in Section 6.1 upon receipt of a new list so
furnished.
(b) The rights of Noteholders to communicate with other holders of Notes
with respect to their rights under this Indenture or under the Notes and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any agent
of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of holders of Notes made pursuant to the
Trust Indenture Act.
Section 6.3 Reports by Trustee
(a) After this Indenture has been qualified under the Trust Indenture Act,
the Trustee shall transmit to holders of Notes such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
sixty (60) days after each May 15 following the date of this Indenture deliver
to holders a brief report, dated as of such May 15, which complies with the
provisions of such Section 313(a).
(b) A copy of such report shall, at the time of such transmission to
holders of Notes, be filed by the Trustee with each stock exchange and automated
quotation system upon which the Notes are listed, if any, and with the Company.
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Section 6.4 Reports by Company
(a) After this Indenture has been qualified under the Trust Indenture Act,
the Company shall notify the Trustee and shall file with the Trustee and the
Commission, and transmit to holders of Notes, such information, documents and
other reports and such summaries thereof, as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant to such
Act; provided that any such information, documents or reports required to be
filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Trustee within fifteen (15) days after the same is so
required to be filed with the Commission.
(b) During any period in which the Company is not subject to Section 13 or
15(d) under the Exchange Act, the Company will deliver to the Trustee (a) as
soon as available and in any event within ninety (90) days after the end of each
fiscal year of the Company (i) a consolidated balance sheet of the Company and
its Subsidiaries as of the end of such fiscal year and the related consolidated
statements of operations, shareholders' equity and cash flows for such fiscal
year, all reported on by an independent public accountant of nationally
recognized standing and (ii) a report containing a management's discussion and
analysis of the financial condition and results of operations and a description
of the business and properties of the Company and (b) as soon as available and
in any event within forty-five (45) days after the end of each of the first
three quarters of each fiscal year of the Company (i) an unaudited consolidated
balance sheet of the Company and its Subsidiaries as of the end of such fiscal
quarter and the related consolidated statements of operations, shareholders'
equity and cash flows for such fiscal quarter and (ii) a report containing a
management's discussion and analysis of the financial condition and results of
operations of the Company for such quarter; provided that the foregoing
statements and reports shall not be required for any fiscal year or quarter, as
the case may be, with respect to which the Company files or expects to file with
the Trustee an annual report or quarterly report, as the case may be, pursuant
to the preceding paragraph of this Section 6.4.
(c) Delivery of reports, information and documents to the Trustee pursuant
to Sections 6.4(a) and (b) is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officer's Certificates).
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.1 Events of Default
In case one or more of the following Events of Default (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body) shall have occurred and be continuing:
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(a) the Company shall default in the payment when due of (i) any
installment of interest or Liquidated Damages as provided in Section 15.2
upon any of the Notes, and such default shall continue for thirty (30)
calendar days after the due date thereof, (ii) the principal of and premium
(including, without limitation the Company Conversion Provisional Payment),
if any, on any of the Notes either at maturity or in connection with any
conversion or redemption, by declaration or otherwise, or (iii) the
Repurchase Price in respect of any Note on the Repurchase Date therefor in
accordance with the provisions of Article XVI; or
(b) failure on the part of the Company duly to observe or perform any
other of the covenants on the part of the Company in the Notes or in this
Indenture (other than default in performance of a covenant that is
specifically dealt with elsewhere in this Section) including, without
limitation, failure on the part of the Company to provide a written notice
of a Repurchase Event in accordance with Section 16.2, and in any such case
the continuance of such failure for a period of thirty (30) days after the
date on which written notice of such failure, specifying such default and
requiring the Company to remedy the same, and stating that such notice is a
"Notice of Default" hereunder, shall have been given to the Company by the
Trustee, or to the Company and a Responsible Officer of the Trustee by the
holders of not less than 20% in aggregate principal amount of the Notes at
the time outstanding determined in accordance with Section 9.4; or
(c) failure on the part of the Company or any Significant Subsidiary
to make any payment at maturity, including any applicable grace period, in
respect of indebtedness of, or guaranteed or assumed by, the Company or any
Significant Subsidiary, in a principal amount then outstanding in excess of
Five Million United States Dollars ($5,000,000), and the continuance of
such failure for a period of fifteen (15) days after there shall have been
given, by registered or certified mail, to the Company by the Trustee
(provided, however, that the Trustee will not be deemed to have knowledge
of such nonpayment unless either (1) a Responsible Officer of the Trustee
has actual knowledge of such nonpayment or (2) the Trustee has received
written notice thereof from the Company, from any holder of the Notes, from
the holder of any such indebtedness or from the trustee under the agreement
or instrument relating to such indebtedness) or to the Company and a
Responsible Officer of the Trustee by the holders of not less than 20% in
aggregate principal amount of the Notes then outstanding, a written notice
specifying such default and requiring the Company to cause such default to
be cured or waived and stating that such notice is a "Notice of Default"
hereunder; or
(d) default on the part of the Company or any Significant Subsidiary
with respect to any Indebtedness of, or guaranteed or assumed by, the
Company or any Significant Subsidiary, which default results in the
acceleration of indebtedness in a principal amount then outstanding in
excess of Five Million United States Dollars ($5,000,000), and such
indebtedness shall not have been discharged or such acceleration shall not
have been rescinded or annulled for a period of fifteen (15) days after
there shall have been given, by registered or certified mail, to the
Company by the Trustee (provided, however, that the Trustee will not be
deemed to have knowledge of such default unless either (1) a Responsible
Officer of the Trustee has actual knowledge of such default or (2) the
Trustee has received
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written notice thereof from the Company, from any holder of the Notes, from
the holder of any such Indebtedness or from the trustee under the agreement
or instrument relating to such Indebtedness) or to the Company and a
Responsible Officer of the Trustee by the holders of not less than 20% in
aggregate principal amount of the Notes then outstanding, a written notice
specifying such default and requiring the Company to cause such
indebtedness to be discharged or cause such default to be cured or waived
or such acceleration to be rescinded or annulled and stating that such
notice is a "Notice of Default" hereunder; or
(e) the Company or any Significant Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due; or
(f) an involuntary case or other proceeding shall be commenced against
the Company or any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of sixty (60) consecutive days.
then, and in each and every such case (other than an Event of Default
specified in Section 7.1(e) or (f) with respect to the Company), unless the
principal of all of the Notes shall have already become due and payable,
and unless the Event of Default shall have been waived in writing in
accordance with the provisions of Section 7.7, either the Trustee or the
holders of not less than 20% in aggregate principal amount of the Notes
then outstanding hereunder determined in accordance with Section 9.4, by
notice in writing to the Company (and to the Trustee if given by
Noteholders), may declare the principal of and premium, if any, on all the
Notes and the interest accrued thereon (including Liquidated Damages to the
extent accrued and unpaid) to be due and payable immediately, and upon any
such declaration the same shall become and shall be immediately due and
payable, anything in this Indenture or in the Notes contained to the
contrary notwithstanding. If an Event of Default specified in Section
7.1(e) or (f) occurs and is continuing with respect to the Company, the
principal of all the Notes and the interest accrued thereon (including
Liquidated Damages to the extent accrued and unpaid) shall be immediately
due and payable. In addition to the foregoing, upon an Event of Default and
for so long as such Event of Default has not been cured or waived pursuant
to Section 7.7, the rate of interest on the Notes shall be increased by
five percent (5%) per annum (i.e., from 6% to 11% per annum) or, if less,
increased to the maximum interest rate then permitted by applicable law.
Any such interest which is not paid when due shall, to the maximum extent
permitted by law, accrue interest until paid at the rate from time to time
applicable to the interest on the Notes. Notwithstanding the foregoing if,
at
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any time after the principal of the Notes shall have been so declared due
and payable, and before any judgment or decree for the payment of the
monies due shall have been obtained or entered as hereinafter provided, the
Company shall pay or shall deposit with the Trustee a sum sufficient to pay
all matured installments of interest upon all Notes and the principal of
and premium, if any, on any and all Notes which shall have become due
otherwise than by acceleration (with interest on overdue installments of
interest (to the extent that payment of such interest is enforceable under
applicable law) and on such principal and premium, if any, at the rate
borne by the Notes, to the date of such payment or deposit) and amounts due
to the Trustee pursuant to Section 8.6, and if any and all defaults under
this Indenture, other than the nonpayment of principal of and premium, if
any, and accrued interest on Notes which shall have become due by
acceleration, shall have been cured or waived pursuant to Section 7.7, then
and in every such case the holders of a majority in aggregate principal
amount of the Notes then outstanding, by written notice to the Company and
to the Trustee, may waive all defaults or Events of Default and rescind and
annul such acceleration and its consequences; but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent
default or Event of Default, or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Notes, and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes, and the Trustee shall continue as
though no such proceeding had been instituted.
Section 7.2 Payments of Notes on Default; Suit Therefor
The Company covenants that (a) in case default shall be made in the payment
by the Company of any installment of interest upon any of the Notes as and when
the same shall become due and payable, and such default shall have continued for
a period of thirty (30) days, or (b) in case default shall be made in the
payment of the principal of or premium, if any, on any of the Notes as and when
the same shall have become due and payable, whether at maturity of the Notes or
in connection with any redemption or repurchase, by declaration under this
Indenture or otherwise, then, upon written demand of the Trustee, the Company
will pay to the Trustee, for the benefit of the holders of the Notes, the whole
amount that then shall have become due and payable on all such Notes for
principal and premium, if any, or interest, or both, as the case may be, with
interest upon the overdue principal and premium, if any, and (to the extent that
payment of such interest is enforceable under applicable law) upon the overdue
installments of interest at the rate borne by the Notes; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any expenses or liabilities incurred by the
Trustee hereunder other than through its negligence or bad faith. Until such
demand by the Trustee, the Company may pay the principal of and premium, if any,
and interest on the Notes to the registered holders, whether or not the Notes
are overdue.
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In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company and collect in the manner provided
by law out of the property of the Company wherever situated the monies adjudged
or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company under Title 11 of the United States Code, or any
other applicable law, or in case a receiver, assignee or trustee in bankruptcy
or reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Company or the property of the Company,
the Trustee, irrespective of whether the principal of the Notes shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 7.2, shall be entitled and empowered, by intervention
in such proceedings or otherwise, to file and prove a claim or claims for the
whole amount of principal, premium, if any, and interest (including Liquidated
Damages, if any) owing and unpaid in respect of the Notes, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
and to take such other actions as it may deem necessary or advisable in order to
have the claims of the Trustee and of the Noteholders allowed in such judicial
proceedings relative to the Company, its creditors, or its property, and to
collect and receive any monies or other property payable or deliverable on any
such claims, and to distribute the same after the deduction of any amounts due
the Trustee under Section 8.6; and any receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, custodian or similar official is
hereby authorized by each of the Noteholders to make such payments to the
Trustee, and, in the event that the Trustee shall consent to the making of such
payments directly to the Noteholders, to pay to the Trustee any amount due it
for reasonable compensation, expenses, advances and disbursements, including
agents and counsel fees incurred by it up to the date of such distribution. To
the extent that such payment of reasonable compensation, expenses, advances and
disbursements out of the estate in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a lien on, and shall be paid out
of, any and all distributions, dividends, monies, securities and other property
which the holders of the Notes may be entitled to receive in such proceedings,
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.
All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Trustee without the possession of any
of the Notes, or the production thereof on any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings involving
the interpretation of any provision of this Indenture to which the Trustee shall
be a party) the Trustee shall be held to represent all the holders of the Notes,
and it shall not be necessary to make any holders of the Notes parties to any
such proceedings.
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Section 7.3 Application of Monies and Property Collected by Trustee
Any monies and property collected by the Trustee pursuant to this Article
VII shall be applied in the following order, at the date or dates fixed by the
Trustee for the distribution of such monies and property, upon presentation of
the several Notes, and stamping thereon the payment, if only partially paid, and
upon surrender thereof, if fully paid:
First: To the payment of all amounts due the Trustee under Section
8.6;
Second: In case the principal of the outstanding Notes shall not have
become due and be unpaid, to the payment of interest on the Notes in
default in the order of the maturity of the installments of such interest,
with interest (to the extent that such interest has been collected by the
Trustee) upon the overdue installments of interest at the rate borne by the
Notes, such payments to be made ratably to the Persons entitled thereto;
Third: In case the principal of the outstanding Notes shall have
become due, by declaration or otherwise, and be unpaid, to the payment of
the whole amount then owing and unpaid upon the Notes for principal and
premium, if any, and interest, with interest on the overdue principal and
premium, if any, and (to the extent that such interest has been collected
by the Trustee) upon overdue installments of interest at the rate borne by
the Notes; and in case such monies and property shall be insufficient to
pay in full the whole amounts so due and unpaid upon the Notes, then to the
payment of such principal and premium, if any, and interest without
preference or priority of principal and premium, if any, over interest, or
of interest over principal and premium, if any, or of any installment of
interest over any other installment of interest, or of any Note over any
other Note, ratably to the aggregate of such principal and premium, if any,
and accrued and unpaid interest; and
Fourth: To the payment of the remainder, if any, to the Company.
Section 7.4 Proceedings by Noteholder
Subject to the last two paragraphs of this Section 7.4, no holder of any
Note shall have any right by virtue of or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture, or for the appointment of a
receiver, trustee, liquidator, custodian or other similar official, or for any
other remedy hereunder, unless such holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, and unless also the holders of not less than 20% in
aggregate principal amount of the Notes then outstanding shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such indemnity
as may be reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 7.7; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or more holders of Notes shall
36
have any right in any manner whatever by virtue of or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other holder of Notes, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
For the protection and enforcement of this Section 7.4, each and every
Noteholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any, and interest (including Liquidated Damages to
the extent accrued but unpaid) on such Note, on or after the respective due
dates expressed in such Note, or to institute suit for the enforcement of any
such payment on or after such respective dates against the Company shall not be
impaired or affected without the consent of such holder.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in his own behalf and for his own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, such holder's
rights of conversion as provided herein.
Section 7.5 Proceedings by Trustee
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether
for the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture, or
to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
Section 7.6 Remedies Cumulative and Continuing
Except as provided in the last paragraph of Section 2.6, all powers and
remedies given by this Article VII to the Trustee or to the Noteholders shall,
to the extent permitted by law, be deemed cumulative and not exclusive of any
thereof or of any other powers and remedies available to the Trustee or the
holders of the Notes, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any holder of any of
the Notes to exercise any right or power accruing upon any default or Event of
Default occurring and continuing as aforesaid shall impair any such right or
power, or shall be construed to be a waiver of any such default or any
acquiescence therein; and, subject to the provisions of Section 7.4, every power
and remedy given by this Article VII or by law to the Trustee or to the
Noteholders may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Noteholders.
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Section 7.7 Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders
The holders of a majority in aggregate principal amount of the Notes at the
time outstanding determined in accordance with Section 9.4 shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee; provided, however, that (a) such direction shall not be in conflict
with any rule of law or with this Indenture, and (b) the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction. The holders of not less than a majority in aggregate principal amount
of the Notes at the time outstanding determined in accordance with Section 9.4
may on behalf of the holders of all of the Notes waive any past or existing
default or Event of Default hereunder and its consequences except (i) a default
in the payment of interest or premium, if any, on, or the principal of, the
Notes when due, (ii) a failure by the Company to convert any Notes into Common
Stock or (iii) a default in respect of a covenant or provisions hereof which
under Article XI cannot be modified or amended without the consent of all
affected holders of Notes then outstanding. Upon any such waiver, the Company,
the Trustee and the holders of the Notes shall be restored to their former
positions and rights hereunder; said default or Event of Default shall for all
purposes of the Notes and this Indenture be deemed to have been cured and to be
not continuing; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
Section 7.8 Notice of Defaults
The Trustee shall, within ninety (90) days after the Trustee obtains
knowledge of the occurrence of a default under this Indenture, send to all
Noteholders, as the names and addresses of such holders appear upon the Note
Register, notice of all defaults actually known to a Responsible Officer, unless
such defaults shall have been cured or waived before the giving of such notice;
and provided that, except in the case of default in the payment of the principal
of, or premium, if any, or interest (including Liquidated Damages to the extent
accrued but unpaid) on any of the Notes, including without limiting the
generality of the foregoing any default in the payment of any Repurchase Price
or in the payment of any amount due in connection with any redemption of Notes,
then in any such event the Trustee shall be protected in withholding such notice
if and so long as a trust committee of directors and/or Responsible Officers of
the Trustee in good faith determines that the withholding of such notice is in
the interests of the Noteholders.
Section 7.9 Undertaking to Pay Costs
All parties to this Indenture agree, and each holder of any Note by his
acceptance thereof shall be deemed to have agreed, that any court may, in its
discretion, require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
provided that the provisions of this Section 7.9 shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate more than 10% in
38
principal amount of the Notes at the time outstanding determined in accordance
with Section 9.4, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or premium, if any, or interest
(including Liquidated Damages to the extent accrued but unpaid) on any Note
(including, but not limited to, the redemption price or Repurchase Price with
respect to the Notes being redeemed or repurchased as provided in this
Indenture) on or after the due date expressed in such Note or to any suit for
the enforcement of the right to convert any Note in accordance with the
provisions of Article XV.
Section 7.10 Delay or Omission Not Waiver
No delay or omission of the Trustee or of any holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this Article VII or by law
to the Trustee or to the holders of Notes may, subject to the terms of this
Indenture, be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the holders of Notes, as the case may be.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1 Duties and Responsibilities of Trustee
The Trustee, prior to the occurrence of an Event of Default and after the
curing or waiver of all Events of Default that may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture and the Trust Indenture Act. In case an Event of Default has occurred
(which has not been cured or waived) the Trustee shall exercise such of the
rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default that may have occurred:
(1) the duties and obligations of the Trustee shall be determined
solely by the Trust Indenture Act and the express provisions of this
Indenture, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Indenture and no implied covenants or obligations shall
be read into this Indenture and the Trust Indenture Act against the
Trustee; and
(2) in the absence of bad faith or willful misconduct on the part
of the Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions
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furnished to the Trustee and conforming to the requirements of this
Indenture; provided, however, in the case of any such certificates or
opinions that by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(c) the Trustee shall not be liable to any Noteholder with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the holders of not less than a majority in aggregate
principal amount of the Notes at the time outstanding determined as
provided in Section 9.4 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee; and
(d) whether or not therein provided, every provision of this Indenture
relating to the conduct or affecting the liability of, or affording
protection to, the Trustee shall be subject to the provisions of this
Section.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Section 8.2 Reliance on Documents, Opinions, Etc.
Except as otherwise provided in Section 8.1:
(a) the Trustee may conclusively rely and shall be protected in acting upon
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, note, coupon or other paper or document believed
by it in good faith to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Company mentioned herein
shall be sufficiently evidenced by an Officer's Certificate (unless other
evidence in respect thereof be herein specifically prescribed) and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection, and any advice
of such counsel or Opinion of Counsel as to matters of law shall be full and
complete authorization and protection in respect of any action taken or omitted
by it hereunder in good faith and in accordance with such advice or Opinion of
Counsel if such counsel was selected with due care;
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(d) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Noteholders pursuant to the provisions of this Indenture, unless such
Noteholders shall have offered to the Trustee security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities which may be
incurred therein or thereby;
(e) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its reasonable discretion, may make
such further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney; provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
indemnity reasonably satisfactory to the Trustee from the Noteholders against
such expenses or liability as a condition to so proceeding; the reasonable
expenses of every such examination shall be paid by the Company or, if paid by
the Trustee or any predecessor Trustee, shall be repaid by the Company upon
demand;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder;
(g) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture;
(h) the Trustee shall not be deemed to have notice of any default or Event
of Default unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a default or
Event of Default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Notes and this Indenture and states that
it is a "Notice of Default" hereunder;
(i) the rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder; and
(j) the Trustee may request that the Company deliver an Officer's
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officer's Certificate may be signed by any person authorized to sign an
Officer's Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
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In no event shall the Trustee be liable for any consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action.
Section 8.3 No Responsibility for Recitals, Etc.
The recitals contained herein and in the Notes (except in the Trustee's
certificate of authentication) shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for the correctness of the same. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes. The Trustee shall not be accountable for the use or
application by the Company of any Notes or the proceeds of any Notes
authenticated and delivered by the Trustee in conformity with the provisions of
this Indenture.
Section 8.4 Trustee, Paying Agents, Conversion Agents or Note Registrar May
Own Notes
The Trustee, any paying agent, any conversion agent or Note Registrar, in
its individual or any other capacity, may become the owner or pledgee of Notes
with the same rights it would have if it were not Trustee, paying agent,
conversion agent or Note Registrar.
Section 8.5 Monies to be Held in Trust
Subject to the provisions of Section 13.4, all monies received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as may be agreed in writing from time to time by
the Company and the Trustee.
Section 8.6 Compensation and Expenses of Trustee
The Company covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, such compensation as the Company and the
Trustee shall from time to time agree in writing for all services rendered by
the Trustee hereunder in any capacity (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), and the Company will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances reasonably incurred or made
by the Trustee in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and disbursements of its
agents and counsel and of all Persons not regularly in its employ) except any
such expense, disbursement or advance as may arise from its negligence, willful
misconduct or bad faith. The Company also covenants to indemnify the Trustee or
any predecessor Trustee in any capacity under this Indenture and its agents and
any authenticating agent for, and to hold them harmless against, any and all
loss, damages, claims, liability or expense, including taxes (other than those
based upon, measured by or determined by the income of the Trustee), incurred
without negligence, willful misconduct or bad faith on the part of the Trustee
or such agent or authenticating agent, as the case may be, and arising out of or
in connection with the acceptance or administration of this trust or in any
other capacity hereunder, including the costs and expenses of defending
42
themselves against any claim (whether asserted by the Company, a holder or any
other Person) of liability in the premises. The obligations of the Company under
this Section 8.6 to compensate or indemnify the Trustee and to pay or reimburse
the Trustee for expenses, disbursements and advances shall be secured by a lien
upon all property and funds held or collected by the Trustee as such, except
funds held in trust herewith for the benefit of the holders of particular Notes
prior to the date of the accrual of such unpaid compensation or indemnifiable
claim. The obligation of the Company under this Section 8.6 shall survive the
satisfaction and discharge of this Indenture and the resignation or removal of
the Trustee. The indemnification provided in this Section 8.6 shall extend to
the officers, directors, agents and employees of the Trustee.
When the Trustee and its agents and any authenticating agent incur expenses
or render services after an Event of Default specified in Section 7.1(e) or (f)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any bankruptcy, insolvency or
similar laws.
Section 8.7 Officer's Certificate as Evidence
Except as otherwise provided in Section 8.1, whenever in the administration
of the provisions of this Indenture the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence, willful
misconduct or bad faith on the part of the Trustee, be deemed to be conclusively
proved and established by an Officer's Certificate delivered to the Trustee, and
such Officer's Certificate, in the absence of negligence, willful misconduct or
bad faith on the part of the Trustee, shall be full warrant to the Trustee for
any action taken or omitted by it under the provisions of this Indenture upon
the faith thereof.
Section 8.8 Conflicting Interests of Trustee
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
Section 8.9 Eligibility of Trustee
There shall at all times be a Trustee hereunder that shall be a Person that
is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus (together with its corporate parent) of at least
Fifty Million United States Dollars ($50,000,000). If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of any supervising or examining authority, then for the purposes of this Section
8.9, the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 8.9, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article VIII.
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Section 8.10 Resignation or Removal of Trustee
(a) The Trustee may at any time resign by giving written notice of such
resignation to the Company and by sending notice thereof to the holders of Notes
at their addresses as they shall appear on the Note Register. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment sixty (60) days after the
sending of such notice of resignation to the Noteholders, the resigning Trustee
may, at the expense of the Company, petition any court of competent jurisdiction
for the appointment of a successor trustee, or any Noteholder who has been a
bona fide holder of a Note or Notes for at least six months may, subject to the
provisions of Section 7.9, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with Section 8.8 within a
reasonable time after written request therefor by the Company or by any
Noteholder who has been a bona fide holder of a Note or Notes for at least
six months, or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.9 and shall fail to resign after written request
therefor by the Company or by any such Noteholder, or
(3) the Trustee shall become incapable of acting, or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed, or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may by a Board Resolution remove the Trustee
and appoint a successor trustee by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be delivered
to the Trustee so removed and one copy to the successor trustee, or, subject to
the provisions of Section 7.9, any Noteholder who has been a bona fide holder of
a Note or Notes for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the Notes at
the time outstanding may at any time remove the Trustee and nominate a successor
trustee which shall be deemed appointed as successor trustee unless within ten
(10) days after notice to the Company of such nomination the Company objects
thereto, in which case the Trustee so removed or any Noteholder, upon the terms
and conditions and otherwise as in Section 8.10(a) provided, may, at the
44
expense of the Company, petition any court of competent jurisdiction for an
appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.11.
(e) If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within thirty (30) days after the giving of such
notice of removal, the Trustee being removed may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
trustee.
Section 8.11 Acceptance by Successor Trustee
Any successor trustee appointed as provided in Section 8.10 shall execute,
acknowledge and deliver to the Company and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as trustee herein; but, nevertheless, on
the written request of the Company or of the successor trustee, the trustee
ceasing to act shall, upon payment of any amounts then due it pursuant to the
provisions of Section 8.6, execute and deliver an instrument transferring to
such successor trustee all the rights and powers of the trustee so ceasing to
act. Upon request of any such successor trustee, the Company shall execute any
and all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers. Any trustee
ceasing to act shall, nevertheless, retain a lien upon all property and funds
held or collected by such trustee as such, except for funds held in trust for
the benefit of holders of particular Notes, to secure any amounts then due it
pursuant to the provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this Section
8.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.11, the Company shall send or cause to be sent notice of the
succession of such trustee hereunder to the holders of Notes at their addresses
as they shall appear on the Note Register. If the Company fails to send such
notice within ten (10) days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be sent at the expense
of the Company.
Section 8.12 Succession by Merger, Etc.
Any corporation or other entity into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation or other entity succeeding to all or substantially all
of the corporate trust business of the Trustee (including the trust created by
this Indenture), shall be the successor to the Trustee hereunder without the
execution or filing of any
45
paper or any further act on the part of any of the parties hereto, provided that
in the case of any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee such corporation shall be qualified
under the provisions of Section 8.8 and eligible under the provisions of Section
8.9.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or an authenticating agent appointed by such successor
trustee may authenticate such Notes either in the name of any predecessor
trustee hereunder or in the name of the successor trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 8.13 Limitation on Rights of Trustee as Creditor
If and when the Trustee shall be or become a creditor of the Company, the
Trustee shall be subject to the provisions of the Trust Indenture Act regarding
the collection of the claims against the Company.
ARTICLE IX
CONCERNING THE NOTEHOLDERS
Section 9.1 Action by Noteholders
Whenever in this Indenture it is provided that the holders of a specified
percentage in aggregate principal amount of the Notes may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action), the fact that at the time
of taking any such action, the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument or any number of instruments of
similar tenor executed by Noteholders in person or by agent or proxy appointed
in writing, or (b) by the record of the holders of Notes voting in favor thereof
at any meeting of Noteholders duly called and held in accordance with the
provisions of Article X, or (c) by a combination of such instrument or
instruments and any such record of such a meeting of Noteholders. Whenever the
Company or the Trustee solicits the taking of any action by the holders of the
Notes, the Company or the Trustee may fix in advance of such solicitation, a
date as the record date for determining holders entitled to take such action.
The record date shall be not more than fifteen (15) days prior to the date of
commencement of solicitation of such action.
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Section 9.2 Proof of Execution by Noteholders
Subject to the provisions of Sections 8.1, 8.2 and 10.5, proof of the
execution of any instrument by a Noteholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The holding of Notes shall be proved by the Note Register or by a
certificate of the Note Registrar. The record of any Noteholders' meeting shall
be proved in the manner provided in Section 10.6.
Section 9.3 Who Are Deemed Absolute Owners
The Company, the Trustee, any authenticating agent, any paying agent, any
conversion agent and any Note Registrar may deem the Person in whose name such
Note shall be registered upon the Note Register to be, and may treat him as, the
absolute owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of, premium, if
any, and interest (including Liquidated Damages to the extent accrued but
unpaid) on such Note, for conversion of such Note and for all other purposes;
and neither the Company nor the Trustee nor any authenticating agent nor any
paying agent nor any conversion agent nor any Note Registrar shall be affected
by any notice to the contrary. All such payments so made to any holder, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for monies payable upon any
such Note.
Section 9.4 Company-Owned Notes Disregarded
In determining whether the holders of the requisite aggregate principal
amount of Notes have concurred in any direction, consent, waiver or other action
under this Indenture, Notes that are owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, consent, waiver or other action only Notes which a Responsible
Officer actually knows are so owned shall be so disregarded. Notes so owned
which have been pledged in good faith may be regarded as outstanding for the
purposes of this Section 9.4 if the pledgee shall establish to the satisfaction
of the Trustee the pledgee's right to vote such Notes and that the pledgee is
not the Company or a Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company. In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officer's Certificate
listing and identifying all Notes, if any, known by the Company to be owned or
held by or for the account of any of the above described Persons; and, subject
to Section 8.1, the Trustee shall be entitled to accept such Officer's
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Notes listed therein are not outstanding for the purpose of any
such determination.
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Section 9.5 Revocation of Consents; Future Holders Bound
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 9.1, of the taking of any action by the holders of the
percentage in aggregate principal amount of the Notes specified in this
Indenture in connection with such action, any holder of a Note which is shown by
the evidence to be included in the Notes the holders of which have consented to
such action may, by filing written notice with the Trustee at its Corporate
Trust Office and upon proof of holding as provided in Section 9.2, revoke such
action so far as concerns such Note. Except as aforesaid, any such action taken
by the holder of any Note shall be conclusive and binding upon such holder and
upon all future holders and owners of such Note and of any Notes issued in
exchange or substitution therefor, irrespective of whether any notation in
regard thereto is made upon such Note or any Note issued in exchange or
substitution therefor.
Section 9.6 Communications by Holders with Other Holders
Noteholders may communicate pursuant to Trust Indenture Act Section 312(b)
with other Noteholders with respect to their rights under this Indenture and the
Notes. The Company, the Trustee, the Notes Registrar and anyone else shall have
the protection of Trust Indenture Act Section 312(c).
ARTICLE X
NOTEHOLDERS' MEETINGS
Section 10.1 Purpose of Meetings
A meeting of Noteholders may be called at any time and from time to time
pursuant to the provisions of this Article X for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or to give any
directions to the Trustee permitted under this Indenture, or to consent to
the waiving of any default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Noteholders pursuant to any of the provisions of Article VII;
(2) to remove the Trustee and nominate a successor trustee pursuant to
the provisions of Article VIII;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.2;
(4) to take any other action authorized to be taken by or on behalf of
the holders of any specified aggregate principal amount of the Notes under
any other provision of this Indenture or under applicable law; or
(5) to take any other action authorized by this Indenture or under
applicable law.
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Section 10.2 Call of Meetings by Trustee
The Trustee may at any time call a meeting of Noteholders to take any
action specified in Section 10.1, to be held at such time and at such place as
the Trustee shall determine. Notice of every meeting of the Noteholders, setting
forth the time and the place of such meeting and in general terms the action
proposed to be taken at such meeting and the establishment of any record date
pursuant to Section 9.1, shall be sent to holders of Notes at their addresses as
they shall appear on the Note Register. Such notice shall also be sent to the
Company. Such notices shall be sent not less than twenty (20) nor more than
ninety (90) days prior to the date fixed for the meeting.
Any meeting of Noteholders shall be valid without notice if the holders of
all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.
Section 10.3 Call of Meetings by Company or Noteholders
In case at any time the Company, pursuant to a resolution of its Board of
Directors, or the holders of at least 10% in aggregate principal amount of the
Notes then outstanding, shall have requested the Trustee to call a meeting of
Noteholders, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have sent the
notice of such meeting within twenty (20) days after receipt of such request,
then the Company or such Noteholders may determine the time and the place for
such meeting and may call such meeting to take any action authorized in Section
10.1, by sending notice thereof as provided in Section 10.2.
Section 10.4 Qualifications for Voting
To be entitled to vote at any meeting of Noteholders a Person shall (a) be
a holder of one or more Notes on the record date pertaining to such meeting or
(b) be a Person appointed by an instrument in writing as proxy by a holder of
one or more such Notes. The only Persons who shall be entitled to be present or
to speak at any meeting of Noteholders shall be the Persons entitled to vote at
such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
Section 10.5 Regulations
Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Noteholders, in regard to proof of the holding of Notes and of the appointment
of proxies, and in regard to the appointment and duties of inspectors of votes,
the submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the meeting
as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be,
49
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of the holders of a
majority in principal amount of the Notes represented at the meeting and
entitled to vote at the meeting.
Subject to the provisions of Section 9.4, at any meeting each Noteholder or
proxyholder shall be entitled to one vote for each One Thousand United States
Dollars ($1,000) principal amount of Notes held or represented by such
Noteholder; provided, however, that no vote shall be cast or counted at any
meeting in respect of any Note challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The chairman of the meeting shall
have no right to vote other than by virtue of Notes held by him or instruments
in writing as aforesaid duly designating him as the proxy to vote on behalf of
other Noteholders. Any meeting of Noteholders duly called pursuant to the
provisions of Section 10.2 or 10.3 may be adjourned from time to time by the
holders of a majority of the aggregate principal amount of Notes represented at
the meeting, and the meeting may be held as so adjourned without further notice.
Section 10.6 Voting
The vote upon any resolution submitted to any meeting of Noteholders shall
be by written ballot on which shall be subscribed the signatures of the holders
of Notes or of their representatives by proxy and the principal amount of the
Notes held or represented by them. The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of Noteholders
shall be prepared by the secretary of the meeting and there shall be attached to
said record the original reports of the inspectors of votes on any vote by
ballot taken thereat and affidavits by one or more persons having knowledge of
the facts setting forth a copy of the notice of the meeting and showing that
said notice was sent as provided in Section 10.2 or 10.3. The record shall show
the principal amount of the Notes voting in favor of or against any resolution.
The record shall be signed and verified by the affidavits of the permanent
chairman and secretary of the meeting and one of the duplicates shall be
delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7 No Delay of Rights by Meeting
Nothing contained in this Article X shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Noteholders or any
rights expressly or implicitly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Noteholders under any of the provisions of
this Indenture or of the Notes.
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ARTICLE XI
AMENDMENTS; SUPPLEMENTAL INDENTURES
Section 11.1 Amendments; Supplemental Indentures without Consent of
Noteholders
The Company, when authorized by the resolutions of the Board of Directors,
and the Trustee may from time to time and at any time amend or supplement this
Indenture or the Notes without notice to or the consent of any Holder for one or
more of the following purposes:
(a) to make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 15.6;
(b) to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Notes, any property or assets;
(c) to evidence the succession of another corporation, limited
liability company, partnership or trust to the Company, or successive
successions, and the assumption by the successor corporation, limited
liability company, partnership or trust of the covenants, agreements and
obligations of the Company pursuant to Article XII;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors shall consider to be
for the benefit of the holders of Notes and to make the occurrence, or the
occurrence and continuance, of a default in any such additional covenants,
restrictions or conditions a default or an Event of Default permitting the
enforcement of all or any of the several remedies provided in this
Indenture as herein set forth; provided, however, that in respect of any
such additional covenant, restriction or condition such supplemental
indenture may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to
provide for exchangeability of such Notes with the Notes issued hereunder
in fully registered form and to make all appropriate changes for such
purpose;
(f) to cure any ambiguity or defect or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in
any supplemental indenture;
(g) to make any other change which does not adversely affect the
rights of the holders of the Notes;
(h) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
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(i) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act, or under any similar federal
statute hereafter enacted.
The Trustee is hereby authorized and directed to join with the Company in
the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer and assignment of any property thereunder;
provided, however, the Trustee shall not be obligated to (but may, in its
discretion) enter into any supplemental indenture that affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Any amendment or supplemental indenture authorized by the provisions of
this Section 11.1 may be executed by the Company and the Trustee without the
consent of the holders of any of the Notes at the time outstanding,
notwithstanding any of the provisions of Section 11.2.
Section 11.2 Amendments; Supplemental Indentures with Consent of
Noteholders
With the consent (evidenced as provided in Article IX) of the holders of
not less than a majority in aggregate principal amount of the Notes at the time
outstanding (determined in accordance with Section 9.4), the Company, when
authorized by resolutions of the Board of Directors, and the Trustee may from
time to time and at any time amend or supplement the Notes or this Indenture for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or any supplemental indenture or of
modifying in any manner the rights of the holders of the Notes; provided,
however, that no such amendment or supplemental indenture shall (i) extend the
fixed maturity of any Note, or reduce the rate or extend the time of payment of
interest thereon, or reduce the principal amount thereof or premium, if any,
thereon, or reduce any amount payable on redemption or repurchase thereof,
impair or change in any respect adverse to the holder of Notes the obligation of
the Company to repurchase any Note at the option of the holder upon the
happening of a Repurchase Event or any Repurchase Date, or impair or adversely
affect the right of any Noteholder to institute suit for the payment thereof, or
change the currency in which the Notes are payable, or impair or change in any
respect adverse to the Noteholders the right to convert the Notes into Common
Stock subject to the terms set forth herein, including Section 15.6, or to
subordinate the Notes in right of payment to other indebtedness, in each such
case without the consent of the holder of each Note so affected, or (ii) reduce
the aforesaid percentage of Notes, the holders of which are required to consent
to any such supplemental indenture, or modify this paragraph, without the
consent of the holders of all Notes then outstanding; provided, further,
however, that any amendment or supplemental indenture that disproportionately
affects the rights of a Noteholder or a class of Noteholder shall require the
prior consent of such Noteholder or the prior consent of Noteholders holding a
majority of the principal amount of Notes then held by such class, as
applicable.
Upon the request of the Company, accompanied by a copy of resolutions of
the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any such amendment or supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of
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such amendment or supplemental indenture unless such amendment or supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amendment or supplemental indenture.
It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed amendment or
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
Section 11.3 Effect of Amendments and Supplemental Indentures
Any amendment or supplemental indenture executed pursuant to the provisions
of this Article XI shall comply with the Trust Indenture Act, as then in effect;
provided that this Section 11.3 shall not require such amendment or supplemental
indenture or the Trustee to be qualified under the Trust Indenture Act prior to
the time such qualification is in fact required under the terms of the Trust
Indenture Act or the Indenture has been qualified under the Trust Indenture Act,
nor shall it constitute any admission or acknowledgement by any party to such
amendment or supplemental indenture that any such qualification is required
prior to the time such qualification is in fact required under the terms of the
Trust Indenture Act or the Indenture has been qualified under the Trust
Indenture Act. Upon the execution of any amendment or supplemental indenture
pursuant to the provisions of this Article XI, this Indenture shall be and be
deemed to be modified and amended in accordance therewith and the respective
rights, limitation of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the holders of Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 11.4 Notation on Notes
Notes authenticated and delivered after the execution of any amendment or
supplemental indenture pursuant to the provisions of this Article XI may bear a
notation in form approved by the Trustee as to any matter provided for in such
amendment or supplemental indenture. If the Company or the Trustee shall so
determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Company, to any modification of this Indenture contained in any such
amendment or supplemental indenture may, at the Company's expense, be prepared
and executed by the Company, authenticated by the Trustee (or an authenticating
agent duly appointed by the Trustee pursuant to Section 17.10) and delivered in
exchange for the Notes then outstanding, upon surrender of such Notes then
outstanding.
Section 11.5 Evidence of Compliance of Amendment or Supplemental Indenture
to be Furnished to Trustee
The Trustee, subject to the provisions of Sections 8.1 and 8.2, shall be
entitled to receive an Officer's Certificate and an Opinion of Counsel as
conclusive evidence that any amendment or supplemental indenture executed
pursuant hereto complies with the requirements of this Article XI.
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ARTICLE XII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1 Company May Consolidate, Etc.
The Company shall not, directly or indirectly, consolidate with or merge
with or into any other Person or sell, lease, convey or transfer all or
substantially all its assets, whether in a single transaction or a series of
related transactions, to any Person or group of affiliated Persons unless:
(a) either (i) in the case of a merger or consolidation that does not
involve a transfer of all or substantially all of the Company's properties
and assets, the Company is the surviving entity or (ii) in case the Company
shall consolidate with or merge into another Person or sell, lease, convey
or transfer all or substantially all of its properties and assets, whether
in a single transaction or a series of related transactions, to any Person,
the Person formed by such consolidation or into which the Company is
merged, or the Person which acquires by sale, conveyance or transfer, or
which leases the properties and assets of the Company substantially as an
entirety, shall be a corporation, limited liability company, partnership or
trust, shall be organized and validly existing under the laws of the United
States of America, any state thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, the due and punctual payment of the principal of,
premium, if any, and interest (including Liquidated Damages, if any) on all
of the Notes, and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed, and shall
have provided for the applicable conversion rights set forth in Section
15.6 and the repurchase rights set forth in Article XVI;
(b) immediately after giving effect to such transaction, no Event of
Default, and no event that after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and
(c) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture, complies
with this Article XII and that all conditions precedent herein provided for
relating to such transaction have been complied with, together with any
documents required under Article IX.
Section 12.2 Successor Entity to be Substituted
In case of any consolidation, merger, sale, conveyance or lease in
accordance with Section 12.1, and, where required in accordance with Section
12.1(a), upon the assumption by the successor entity, by supplemental indenture
executed and delivered to the Trustee, of the due and punctual payment of the
principal of and premium, if any, and interest (including Liquidated Damages, if
any) on all of the Notes and the performance or observance of every covenant of
this Indenture on the part of the Company to be performed or observed, such
successor entity shall
54
succeed to and be substituted for the Company, with the same effect as if it had
been named herein as the party of the first part. Such successor entity
thereupon may cause to be signed, and may issue either in its own name or in the
name of ATS Medical, Inc. any or all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor entity instead of the Company,
and subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver, or cause to be
authenticated and delivered, any Notes which previously shall have been signed
and delivered by the officers of the Company to the Trustee for authentication,
and any Notes which such successor entity thereafter shall cause to be signed
and delivered to the Trustee for that purpose. All the Notes so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Notes theretofore or thereafter issued in accordance with the terms of this
Indenture. In the event of any such consolidation, merger, sale, conveyance or
lease, the Person named as the "Company" in the first paragraph of this
Indenture or any successor which shall thereafter have become such in the manner
prescribed in this Article XII may be dissolved, wound up and liquidated at any
time thereafter and such Person shall be released from its liabilities as
obligor and maker of the Notes and from its obligations under this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.
Section 12.3 Opinion of Counsel to be Given Trustee
The Trustee, subject to Sections 8.1 and 8.2, shall receive the Officer's
Certificate and an Opinion of Counsel referenced in Section 12.1(c) as
conclusive evidence that any such consolidation, merger, sale, conveyance or
lease and any such assumption complies with the provisions of this Article XII.
Article XIII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1 Discharge of Indenture
When (a) the Company shall deliver to the Trustee for cancellation all
Notes theretofore authenticated (other than any Notes that have been destroyed,
lost or stolen and in lieu of or in substitution for which other Notes shall
have been authenticated and delivered) and not theretofore canceled, or (b) all
the Notes not theretofore canceled or delivered to the Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption,
and the Company shall deposit with the Trustee, in trust, funds sufficient to
pay at maturity or upon redemption of all of the Notes (other than any Notes
which shall have been mutilated, destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
not theretofore canceled or delivered to the Trustee for cancellation, including
principal and premium, if any, and interest (including Liquidated Damages, if
55
any) due or to become due to such date of maturity or redemption date, as the
case may be, and if in either case the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company, then this Indenture shall
cease to be of further effect, and the Trustee, on demand of the Company
accompanied by an Officer's Certificate and an Opinion of Counsel as required by
Section 17.5 and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture.
Notwithstanding the satisfaction and discharge of this Indenture, the Company's
obligations to the Trustee under Section 8.6 and, if money shall have been
deposited with the Trustee, the following shall survive until the Notes have
been paid in full: (i) the remaining rights of registration of transfer,
substitution and exchange and conversion of Notes, (ii) the rights hereunder of
Noteholders to receive payments of principal of and premium, if any, and
interest on, the Notes and the other rights, duties and obligations of
Noteholders, as beneficiaries hereof with respect to the amounts, if any, so
deposited with the Trustee and (iii) the rights, obligations and immunities of
the Trustee hereunder (other than the rights of the Trustee under Section 8.6,
which shall survive as provided above).
Section 13.2 Deposited Monies to be Held in Trust by Trustee
Subject to Section 13.4, all monies deposited with the Trustee pursuant to
Section 13.1 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Company if acting as its own
paying agent), to the holders of the particular Notes for the payment or
redemption of which such monies have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest and premium, if
any.
Section 13.3 Paying Agent to Repay Monies Held
Upon the satisfaction and discharge of this Indenture, all monies then held
by any paying agent of the Notes (other than the Trustee) shall, upon demand of
the Company, be repaid to it or paid to the Trustee, and thereupon such paying
agent shall be released from all further liability with respect to such monies.
Section 13.4 Repayment to Company
The Trustee and any paying agent shall promptly turn over to the Company
upon written request any excess funds held by them at any time, including,
without limitation, any funds that were deposited with the Trustee pursuant to
Section 13.1 for the payment of Notes that were subsequently converted (other
than amounts paid or that remain payable with respect to such Notes pursuant to
the terms of this Indenture and such Notes).
Subject to the requirements of applicable law, any monies deposited with or
paid to the Trustee or any paying agent of the Notes (other than the Trustee)
for payment of the principal of, premium, if any, or interest (including
Liquidated Damages, if any) on Notes and not applied but remaining unclaimed by
the holders of Notes for two (2) years after the date upon which the principal
of, premium, if any, or interest (including Liquidated Damages, if any) on such
Notes, as the case may be, shall have become due and payable, shall be repaid to
the Company by the Trustee or paying agent on written demand and all liability
of the Trustee or paying agent shall thereupon cease with respect to such
monies; and the holder of any of the Notes shall thereafter look only to the
56
Company for any payment which such holder may be entitled to collect unless an
applicable abandoned property law designates another Person.
Section 13.5 Reinstatement
If (i) the Trustee or the paying agent is unable to apply any money in
accordance with Section 13.2 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application and (ii) the holders of at least a majority in principal amount of
the then outstanding Notes so request by written notice to the Trustee, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 13.1 until such
time as the Trustee or the paying agent is permitted to apply all such money in
accordance with Section 13.2; provided, however, that if the Company makes any
payment of interest on or principal of any Note following the reinstatement of
its obligations, the Company shall be subrogated to the rights of the holders of
such Notes to receive such payment from the money held by the Trustee or paying
agent.
ARTICLE XIV
NO RECOURSE AGAINST OTHERS
Section 14.1 Indenture and Notes Solely Corporate Obligations
No direct or indirect partner, employee, incorporator, shareholder,
director or officer, as such, past, present or future of the Company or any
successor Person or any Subsidiary or any of the Company's Affiliates, shall
have any personal liability in respect of the obligations of the Company under
the Notes or this Indenture by reason of his, her or its status as such partner,
employee, incorporator, shareholder, director or officer. Each Noteholder by
accepting a Note waives and releases all such liability. Such waiver and release
are part of the consideration for the issuance of the Notes.
ARTICLE XV
CONVERSION OF NOTES
Section 15.1 Right to Convert
Subject to and upon compliance with the provisions of this Indenture, the
holder of any Note shall have the right, at the holder's option, at any time
following the date of original issuance of the Notes and prior to the close of
business on October 15, 2025 (except that, with respect to any Note or portion
of a Note that shall be called for redemption or shall have been noticed for
automatic conversion, such right shall terminate, except as provided in Section
3.4, at the close of business on the last Business Day prior to the Redemption
Date or the date fixed for automatic conversion of such Note or portion of a
Note unless the Company shall default in payment due upon redemption thereof or
the delivery of shares on automatic conversion thereof), to convert the
principal amount of any such Note, or any portion of such principal amount which
is One Thousand United States Dollars ($1,000) or an integral multiple thereof,
into that number of fully paid and non-assessable
57
shares of Common Stock (as such shares shall then be constituted) obtained by
dividing the principal amount of the Note or portion thereof surrendered for
conversion by the Conversion Price in effect at such time, by surrender of the
Note so to be converted in whole or in part in the manner provided in Section
15.2. A holder of Notes is not entitled to any rights of a holder of Common
Stock until such holder has converted his Notes to Common Stock, and then only
to the extent such Notes are deemed to have been converted to Common Stock under
this Article XV. A Note with respect to which a holder has delivered a notice in
accordance with Section 16.2 regarding such holder's election to require the
Company to repurchase such holder's Notes may be converted in accordance with
this Article XV only if such holder withdraws such repurchase notice by
delivering a written notice of withdrawal to the Company prior to the close of
business on the last Business Day prior to the Repurchase Date.
Section 15.2 Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion; Payment of Cash in Lieu of Issuance of Common Stock
In order to exercise the conversion privilege with respect to any
Definitive Note, the holder of such Definitive Note then registered on the books
of the Company shall (i) deliver a written notice, in the form of the conversion
notice attached hereto as Exhibit B, or a facsimile thereof (the "Conversion
Notice"), to the Trustee, the Company (with a copy to the Company's legal
counsel) and the transfer agent at Xxxxx Fargo Shareowner Services, Compliance
Department, 000 Xxxxx Xxxxxxx Xxxxxxxx, Xxxxx Xxxx, Xxxxxxxxx 00000, of such
holder's election to convert, which notice shall specify that all of such Note
shall be converted or the portion thereof to be converted (which shall be One
Thousand United States Dollars ($1,000) or an integral multiple thereof) and the
name or names (with address) in which the shares of Common Stock which shall be
issuable on such conversion shall be issued, (ii) if such Note or portion
thereof is surrendered for conversion during the period from the close of
business on the record date for any Interest Payment Date through the close of
business on the last Business Day prior to such Interest Payment Date, pay by
wire transfer of immediately available funds or other method acceptable to the
Company, an amount equal to the interest otherwise payable on such Interest
Payment Date on the principal amount being converted; provided, however, that no
such payment need be made if there shall exist at the time of conversion a
default in the payment of interest on the Notes (except that if a special record
date for payment of such defaulted interest has been set as provided in Section
2.3 and the Note or portion thereof is surrendered for conversion during the
period from the close of business on such special record date through the close
of business on the Business Day next preceding the special interest payment date
then the holder shall pay an amount equal to that portion, if any, of the
interest payable on such special interest payment date that does not relate to
past due interest), (iii) pay by wire transfer of immediately available funds or
other method acceptable to the Company the transfer taxes, if any, required
pursuant to Section 15.8, and (iv) surrender the Definitive Note to be converted
in whole or in part to a common carrier for overnight delivery to the Company as
soon as practicable following such date (or an indemnification undertaking or
other form of security reasonably satisfactory to the Company with respect to
the Definitive Note in the case of its loss, theft or destruction). Anything
herein to the contrary notwithstanding, in the case of Global Securities,
conversion notices may be delivered and a Participant's interest in a Global
Note may be surrendered for conversion in accordance with the Applicable
Procedures as in effect from time to time. Each Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as
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the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer (including a broker's letter regarding compliance with
the prospectus delivery requirement, if applicable) in form satisfactory to the
Company duly executed by, the holder or his duly authorized attorney. Except as
provided in the fifth paragraph of this Section 15.2 or as otherwise agreed by
the Company, a Conversion Notice shall be irrevocable.
The Company shall use its best efforts to, within three (3) Business Days
after the Conversion Date (as defined below) with respect to any Note, subject
to compliance with any restrictions on transfer if shares issuable on conversion
are to be issued in a name other than that of the Noteholder (as if such
transfer were a transfer of the Note or Notes (or portion thereof) so converted)
(a)(i) in the case of shares of Common Stock issuable upon such conversion that
will not, following issuance, be Restricted Securities, at the holder's request,
credit such aggregate number of full shares of Common Stock to which the holder
shall be entitled to the holder's or its designee's balance account with The
Depository Trust Company through its Deposit Withdrawal Agent Commission system
or (ii) issue and deliver to the address as specified in the Conversion Notice,
a certificate, registered in the name of the holder or its designee, for the
number of full shares of Common Stock to which the holder shall be entitled upon
such conversion, and (b) deliver to such holder a check or cash in respect of
any fractional interest in respect of a share of Common Stock arising upon such
conversion, as provided in Section 15.4 (which payment, if any, shall be paid no
later than five (5) Business Days after the Conversion Date). In case any Note
of a denomination greater than One Thousand United States Dollars ($1,000) shall
be surrendered for partial conversion, the Company shall execute and the Trustee
shall authenticate and deliver to the holder of the Note so surrendered, without
charge to such holder, a new Note or Notes in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Note.
If the Company shall not have delivered the number of shares of Common
Stock issued upon conversion of Notes by any holder within five (5) Business
Days after the Conversion Date with respect to such Notes, the Company shall pay
Liquidated Damages to such holder at the rate of one-half percent (0.5%) per
month of the outstanding principal amount of Notes so converted by such holder.
The conversion shall be deemed to have been effected as to any such Note
(or portion thereof) on the date on which the requirements set forth above in
this Section 15.2 have been satisfied as to such Note (or portion thereof) (such
date, the "Conversion Date"), and the Person in whose name any shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become on
the Conversion Date the holder of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the Person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, and the
Conversion Date for purposes of determining the Company's compliance with its
share delivery obligations under this Section 15.2 shall be such later date, but
such conversion shall be at the Conversion Price in effect on the date upon
which such Note shall be surrendered. For purposes of determining satisfaction
of the requirement set forth above with respect to the Conversion Date for any
Note, any facsimile required to be sent shall be deemed to
59
have been sent on a given day if such facsimile was received before 1:00 p.m.,
Minneapolis time, on such date, to the number listed above (unless a different
number is specified in a notice filed with the Trustee and sent by the Trustee,
at the Company's expense, to each holder of the Notes at such holder's address
appearing in the Note Register, as provided for in Section 2.5 of this
Indenture) and a confirmation of transmission of such facsimile is obtained.
The foregoing provisions of this Section 15.2 notwithstanding, if a Holder
elects to convert all or any portion of a Note into shares of Common Stock and
the Company does not have a sufficient number of authorized shares of Common
Stock to deliver upon conversion, the Company may choose to satisfy all or any
portion of its conversion obligation in cash. For purposes of the foregoing
sentence, the Company, when determining whether it has a sufficient number of
authorized shares of Common Stock to deliver upon conversion, may treat as
outstanding any shares reserved (as of the date of this Indenture) by the
Company's Board of Directors for a specific purpose including issuance under any
existing stock option or other equity plan of the Company or other obligation of
the Company to issue shares of Common Stock (including the obligation
represented by the Warrants issued pursuant to the Securities Purchase Agreement
to the initial purchasers of the beneficial interests in the Notes). In this
case, the Company will notify the converting holder through the Trustee of the
dollar amount to be satisfied in cash (which must be expressed as a fixed
percentage of the principal amount of Notes to be converted) at any time on or
before the date that is two Business Days following the Company's receipt of the
Conversion Notice (the "Cash Settlement Notice Period"). If the Company elects
to pay cash for any portion of the shares otherwise issuable to the holder, the
holder may revoke the Conversion Notice at any time during the two Business Day
period beginning on the day after the final day of the Cash Settlement Notice
Period (the "Conversion Revocation Period"). With respect to any conversion to
be settled all or in part in cash as provided in the foregoing sentence:
(i) if the Company elects to satisfy its entire conversion obligation
in cash, it shall pay an amount in cash equal to (1) the number of shares
of Common Stock otherwise issuable upon such conversion multiplied by (2)
the greater of (A) the Closing Price (as defined in Section 15.6(e)) on the
Trading Day (as defined in Section 15.6(e)) prior to the Conversion Date,
or (B) the average of the daily Closing Prices per share of Common Stock
for the 20 consecutive Trading Days beginning on the Trading Day
immediately following the final day of the Conversion Revocation Period
(the "Cash Settlement Averaging Period"); and
(ii) if the Company elects to satisfy a fixed percentage (other than
100%) of the principal amount of Notes to be converted by payment in cash,
it shall deliver to the holder (1) an amount in cash equal to (A) the
number of shares of Common Stock otherwise issuable upon conversion of the
relevant fixed percentage of the principal amount of the Notes being
converted multiplied by (B) the greater of (a) the Closing Price on the
Trading Day prior to the Conversion Date, or (b) the average of the daily
Closing Prices per share of Common Stock for the Cash Settlement Averaging
Period together with (2) that number of shares of Common Stock otherwise
issuable on the conversion of the remaining principal amount of the Notes
being converted.
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Nothing in this Section 15.2 shall affect the right of a holder in whose
name any Note is registered at the close of business on a record date to receive
the interest payable on such Note on the related Interest Payment Date in
accordance with the terms of this Indenture and the Note.
Except as provided in this Section 15.2 or in Section 15.3, no adjustment
shall be made for interest accrued on any Note converted or for dividends on any
shares issued upon the conversion of such Note as provided in this Article.
Except where a Note (or portion thereof) is surrendered for conversion on or
after the day immediately following a record date or special record date and
prior to the related Interest Payment Date or special interest payment date, in
which case interest shall be paid as provided in Section 2.3 to the holder of
record at the close of business on such record date or special record date,
accrued and unpaid interest on a Note (or portion thereof) surrendered for
conversion will be deemed paid by delivery of the shares of Common Stock
issuable on conversion.
Section 15.3 Company Right to Force Automatic Conversion
The Company may, at its option, automatically convert all or a portion of
the Notes (an "Automatic Conversion") at any time prior to October 15, 2025 if
the Closing Price (as defined in Section 15.6(e)) per share of the Common Stock
has exceeded one hundred and fifty percent (150%) of the Conversion Price then
in effect for at least twenty (20) Trading Days within a period of thirty (30)
consecutive Trading Days ending within five (5) Trading Days of the date the
Automatic Conversion Notice (defined below) specifying the date (the "Automatic
Conversion Date") on which an Automatic Conversion will become effective is sent
to all holders of Notes, provided that either (x) a registration statement
covering the resale of the Conversion Shares is effective and available for use
from the date of the Automatic Conversion Notice (as defined below) through and
including the earlier of 30 days after the Automatic Conversion Date or the last
date on which the registration statement is required to be kept effective under
the terms of the Registration Rights Agreement, or (y) the Conversion Shares
issuable upon the Automatic Conversion may be sold pursuant to Rule 144(k) under
the Securities Act (assuming, for purposes of such determination, that no
recipient of Conversion Shares is an "affiliate" of the Company within the
meaning of such Rule and that all recipients of Conversion Shares have held the
Notes since the date of their original issuance). The Company may only elect an
Automatic Conversion with respect to all or any part of the Notes if it has, as
of the date of the Automatic Conversion Notice required by the following
paragraph, sufficient shares of Common Stock authorized and available for
issuance on conversion of the Notes (or parts thereof) so called for Automatic
Conversion. If the Automatic Conversion Date is prior to October 15, 2008, the
Company shall make an additional payment to each holder of Notes with respect to
the Notes converted (or portion thereof), in an amount equal to $181.33 per each
One Thousand United States Dollars ($1,000) principal amount of the holder's
Notes (or portion thereof) (the "Company Conversion Provisional Payment"), less
the amount of any interest actually paid on the holder's Notes (or portion
thereof) prior to the Automatic Conversion Date (and, if the relevant Notes are
converted after a record date and prior to the related Interest Payment Date,
less interest payable on such Notes (or portion thereof) on such Interest
Payment Date, which interest shall be paid to the record holder at the close of
business on the relevant record date as provided in Section 2.3). Except as
provided in the immediately preceding sentence, if the Automatic Conversion Date
with respect to any Notes (or portions thereof) subject to an Automatic
Conversion occurs following a record date and prior to the related Interest
Payment Date, then unless the Company defaults in its
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obligation to deliver the shares of Common Stock issuable on such Automatic
Conversion. the Company shall not be obligated to pay any interest on such
Interest Payment Date, either to the holder of such Notes (or portions thereof)
at the close of business on the relevant record date or to the holder of such
Notes (or portions thereof) to whom the Company issues the shares of Common
Stock issuable on the Automatic Conversion.
If the Company elects to convert all or a portion of the Notes pursuant to
this Section 15.3, the Company, or at its request (which must be received by the
Trustee at least five (5) Business Days prior to the date the Trustee is
requested to give notice as described below unless a shorter period is agreed to
by the Trustee), the Trustee in the name of and at the expense of the Company,
shall send or cause to be sent a notice (the "Automatic Conversion Notice") of
the Automatic Conversion not more than thirty (30) days but not less than five
(5) days before the Automatic Conversion Date to such holders at their last
addresses as they shall appear upon the Notes Register. Such notice shall be
irrevocable. Any notice that is sent in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the registered
holder receives the notice. In any case, failure to duly give such notice to the
holder of any Notes designated for Automatic Conversion in whole or in part, or
any defect in the notice, shall not affect the validity of the proceedings for
the Automatic Conversion of any other Notes.
Each Automatic Conversion Notice shall state:
(a) the Automatic Conversion Date,
(b) the CUSIP number(s) of the Note(s) to be automatically converted,
(c) the place or places where such Notes are to be surrendered for
conversion,
(d) the Conversion Price then in effect,
(e) whether or not Additional Shares will be issued pursuant to
Section 15.13 and, if so, the method for calculating the number of
Additional Shares to be issued, and
(f) the amount of the Company Conversions Provisional Payment, if any.
In case the Notes are to be converted in part only, the Automatic
Conversion Notice shall state the portion of the principal amount thereof to be
converted and shall state that on and after the Automatic Conversion Date, upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unconverted portion thereof will be issued.
If any of the foregoing provisions or other provisions of this Section are
inconsistent with applicable law, such law shall govern.
In the event of an Automatic Conversion, the Company shall (a) issue and
deliver a certificate or certificates for the number of full shares of Common
Stock issuable upon conversion of the Notes or, (b) in the case of shares of
Common Stock issuable upon such conversion that will not, following such
issuance, be Restricted Securities, at the holder's request, credit such
aggregate
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number of shares of Common Stock to which the holder shall be entitled to the
holder's balance account with the Depositary through its Deposit Withdrawal
Agent Commission system, in either case along with (i) any cash in respect of
any fractional shares of Common Stock otherwise issuable upon conversion (as
provided in Section 15.4), and (ii) the Company Conversion Provisional Payment,
if any, for payment to the holder as promptly after the Automatic Conversion
Date as practicable in accordance with the provisions of this Section 15.3.
All Notes subject to the Automatic Conversion shall be delivered to the
Company to be canceled. Failure to deliver such Notes shall not affect their
automatic cancellation.
Section 15.4 Cash Payments in Lieu of Fractional Shares
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 thereof 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 for conversion. If any
fractional share of stock otherwise would be issuable upon the conversion of any
Note or Notes, the Company shall calculate and pay a cash adjustment in lieu of
such fractional share at the current market value thereof to the holder of
Notes. For purposes of this Section 15.4, the current market value of a share of
Common Stock shall be the Closing Price (determined as provided in Section
15.6(e)) on the Trading Day immediately preceding the day on which the relevant
Notes (or specified portions thereof) are deemed to have been converted.
Section 15.5 Conversion Price
The conversion price shall be as specified in the form of Note (herein
called the "Conversion Price") attached as Exhibit A hereto, subject to
adjustment as provided in this Article XV.
Section 15.6 Adjustment of Conversion Price
The Conversion Price shall be adjusted from time to time by the Company as
follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the Business
Day following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which (i) the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the Record Date
(as defined in Section 15.6(e)) fixed for such determination and (ii) the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction in the
Conversion Price to become effective immediately after the opening of business
on the Business Day following the Record Date. If any dividend or distribution
of the type described in this Section 15.6(a) is declared but not so paid or
made, the Conversion Price shall again be adjusted to the Conversion Price which
would then be in effect if such dividend or distribution had not been declared.
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(b) In case the outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the Business Day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and conversely,
in case outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the Business Day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the opening
of business on the Business Day following the day upon which such subdivision or
combination becomes effective.
(c) In case the Company shall issue rights or warrants to all or
substantially all holders of its outstanding shares of Common Stock entitling
them to subscribe for or purchase into shares of Common Stock at a price per
share less than the Current Market Price (as defined in Section 15.6(e)) (other
than rights or warrants subject to the third paragraph of Section 15.6(d)) on
the Record Date fixed for the determination of shareholders entitled to receive
such rights or warrants, the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
at the opening of business on the Business Day after such Record Date by a
fraction of which (i) the numerator shall be the sum of the number of shares of
Common Stock outstanding at the close of business on the Record Date plus the
number of shares that the aggregate offering price of the total number of shares
so offered for subscription or purchase would purchase at such Current Market
Price, and of which (ii) the denominator shall be the sum of the number of
shares of Common Stock outstanding at the close of business on the Record Date
plus the total number of additional shares of Common Stock so offered for
subscription or purchase. Such adjustment shall become effective immediately
after the opening of business on the Business Day following the Record Date
fixed for determination of shareholders entitled to receive such rights or
warrants. To the extent that shares of Common Stock are not delivered pursuant
to such rights or warrants, upon the expiration or termination of such rights or
warrants the Conversion Price shall be readjusted to the Conversion Price that
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of
shares of Common Stock actually delivered. In the event that such rights or
warrants are not so issued, the Conversion Price shall again be adjusted to be
the Conversion Price that would then be in effect if the Record Date for the
determination of shareholders entitled to receive such rights or warrants had
not been fixed. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Common Stock at less than such
Current Market Price, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any consideration
received for such rights or warrants, the value of such consideration, if other
than cash, to be determined in good faith by the Board of Directors.
(d) In case the Company shall, by dividend or otherwise, distribute to all
or substantially all holders of its Common Stock shares of any class of capital
stock of the Company (other than any dividends or distributions to which Section
15.6(a) applies) or evidences of its indebtedness or other assets (including
securities, but excluding (1) any rights or warrants referred to in Section
15.6(c) and (2) dividends and distributions paid exclusively in cash, which are
subject to the last paragraph of this Section 15.6(d), (the foregoing
hereinafter in this Section 15.6(d) called the "Additional Securities")), unless
the Company elects to reserve such Additional Securities for distribution to the
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Noteholders upon conversion of the Notes so that any such holder converting
Notes will receive upon such conversion, in addition to the shares of Common
Stock to which such holder is entitled, the amount and kind of such Additional
Securities which such holder would have received if such holder had converted
its Notes into Common Stock immediately prior to the Record Date (as defined in
Section 15.6(e)) for such distribution of the Additional Securities then, in
each such case, the Conversion Price shall be reduced so that the same shall be
equal to the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the Record Date with respect to
such distribution by a fraction of which (i) the numerator shall be the Current
Market Price (determined as provided in Section 15.6(e)) on such date less the
fair market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) on such
date of the portion of the Additional Securities so distributed applicable to
one share of Common Stock (determined on the basis of the number of shares of
Common Stock outstanding on the Record Date) and (ii) the denominator shall be
such Current Market Price, such reduction to become effective immediately prior
to the opening of business on the Business Day following the Record Date;
provided, however, that in the event the then fair market value (as so
determined) of the portion of the Additional Securities so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Noteholder shall have the right to receive
upon conversion of a Note (or any portion thereof) the amount of Common Stock,
other capital stock, evidences of indebtedness and other assets that such holder
would have received had such holder converted such Note (or portion thereof)
immediately prior to such Record Date and immediately thereafter received such
Additional Securities. In the event that such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared. If the Board of Directors determines the fair market value of any
distribution for purposes of this Section 15.6(d) by reference to the actual or
when issued trading market for any securities comprising all or part of such
distribution, it must in doing so consider the prices in such market over the
same period (the "Reference Period") used in computing the Current Market Price
pursuant to Section 15.6(e) to the extent possible, unless the Board of
Directors in a Board Resolution determines in good faith that determining the
fair market value during the Reference Period would not be in the best interest
of the Noteholders.
In the event that the Company implements a new shareholder rights plan,
such rights plan shall provide that upon conversion of the Notes the holders
will receive, in addition to the Common Stock issuable upon such conversion, the
rights issued under such rights plan as if the holders had converted the Notes
prior to implementing the rights plan and notwithstanding the occurrence of an
event causing such rights to separate from the Common Stock at or prior to the
time of conversion. Any distribution of rights or warrants pursuant to a
shareholder rights plan complying with the requirements set forth in the
immediately preceding sentence of this paragraph shall not constitute a
distribution of rights or warrants for the purposes of Section 15.6(c) or this
Section 15.6(d).
Rights or warrants 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 or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock;
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(ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 15.6(d) (and no adjustment to the Conversion Price
under this Section 15.6(d) will be required) until the occurrence of the
earliest Trigger Event. If such right or warrant is subject to subsequent
events, upon the occurrence of which such right or warrant shall become
exercisable to purchase different securities, evidences of indebtedness or other
assets or entitle the holder to purchase a different number or amount of the
foregoing or to purchase any of the foregoing at a different purchase price,
then the occurrence of each such event shall be deemed to be the date of
issuance and record date with respect to a new right or warrant (and a
termination or expiration of the existing right or warrant without exercise by
the holder thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto, that resulted in
an adjustment to the Conversion Price under this Section 15.6(d), (1) in the
case of any such rights or warrants that 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 or warrants (assuming such
holder had retained such rights or warrants), made to all holders of Common
Stock as of the date of such redemption or repurchase, and (2) in the case of
such rights or warrants all of which shall have expired or been terminated
without exercise, the Conversion Price shall be readjusted as if such rights and
warrants had never been issued.
For purposes of this Section 15.6(d) and Sections 15.6(a) and (c), any
dividend or distribution to which this Section 15.6(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock to which Section 15.6(a) or 15.6(c) applies (or
both), shall be deemed to be (1) a dividend or distribution of the evidences of
indebtedness, assets, shares of capital stock, rights or warrants to which this
Section 15.6(d) applies (and any Conversion Price reduction required by this
Section 15.6(d) with respect to such dividend or distribution shall first be
made) immediately followed by (2) a dividend or distribution of the shares of
Common Stock or rights or warrants to which Sections 15.6(a) and (c) apply (and
any further Conversion Price reduction required by Sections 15.6(a) and (c) with
respect to such dividend or distribution shall then be made), except (A) the
Record Date of such dividend or distribution shall be substituted as "the date
fixed for the determination of shareholders entitled to receive such dividend or
other distribution", "Record Date fixed for such determination" and "Record
Date" within the meaning of Section 15.6(a) and as "the date fixed for the
determination of shareholders entitled to receive such rights or warrants", "the
Record Date fixed for the determination of the shareholders entitled to receive
such rights or warrants" and "such Record Date" within the meaning of Section
15.6(c) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of Section 15.6(a).
In case the Company shall, by dividend or otherwise, distribute to all or
substantially all holders of its Common Stock cash (excluding any cash that is
distributed upon a merger or consolidation to which Section 15.7 applies or as
part of a distribution referred to elsewhere in this Section 15.6(d)), then
immediately after the close of business on the Record Date for the
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distribution, the Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the close of business on such Record Date by a fraction (i) the
numerator of which shall be equal to the Current Market Price on the Record Date
less the portion of the cash so distributed applicable to one (1) share of
Common Stock and (ii) the denominator of which shall be equal to the Current
Market Price on such date; provided, however, that in the event the portion of
the cash so distributed applicable to one (1) share of Common Stock is equal to
or greater than the Current Market Price of the Common Stock on the Record Date,
in lieu of the foregoing adjustment, adequate provision shall be made so that
each holder shall have the right to receive upon conversion of a Note (or any
portion thereof) the amount of Common Stock and cash such holder would have
received had such holder converted such Note (or portion thereof) immediately
prior to such Record Date and immediately thereafter received such cash
distribution. In the event that such dividend or distribution is not so paid or
made, the Conversion Price shall again be adjusted to be the Conversion Price
that would then be in effect if such dividend or distribution had not been
declared.
(e) For purposes of this Section 15.6, the following terms shall have the
meaning indicated:
(1) "Closing Price" with respect to any securities on any day shall
mean the closing sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and
asked prices, regular way, in each case on the Nasdaq National Market or
New York Stock Exchange, as applicable, or, if such security is not listed
or admitted to trading on such National Market or Exchange, on the
principal national security exchange or quotation system on which such
security is quoted or listed or admitted to trading, or, if not quoted or
listed or admitted to trading on any national securities exchange or
quotation system, the average of the closing bid and asked prices of such
security on the over-the-counter market on the day in question as reported
by the National Quotation Bureau Incorporated, or a similar generally
accepted reporting service, or if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from time to
time by the Board of Directors for that purpose, or a price determined in
good faith by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution.
(2) "Current Market Price" shall mean the average of the daily Closing
Prices per share of Common Stock for the ten (10) consecutive Trading Days
immediately prior to the date in question; provided, however, that (1) if
the "ex" date (as hereinafter defined) for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 15.6(a), (b), (c) or
(d) occurs during such ten (10) consecutive Trading Days, the Closing Price
for each Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by which
the Conversion Price is so required to be adjusted as a result of such
other event, (2) if the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 15.6(a), (b), (c) or (d) occurs on or
after the "ex" date for the issuance or distribution requiring such
computation and prior to the day in question, the Closing Price for each
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Trading Day on and after the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, and (3) if the "ex" date for the issuance or
distribution requiring such computation is prior to the day in question,
after taking into account any adjustment required pursuant to clause (1) or
(2) of this proviso, the Closing Price for each Trading Day on or after
such "ex" date shall be adjusted by adding thereto the amount of any cash
and the fair market value (as determined in good faith by the Company's
Board of Directors in a manner consistent with any determination of such
value for purposes of Section 15.6(d), whose determination shall be
conclusive and described in a Board Resolution) of the evidences of
indebtedness, shares of capital stock or assets being distributed
applicable to one share of Common Stock as of the close of business on the
day before such "ex" date. For purposes of this paragraph, the term "ex"
date, (1) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or distribution and (2)
when used with respect to any subdivision or combination of shares of
Common Stock, means the first date on which the Common Stock trades regular
way on such exchange or in such market after the time at which such
subdivision or combination becomes effective. Notwithstanding the
foregoing, whenever successive adjustments to the Conversion Price are
called for pursuant to this Section 15.6, such adjustments shall be made to
the Current Market Price as may be necessary or appropriate to effectuate
the intent of this Section 15.6 and to avoid unjust or inequitable results
as determined in good faith by the Board of Directors.
(3) "fair market value" shall mean the amount which a willing buyer
would pay a willing seller in an arm's length transaction.
(4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common
Stock have the right to receive any cash, securities or other property or
in which the Common Stock (or other applicable security) is exchanged for
or converted into any combination of cash, securities or other property,
the date fixed for determination of shareholders entitled to receive such
cash, securities or other property (whether such date is fixed by the Board
of Directors or by statute, contract or otherwise).
(5) "Trading Day" shall mean (x) if the applicable security is listed
or admitted for trading on the New York Stock Exchange or another national
security exchange, a day on which the New York Stock Exchange or such other
national security exchange, as applicable, is open for business or (y) if
the applicable security is quoted on the Nasdaq National Market, a day on
which trades may be made thereon or (z) if the applicable security is not
so listed, admitted for trading or quoted, a Business Day.
(f) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 15.6(a), (b), (c) or (d), as the Board of
Directors considers to be advisable to avoid or diminish any income tax to
holders of Common Stock or rights to purchase Common Stock
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resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
(g) To the extent permitted by applicable law, 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 twenty (20) days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive and described in a Board Resolution. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Company shall send to
the holder of each Note at his last address appearing on the Note Register
provided for in Section 2.5(a) a notice of the reduction at least five (5) days
prior to the date the reduced Conversion Price takes effect, and such notice
shall state the reduced Conversion Price and the period during which it will be
in effect. A reduction of the Conversion Price pursuant to this Section 15.6(g)
does not change or adjust the Conversion Price otherwise in effect for purposes
of the other provisions of this Section 15.6.
(h) No adjustment in the Conversion Price shall be required under this
Section 15.6 unless such adjustment would require an increase or decrease of at
least one percent (1%) in such price; provided, however, that any adjustments
which by reason of this Section 15.6 (h) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Article XV shall be made by the Company and 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 a change in the par value or no par value
of the Common Stock. Except as otherwise described in this Section 15.6, no
adjustment in the Conversion Price shall be required for the issuance of shares
of Common Stock or the right to purchase shares of Common Stock. To the extent
that the Notes become convertible into cash, no adjustment need be made
thereafter as to the cash and interest will not accrue on that cash.
(i) Subject to Section 15.6(g), whenever the Conversion Price is adjusted
as provided in this Section 15.6, the Company shall promptly file with the
Trustee and any conversion agent other than the Trustee an Officer's Certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment. Promptly after delivery
of such certificate, the Company shall prepare a notice of such adjustment of
the Conversion Price setting forth the adjusted Conversion Price and the date on
which each adjustment becomes effective and shall send such notice of such
adjustment of the Conversion Price to the holder of each Note at his last
address appearing on the Note Register provided for in Section 2.5(a), within
twenty (20) days of the effective date of such adjustment. Failure to deliver
such notice shall not effect the legality or validity of any such adjustment.
(j) In any case in which this Section 15.6 provides that an adjustment
shall become effective immediately after a Record Date for an event, the Company
may defer until the occurrence of such event (i) issuing to the holder of any
Note (or portion thereof) converted after such Record Date and before the
occurrence of such event the additional shares of Common Stock issuable upon
such conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such holder any amount in cash in lieu of any
fraction pursuant to Section 15.4.
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(k) For purposes of this Section 15.6, the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
Section 15.7 Effect of Reclassification, Consolidation, Merger or Sale
Subject to the provisions of Article XVI, if any of the following events
occurs, namely (i) any reclassification or change of the 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), (ii) any consolidation, merger or combination of the Company with
another Person as a result of which holders of Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock (other than as a result of a
change in name, a change in par value or a change in the jurisdiction of
incorporation), (iii) any statutory exchange as a result of which holders of
Common Stock generally shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock (such transaction, a "Statutory Exchange"), or (iv) any sale or
conveyance of the properties and assets of the Company as, or substantially as,
an entirety to any other Person as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, then the
Company or the successor or purchasing Person, as the case may be, shall execute
with the Trustee a supplemental indenture (which shall comply with the Trust
Indenture Act as in force at the date of execution of such supplemental
indenture if such supplemental indenture is then required to so comply)
providing that such Note shall be convertible into the kind and amount of shares
of stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination,
Statutory Exchange, sale or conveyance by a holder of a number of shares of
Common Stock issuable upon conversion of such Notes (assuming, for such
purposes, a sufficient number of authorized shares of Common Stock available to
convert all such Notes) immediately prior to such reclassification, change,
consolidation, merger, combination, Statutory Exchange, sale or conveyance. In
the event holders of Common Stock have the opportunity to elect the form of
consideration to be received in such reclassification, change, consolidation,
merger, combination, Statutory Exchange, sale or conveyance, the Company shall
make adequate provision whereby the holders of the Notes shall have a reasonable
opportunity to determine the form of consideration into which all of the Notes
shall be convertible from and after the effective date of such reclassification,
change, consolidation, merger, combination, Statutory Exchange, sale or
conveyance. Such determination shall be (i) based on the weighted average of
elections made by holders of the Notes who participate in such determination,
(ii) subject to any limitations to which all of the holders of the Common Stock
are subject, such as pro-rata reductions applicable to any portion of the
consideration payable in such reclassification, change, consolidation, merger,
combination, Statutory Exchange, sale or conveyance, and (iii) conducted in such
a manner as to be completed by the date which is the earliest of (a) the
deadline for elections to be made by stockholders of the Company, and (b) two
Trading Days prior to the anticipated effective date of the reclassification,
change, consolidation, merger, combination, Statutory Exchange, sale or
conveyance. The Company shall provide notice of the
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opportunity to determine the form of such consideration, as well as notice of
the determination made by holders of the Notes (and the weighted average of
elections), by issuing a press release and providing a copy of such notice to
the Trustee. In the event the effective date of the reclassification, change,
consolidation, merger, combination, Statutory Exchange, sale or conveyance is
delayed beyond the initially anticipated effective date, holders of the Notes
shall be given the opportunity to make subsequent similar determinations in
regard to such delayed effective date. Such supplemental indenture shall provide
for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article XV. If, in the case of any such
reclassification, change, consolidation, merger, combination, Statutory
Exchange, sale or conveyance, the stock or other securities and assets
receivable thereupon by a holder of shares of Common Stock include shares of
stock or other securities and assets of a Person other than the successor or
purchasing Person, as the case may be, in such reclassification, change,
consolidation, merger, combination, Statutory Exchange, sale or conveyance, then
such supplemental indenture shall also be executed by such other Person and
shall contain such additional provisions to protect the interests of the holders
of the Notes as the Company's Board of Directors shall reasonably consider
necessary by reason of the foregoing, including to the extent practicable the
provisions providing for the repurchase rights set forth in Article XVI herein.
The Company shall cause notice of the execution of such supplemental
indenture to be sent to each holder of Notes, at his address appearing on the
Note Register provided for in Section 2.5(a) of this Indenture, within twenty
(20) days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of such supplemental indenture.
The above provisions of this Section 15.7 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 15.7 applies to any event or occurrence, Section 15.6 shall
not apply.
Section 15.8 Taxes on Shares Issued
The issue of stock certificates on conversions of Notes shall be made
without charge to the converting Noteholder for any tax in respect of the issue
thereof. The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of stock
in any name other than that of the holder of any Note converted, and the Company
shall not be required to issue or deliver any such stock certificate unless and
until the Person or Persons requesting the issue thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
Section 15.9 Reservation of Shares; Shares to be Fully Paid; Listing of
Common Stock
The Company shall provide, free from preemptive rights, out of its
authorized but unissued shares, reserved for the purpose of issuance, no less
than one hundred five percent (105%) of the number of shares of Common Stock
needed to provide for the issuance of Common Stock upon conversion of all of the
Notes without regard to any limitations on conversions or exercise (but not
including any Additional Shares); provided that until such date, if any, after
the date hereof as the shareholders of the Company approve an increase in the
authorized capital stock of the Company
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such that there are sufficient shares therefor (the "Approval Date"), the number
of shares required to be reserved shall be reduced to the total number of the
Company's authorized but unissued shares that, as of the date hereof, are
available for issuance and have not been reserved by the Company's Board of
Directors for a specific purpose as of the date hereof including issuance under
any existing stock option or other equity plan of the Company or other
obligation of the Company to issue shares of Common Stock (including the
obligation represented by the Warrants issued pursuant to the Securities
Purchase Agreement to the initial purchasers of the beneficial interests in the
Notes).
The Company will not, by amendment of its articles of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any shares of
Common Stock issuable upon conversion of the Notes above the Conversion Price
then in effect, (ii) will take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock upon conversion of the Notes and (iii)
will not at any time after the Approval Date take any action which results in
any adjustment of the Conversion Price if the total number of shares of Common
Stock issuable after the conversion of all of the Notes would exceed the total
number of shares of Common Stock then authorized by the Company's articles of
incorporation and available for the purpose of issue upon such exercise.
The Company covenants that all shares of Common Stock issued upon
conversion of Notes will be fully paid and non-assessable by the Company and
free from all preemptive and other similar rights, and all taxes, liens and
charges with respect to the issue thereof.
The Company is obligated to register the Notes and the shares of Common
Stock issuable upon conversion of the Notes for resale under the Securities Act
pursuant to the Registration Rights Agreement. The Notes and the shares of
Common Stock issuable upon conversion of the Notes shall constitute Registrable
Securities (as such term is defined in the Registration Rights Agreement). Each
holder of Notes shall be entitled to all of the benefits afforded to a holder of
Registrable Securities under the Registration Rights Agreement and such holder,
by its acceptance of a Note, agrees and shall agree to be bound by and to comply
with the terms and conditions of the Registration Rights Agreement applicable to
such holder as a holder of such Registrable Securities.
The Company shall use commercially reasonable efforts to promptly secure
the listing of the shares of Common Stock issuable upon conversion of the Notes
upon each national securities exchange and automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance upon conversion of such Notes) and shall use commercially reasonable
efforts to maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all shares of Common Stock from time to time issuable
upon the conversion of all then outstanding Notes; and the Company shall use
commercially reasonable efforts to list on each national securities exchange or
automated quotation system, as the case may be, and shall maintain such listing
of, any other shares of capital stock of the Company issuable upon conversion of
the Notes if and so long as any shares of the same class shall be listed on such
national securities
72
exchange or automated quotation system. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 15.9.
Section 15.10 Responsibility of Trustee
The Trustee and any other conversion agent shall not at any time be under
any duty or responsibility to any holder of Notes to determine whether any facts
exist which may require any adjustment of the Conversion Price, or with respect
to the nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee and any other
conversion agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
other property, which may at any time be issued or delivered upon the conversion
of any Note; and the Trustee and any other conversion agent make no
representations with respect thereto. Neither the Trustee nor any conversion
agent shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
other property or cash upon the surrender of any Note for the purpose of
conversion or to comply with any of the duties, responsibilities or covenants of
the Company contained in this Article XV. Without limiting the generality of the
foregoing, neither the Trustee nor any conversion agent shall be under any
responsibility to determine whether a supplemental indenture need be entered
into under Section 15.7 or the correctness of any provisions contained in any
supplemental indenture entered into pursuant to such section relating either to
the kind or amount of shares of stock or securities or other property (including
cash) receivable by Noteholders upon the conversion of their Notes after any
event referred to in such Section 15.7 or to any adjustment to be made with
respect thereto, but, subject to the provisions of Section 8.1, may accept as
conclusive evidence of the correctness of any such provisions, and shall be
protected in relying upon, the Officer's Certificate (which the Company shall be
obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.
Section 15.11 Notice to Holders Prior to Certain Actions
In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any share
of any class or any other rights or warrants (other than rights or warrants
described in the third paragraph of Section 15.6(d)); 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 shareholders of the Company is
required (other than a merger that only serves to change the Company's name
or
73
jurisdiction of incorporation), 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 sent to each
holder of Notes at his address appearing on the Note Register provided for in
Section 2.5(a) of this Indenture, as promptly as possible but in any event at
least fifteen (15) 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 granting of rights or warrants, or, if a record
is not to be taken, the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution or rights or warrants 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, grant, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.
Section 15.12 Holder Not Deemed a Shareholder
Except as otherwise specifically provided herein, prior to a Noteholder's
receipt of Common Stock upon conversion of a Note, the Noteholder shall not be
entitled, as such, to any rights of a shareholder of the Company, including,
without limitation, the right to vote or to consent to any action of the
shareholders of the Company, to receive dividends or other distributions, to
exercise any preemptive right or to receive dividends or other distributions, or
to receive any notice of meetings of shareholders of the Company, and shall not
be entitled to receive any notice of any proceedings of the Company. In
addition, nothing contained in this Indenture shall be construed as imposing any
liabilities on such holder to purchase any securities (upon conversion of a Note
or otherwise) or as a shareholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company.
Section 15.13 Adjustment to Conversion Price Following Certain Changes of
Control
In case (a) a Change of Control (as defined in Section 16.3) occurs as
defined in clause (iii) of the definition thereof (disregarding, for purposes of
this Section 15.13, the proviso at the end of such definition), (b) 10% or more
of the value of the consideration received by holders of the Common Stock in
connection with such Change of Control (as determined in good faith by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution) consists of cash or securities or other property that is not traded
or scheduled to be traded immediately following such transaction on a U.S.
national securities exchange or the Nasdaq National Market and (c) a holder
elects to convert its Notes pursuant to this Article XV or the Company elects to
convert all or a portion of the Notes pursuant to Section 15.3, in either case
on or
74
prior to October 15, 2010, then the Conversion Price for any such Notes
surrendered for conversion shall be increased by a number of additional shares
of Common Stock (the "Additional Shares") as described below.
The number of Additional Shares will be determined by reference to the
table attached as Schedule A hereto, based on the effective date of such Change
in Control (the "Effective Date") and the price (the "Stock Price") paid per
share of the Common Stock in such corporate transaction. If holders of Common
Stock receive only cash in such corporate transaction, the Stock Price shall be
the cash amount paid per share. Otherwise, the Stock Price shall be the average
of the Closing Prices of Common Stock on the five Trading Days up to but not
including the Effective Date of the Change in Control.
The Stock Prices set forth in the first row of the table in Schedule A
hereto will be adjusted as of any date on which the Conversion Price of the
Securities is adjusted pursuant to Section 15.6. The adjusted Stock Price will
equal the Stock Price applicable immediately prior to such adjustment,
multiplied by a fraction, the numerator of which is the Conversion Price as so
adjusted and the denominator of which is the Conversion Price immediately prior
to the adjustment giving rise to the Stock Price adjustment. In the case of any
such adjustment to the Stock Price, the number of Additional Shares will be
adjusted by multiplying such number by a fraction, the numerator of which is the
Conversion Price immediately prior to such adjustment and the denominator of
which is the Conversion Price, as so adjusted.
The exact Stock Prices and Effective Dates may not be set forth in the
table in Schedule A, in which case:
(i) if the Stock Price is between two Stock Price amounts in the table
or the Effective Date is between two Effective Dates in the table, the
number of Additional Shares will be determined by a straight-line
interpolation between the number of Additional Shares set forth for the
higher and lower Stock Price amounts and the two dates, as applicable,
based on a 365-day year,
(ii) prior to October 15, 2008, if the Stock Price exceeds $7.50 per
share, subject to adjustments set forth in Section 15.6, the number of
Additional Shares will be determined based on the formula reflected in the
table which has the intent of producing a number of shares equal to the
interest payable on the Notes through October 15, 2008, less any interest
paid on the Notes prior to the Effective Date, and divided by the Stock
Price; after October 15, 2008, holders will not receive any additional
shares if the stock price exceeds $6.30 per share, and
(iii) if the Stock Price is less than $3.75 per share, subject to
adjustments set forth in Section 15.6, no Additional Shares will be issued
upon conversion.
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Section 15.14 Payment of Additional Conversion Payment and Company
Conversion Provisional Payment.
The Company may pay any Company Conversion Provisional Payment required to
be paid pursuant to this Indenture in whole or in part in cash and/or through
the issuance of Common Stock; provided (i) that Common Stock used to pay any
such payment shall be valued at ninety-five percent (95%) of the Closing Prices
per share of Common Stock for the ten (10) consecutive Trading Days ending on
and including the second Trading Day immediately preceding the Conversion Date,
(ii) that a registration statement covering the resale of such Common Stock is
effective and available for resale of such Common Stock from the twenty-fifth
(25th) Trading Date prior to the Conversion Date to and including the 30th day
after the Conversion Date to the extent required under the Registration Rights
Agreement, (iii) such Common Stock is listed for trading on the Principal Market
(as defined in the Securities Purchase Agreement) and (iv) that there are enough
authorized but unissued shares of Common Stock available for that purpose.
ARTICLE XVI
REPURCHASE RIGHT
Section 16.1 Repurchase Right
If, at any time prior to October 15, 2025 there shall occur a Repurchase
Event (as defined in Section 16.3), then each holder shall have the right, at
such holder's option, to require the Company to repurchase all of such holder's
Notes, or any portion thereof (in principal amounts of One Thousand United
States Dollars ($1,000) or integral multiples thereof), on the date set by the
Company (a "Repurchase Date") that is no earlier than the Business Day
immediately following the earliest date permitted under Rule 13e-4 or Rule 14e-1
under the Exchange Act (or any successor rule), if either such rule is
applicable, and no later than sixty (60) calendar days after the date of the
Company Notice (as defined in Section 16.2(a) below) of such Repurchase Event
(or, if such 60th day is not a Business Day, the next succeeding Business Day).
Such repurchase shall be made in cash at a price equal to 100% of the principal
amount of Notes such holder elects to require the Company to repurchase
together, in each case, with accrued interest, if any, to, but excluding, the
applicable Repurchase Date (the "Repurchase Price"); provided, that if the
relevant Repurchase Date occurs after a record date or special record date and
before the related Interest Payment Date or special interest payment date, the
amount payable on such Interest Payment Date or special interest payment date
shall be paid to the record holder at the close of business on the record date
or special record date as provided in Section 2.3 and shall not constitute part
of the Repurchase Price.
In addition, Notes shall be purchased by the Company at the option of the
holder on October 15, 2010, October 15, 2015 and October 15, 2020 (each, also a
"Repurchase Date"), at the Repurchase Price.
Notwithstanding anything in this Article XVI to the contrary, if a
redemption date pursuant to Article III shall occur prior to any Repurchase Date
established pursuant to a Company Notice under Section 16.2, provided that the
Company shall have deposited or set aside an amount of
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money sufficient to redeem such Notes as set forth in Section 3.2 on or before
such Repurchase Date, all such Notes shall be redeemed pursuant to Article III
and the repurchase rights hereunder shall have no effect.
Section 16.2 Notices; Method of Exercising Repurchase Right, Etc.
(a) Unless the Company shall have theretofore called for redemption all of
the outstanding Notes and deposited or set aside an amount of money sufficient
to redeem such Notes on the redemption date as set forth in Section 3.2, on or
before (x) the tenth (10th) calendar day following the occurrence of a
Repurchase Event and (y) September 1, 2010, September 1, 2015 and September 1,
2020, the Company or, at the written request of the Company, the Trustee, shall
send to all holders of record of the Notes a notice (the "Company Notice") of
the repurchase right set forth herein arising as of the result of the occurrence
of a Repurchase Event or on October 15, 2010, October 15, 2015 or October 15,
2020, as applicable. The Company shall also deliver a copy of such notice to the
Trustee. The Company Notice shall contain the following information:
(1) a brief description of the Repurchase Event, if applicable;
(2) the Repurchase Date;
(3) the CUSIP number(s) of the Note(s) subject to the repurchase
right;
(4) the date by which the repurchase right must be exercised;
(5) the last date by which the election to require repurchase, if
submitted, may be revoked;
(6) the Repurchase Price;
(7) a description of the procedure which a holder must follow to
exercise the repurchase right;
(8) if applicable, that Additional Shares are expected to become
issuable pursuant to Section 15.13 as a result of the Change of Control and
the method for calculating the number of Additional Shares to be issued;
and
(9) the Conversion Price then in effect, the date on which the right
to convert the principal amount of the Notes to be repurchased will
terminate and the method by which and place or places where Notes may be
surrendered for conversion.
No failure of the Company to give the foregoing notices or defect therein
shall limit any holder's right to exercise a repurchase right or affect the
validity of the proceedings for the repurchase of Notes.
(b) To exercise a repurchase right, a holder shall deliver to the Trustee
on or before the close of business on the last Business Day prior to the
Repurchase Date (i) written notice to the
77
Company (or agent designated by the Company for such purpose) of the holder's
exercise of such right in substantially the form attached hereto as Exhibit C
(the "Repurchase Notice"), which Repurchase Notice shall set forth the name of
the holder, the principal amount of the Notes to be repurchased and a statement
that an election to exercise the repurchase right is being made thereby, and
(ii) the Notes with respect to which the repurchase right is being exercised,
duly endorsed for transfer to the Company. Election of repurchase by a holder
shall be revocable at any time prior to the close of business on the last
Business Day prior to the Repurchase Date, by delivering written notice to that
effect to the Trustee.
(c) If the Company fails to repurchase on the Repurchase Date any Notes (or
portions thereof) as to which the repurchase right has been properly exercised,
then the principal of such Notes shall, until paid, bear interest to the extent
permitted by applicable law from the Repurchase Date at the rate borne by the
Note and each such Note shall be convertible into Common Stock in accordance
with this Indenture until the principal of such Note shall have been paid or
duly provided for.
(d) Any Note that is to be repurchased only in part shall be surrendered to
the Trustee duly endorsed for transfer to the Company and accompanied by
appropriate evidence of genuineness and authority satisfactory to the Company
and the Trustee duly executed by the holder thereof (or his 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, containing identical terms and conditions, of any authorized
denomination as requested by such holder in aggregate principal amount equal to
and in exchange for the unrepurchased portion of the principal of the Note so
surrendered.
(e) On or prior to 1:00 p.m., Minneapolis time on the Repurchase Date, the
Company shall deposit with the Trustee or with a paying agent (or, if the
Company is acting as its own paying agent, segregate and hold in trust as
provided in Section 5.4) the Repurchase Price in cash for payment to the holder
on the Repurchase Date. If on or after the Repurchase Date the Company shall
have deposited (or segregated and be holding in trust) funds sufficient to pay
the Repurchase Price of all Notes (or portions thereof) as to which the holders
have duly exercised their repurchase rights pursuant to this Section 16.2, then
on and after such date interest on such Notes (or portions thereof) shall cease
to accrue and such Notes shall cease at the close of business on such date to be
convertible into Common Stock and, except as provided in Section 8.5 and 13.4,
to be entitled to any benefit or security under this Indenture and the holders
thereof shall have no right in respect of such Notes except the right to receive
the Repurchase Price of such Notes (or portions thereof), without interest
thereon from the Repurchase Date.
(f) If the Company is unable to repurchase on the Repurchase Date all of
the Notes (or portions thereof) as to which the repurchase right has been
properly exercised, the aggregate amount of Notes the Company may repurchase
shall be allocated pro rata among each Note (or portion thereof) surrendered for
repurchase, based on the principal amount of such Note, in proportion to the
aggregate amount of Notes surrendered for repurchase.
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(g) All Notes delivered for repurchase shall be delivered to the Trustee to
be canceled in accordance with the provisions of Section 2.8.
(h) If any of the foregoing provisions are inconsistent with applicable
law, such law shall govern.
(i) When complying with the requirements of this Article XVI, the Company
shall comply with the requirements of Rules 13e-4 and 14e-1 (or any successor
rules) under the Exchange Act and any other federal or state securities laws to
the extent such laws are applicable at the time to such actions under this
Article XVI.
Section 16.3 Certain Definitions
For purposes of this Article XVI:
(a) The term "beneficial owner" shall be determined in accordance with Rule
13d-3 and 13d-5, as in effect on the date of the original execution of this
Indenture, promulgated by the Commission pursuant to the Exchange Act.
(b) The term "person" or "group" shall include any syndicate or group which
would be deemed to be a "person" under Section 13(e) and 14(d) of the Exchange
Act as in effect on the date of the original execution of this Indenture.
(c) The term "Continuing Director" means at any date a member of the
Company's Board of Directors (i) who was a member of such board on the date of
the Securities Purchase Agreement or (ii) who was nominated or elected by at
least a majority of the directors who were Continuing Directors at the time of
such nomination or election or whose election to the Company's Board of
Directors was recommended or endorsed by at least a majority of the directors
who were Continuing Directors at the time of such nomination or election or such
lesser number comprising a majority of a nominating committee if authority for
such nominations or elections has been delegated to a nominating committee whose
authority and composition have been approved by at least a majority of the
directors who were Continuing Directors at the time such committee was formed.
(Under this definition, if the Board of Directors of the Company as of the date
of this Indenture were to approve a new director or directors and then resign,
no Change in Control would occur even though all of the current members of the
Board of Directors would thereafter cease to be in office.)
(d) The term "Repurchase Event" means a Change in Control or a Termination
of Trading.
(e) A "Change in Control" shall be deemed to have occurred when (i) any
"person" or "group" (as such terms are used in Sections 13(e) and 14(d) of the
Exchange Act) is or becomes the beneficial owner of shares representing more
than 50% of the combined voting power of the then outstanding securities
entitled to vote generally in elections of directors of the Company (the "Voting
Stock"); (ii) approval by the shareholders of the Company of any plan or
proposal for the liquidation, dissolution or winding up of the Company; (iii)
the Company (A) consolidates with or
79
merges into any other corporation or any other corporation merges into the
Company, and in the case of any such transaction, the outstanding Common Stock
of the Company is changed or exchanged into other assets or securities as a
result, or (B) conveys, transfers or leases all or substantially all of its
assets to any Person (other than a wholly-owned subsidiary as a result of which
the Company becomes a holding company) unless in either such case the
shareholders of the Company immediately before such transaction own, directly or
indirectly immediately following such transaction, at least a majority of the
combined voting power of the outstanding voting securities of the corporation
resulting from such transaction in substantially the same proportion as their
ownership of the Voting Stock immediately before such transaction; or (iv) any
time Continuing Directors do not constitute a majority of the Board of Directors
of the Company (or, if applicable, a successor corporation to the Company);
provided that a Change in Control shall not be deemed to have occurred if at
least ninety percent (90%) of the consideration (excluding cash payments for
fractional shares) in the transaction or transactions constituting the Change in
Control consists of (and the capital stock into which the Notes would be
convertible consists of) shares of capital stock that are, or upon issuance will
be, traded on a United States national securities exchange or approved for
trading on an established automated over-the-counter trading market in the
United States.
(f) A "Termination of Trading" shall have occurred if the Common Stock of
the Company shall not be authorized for quotation or listing on The New York
Stock Exchange, Inc. (the "NYSE"), the American Stock Exchange, Inc. ("AMEX") or
The Nasdaq National Market or SmallCap Market ("NASDAQ").
ARTICLE XVII
MISCELLANEOUS PROVISIONS
Section 17.1 Provisions Binding on Company's Successors
All the covenants, stipulations, promises and agreements of the Company
contained in this Indenture shall bind its successors and assigns whether so
expressed or not.
Section 17.2 Official Acts by Successor Corporation
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the time be
the lawful sole successor of the Company.
Section 17.3 Addresses for Notices, Etc.
Any notice or demand which by any provision of this Indenture is required
or permitted to be given or served by the Trustee or by the holders of Notes on
the Company and any notice, direction, request or demand hereunder to or upon
the Trustee or to or upon any Noteholder shall be deemed to have been
sufficiently given or made, for all purposes (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (evidence by mechanically
or electronically generated receipt by the sender's facsimile machine); (iii)
one (1) Business Day after deposit with a nationally
80
recognized overnight delivery service; or (iv) three (3) Business Days after
deposit in the United States mail, with first-class postage pre-paid, mailed by
registered or certified mail; in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers of such communications
shall be:
If to the Company:
ATS Medical, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxx X. Xxxx
If to the Trustee:
Xxxxx Fargo Bank, National Association
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telephone (000) 000-0000
Facsimile: (000) 000-0000
Attention: Corporate Trust Administration
If to a Noteholder:
At the address and facsimile number of such Noteholder, as set
forth on the Note Register, which shall initially include the
information set forth in the Securities Purchase Agreement
regarding notices.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications. The Trustee shall
use reasonable commercial efforts to provide any notice of default, notice of
redemption and notice of conversion to each holder by facsimile, if and to the
extent such holder's facsimile number is set forth in the Note Register.
Failure to give a notice or communication to a Noteholder or any defect in
it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is given or made in the manner provided above, it is
duly given or made, whether or not the addressee receives it.
Section 17.4 Governing Law; Jurisdiction; Jury Trial
This Indenture and each Note shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the internal laws of the State of New York without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in New York City, for the
81
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Indenture and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If any provision of this
Indenture shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Indenture in that jurisdiction or the validity or
enforceability of any provision of this Indenture in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
Section 17.5 Evidence of Compliance with Conditions Precedent; Certificates
to Trustee
Upon any application or demand by the Company to the Trustee to take any
action under any of the provisions of this Indenture, the Company shall furnish
to the Trustee an Officer's Certificate stating that in the opinion of the
person executing such Officer's Certificate all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each such certificate or opinion provided for by or on behalf of the
Company and delivered to the Trustee with respect to compliance with a condition
or covenant provided for in this Indenture shall include (1) a statement that
the person making such certificate or opinion has read such covenant or
condition; (2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
Section 17.6 Legal Holidays
In any case where the date of maturity of interest on or principal of the
Notes or the date fixed for redemption of any Note will not be a Business Day,
then payment of such interest on or principal of the Notes need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date of maturity or the date fixed for
redemption, and no interest shall accrue for the intervening period.
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Section 17.7 Trust Indenture Act
This Indenture is hereby made subject to, and shall be governed by, the
provisions of the Trust Indenture Act required to be part of and to govern
indentures qualified under the Trust Indenture Act; provided, however, that this
Section 17.7 shall not require that this Indenture or the Trustee be qualified
under the Trust Indenture Act prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act, nor shall it constitute any
admission or acknowledgment by any party hereto that any such qualification is
required prior to the time such qualification is in fact required under the
terms of the Trust Indenture Act. If any provision hereof limits, qualifies or
conflicts with another provision hereof that is required to be included in an
indenture qualified under the Trust Indenture Act, such required provision shall
control. If any provision of the Trust Indenture Act requires or permits a
provision of this Indenture and the Trust Indenture Act provision is amended,
then the Indenture provision shall be automatically amended to like effect.
Section 17.8 Benefits of Indenture
Nothing in this Indenture or in the Notes, expressed or implied, shall give
to any Person, other than the parties hereto, any paying agent, any
authenticating agent, any Note Registrar and their successors hereunder, the
holders of Notes and the holders of Senior Indebtedness, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 17.9 Table of Contents, Headings, Etc.
The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.
Section 17.10 Authenticating Agent
The Trustee may appoint an authenticating agent which shall be authorized
to act on its behalf and subject to its direction in the authentication and
delivery of Notes in connection with the original issuance thereof and transfers
and exchanges of Notes hereunder, including under Sections 2.4, 2.5, 2.6, 2.7,
3.3, 15.2, 15.3 and 16.2, as fully for all intents and purposes as though the
authenticating agent had been expressly authorized by this Indenture and those
Sections to authenticate and deliver Notes. For all purposes of this Indenture,
the authentication and delivery of Notes by the authenticating agent shall be
deemed to be authentication and delivery of such Notes "by the Trustee" and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent shall be deemed to satisfy any requirement hereunder or in
the Notes for the Trustee's certificate of authentication. Such authenticating
agent shall at all times be a Person eligible to serve as trustee hereunder
pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of any authenticating agent, shall be the successor
of
83
the authenticating agent hereunder, if such successor corporation is otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the parties hereto or the authenticating agent or
such successor corporation.
Any authenticating agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any authenticating agent by giving written notice of
termination to such authenticating agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time any
authenticating agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor authenticating agent (which may be the
Trustee), shall give written notice of such appointment to the Company and shall
send notice of such appointment to all holders of Notes as the names and
addresses of such holders appear on the Note Register.
The Company agrees to pay to the authenticating agent from time to time
reasonable compensation for its services.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 17.10 shall
be applicable to any authenticating agent.
Section 17.11 Execution in Counterparts
This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.
Section 17.12 No Adverse Interpretation of Other Agreements
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any Subsidiary of the Company. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
84
IN WITNESS WHEREOF, all of the parties hereto have caused this Indenture to
be duly signed as of the date first written above.
ATS MEDICAL, INC.
By: /s/ Xxxx X. Xxxx
------------------------------------
Name: Xxxx X. Xxxx
----------------------------------
Title: Chief Financial Officer
---------------------------------
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
----------------------------------
Title: Vice President
---------------------------------
[SIGNATURE PAGE TO INDENTURE]
85
SCHEDULE A
The following table sets forth the number of Additional Shares to be
received per $1,000 principal amount of Notes.
Stock Price
---------------------------------------------------------------------
Effective Date $3.75 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50
-------------- ----- ----- ----- ----- ----- ----- ----- ----- -----
October 15, 2005...... 48.0 45.0 40.0 36.0 32.7 30.0 27.7 25.7 24.0
October 15, 2006...... 32.0 30.0 26.7 24.0 21.8 20.0 18.5 17.1 16.0
October 15, 2007...... 28.6 25.6 20.7 16.8 13.6 10.9 9.2 8.6 8.0
October 15, 2008...... 28.6 24.2 16.8 10.9 6.1 2.1 0.0 0.0 0.0
October 15, 2009...... 28.6 24.2 16.8 10.9 6.1 2.1 0.0 0.0 0.0
October 15, 2010...... 28.6 24.2 16.8 10.9 6.1 2.1 0.0 0.0 0.0
EXHIBIT A
FORM OF 6% CONVERTIBLE SENIOR NOTE DUE 2025
----------
ATS MEDICAL, INC.
[FORM OF FACE OF NOTE]
[THE FOLLOWING PARAGRAPH SHALL APPEAR ON THE FACE OF EACH RESTRICTED NOTE.]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR APPLICABLE
STATE SECURITIES LAWS. THIS SECURITY MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION THEREFROM.
[THE FOLLOWING PARAGRAPH SHALL APPEAR ON THE FACE OF EACH GLOBAL NOTE.]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE 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.
ATS MEDICAL, INC.
6% Convertible Senior Note due 2025
No. _____ $_______________
CUSIP No. _____________
A-1
ATS Medical, Inc., a corporation duly organized and validly existing under
the laws of the State of Minnesota (herein called the "Company", which term
includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received hereby promises to pay to ____________, or
registered assigns, the principal sum of ___________ United States Dollars on
October 15, 2025 and to pay interest on said principal sum semi-annually on
April 15 and October 15 of each year (each, an "Interest Payment Date"),
commencing April 15, 2006, at the rate per annum specified in the title of this
Note, accrued from the most recent date to which interest has been paid or, if
no interest has been paid, from October 7, 2005. The interest so payable on any
April 15 or October 15 will be paid to the person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the
record date, which shall be the 4th day of the month in which the Interest
Payment Date shall occur, whether or not such date is a Business Day; provided
that any such interest not punctually paid or duly provided for shall be payable
as provided in the Indenture. Each payment of interest on this Note shall
include interest to, but excluding, the date of such payment. Payment of the
principal of and interest accrued on this Note (including Liquidated Damages, if
any) shall be made at the office or agency of the Company maintained for that
purpose, which shall initially be the office or agency of the Trustee in
Minneapolis, Minnesota, specified in the Indenture, or at any other office or
agency permitted by the Indenture, in such lawful money of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts; provided, that interest may, at the option of the
Company, be paid by check mailed to the address of the holder hereof on the Note
Register; provided further, however, that, with respect to any holder of Notes
with an aggregate principal amount equal to or in excess of Five Hundred
Thousand United States Dollars ($500,000), interest on such holder's Notes shall
be paid by wire transfer in immediately available funds to any bank located in
the United States in accordance with the written wire transfer instruction
supplied by such holder from time to time to the Trustee and paying agent (if
different from the Trustee) in writing at least five (5) Business Days prior to
the applicable record date.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions giving a holder of
this Note the right to convert this Note into Common Stock of the Company on the
terms and subject to the limitations referred to on the reverse hereof and as
more fully specified in the Indenture. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Note shall be deemed to be a contract made under the laws of the State
of New York and for all purposes shall be construed in accordance with the
internal laws of the State of New York without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
A-2
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
ATS MEDICAL, INC.
----------------------------------------
[Name, Title]
Attest:
-------------------------------------
[Name, Title]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Trustee, certifies that this is one of the Notes described
in the within-named Indenture.
Dated:
----------
By:
---------------------------------
Authorized Signatory
A-3
[FORM OF REVERSE OF NOTE]
ATS MEDICAL, INC.
6% Convertible Senior Note due 2025
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 6% Convertible Senior Notes due 2025 (herein called the
"Notes"), limited (except as otherwise provided in the Indenture) to the
aggregate principal amount outstanding of _______________ United States Dollars,
($____________) all issued or to be issued under and pursuant to an Indenture
dated as of October 7, 2005 (herein called the "Indenture"), between the Company
and Xxxxx Fargo Bank, National Association (herein called the "Trustee"), to
which the Indenture and all indentures supplemental thereto reference is hereby
made for a full description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Notes. All capitalized terms used herein without definition shall have the
meaning set forth in the Indenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of and premium, if any, on all Notes
and the interest accrued thereon (including Liquidated Damages to the extent
accrued and unpaid) may be declared, and upon said declaration shall become, due
and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture. Liquidated damages paid pursuant to Section 15.2 of
the Indenture, if any, shall be paid within ten (10) Business Days after the end
of each month with respect to which such liquidated damages have accrued
pursuant to Section 15.2 in the same manner as interest is paid. Liquidated
Damages on the Notes paid pursuant to Section 2(f) of the Registration Rights
Agreement, if any, shall be paid at the times and in the manner provided
therein.
The Indenture contains provisions permitting the Company and the Trustee in
certain limited circumstances, without the consent of the holders of the Notes,
and in other circumstances, with the consent of the holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding,
evidenced as in the Indenture provided, to execute amendments to the Indenture
or supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Notes;
provided, however, that no such amendment or supplemental indenture shall (i)
extend the fixed maturity of any Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof or premium,
if any, thereon, or reduce any amount payable on redemption or repurchase
thereof, impair or change in any respect adverse to the holder of Notes the
obligation of the Company to repurchase any Note at the option of the holder in
accordance with Article XVI of the Indenture, or impair or adversely affect the
right of any Noteholder to institute suit for the payment thereof, or change the
currency in which the Notes are payable, or impair or change in any respect
adverse to the Noteholders the right to convert the Notes into Common Stock
subject to the terms set forth in the Indenture, including Section 15.6, or to
subordinate the Notes in right of payment to other indebtedness, in each such
case without the consent of the holder of each Note so affected, or (ii) reduce
the aforesaid percentage of Notes, the
A-4
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of all Notes then outstanding. In addition,
any amendment or supplemental indenture that disproportionately affects the
rights of a Noteholder or a class of Noteholder shall require the prior consent
of such Noteholder or the prior consent of Noteholders holding a majority of the
principal amount of Notes then held by such class, as applicable.
It is also provided in the Indenture that the holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding may
on behalf of the holders of all of the Notes waive any past or existing default
or Event of Default under the Indenture and its consequences except (i) a
default in the payment of interest or premium, if any, on, or the principal of,
the Notes when due, (ii) a failure by the Company to convert any Notes into
Common Stock or (iii) a default in respect of a covenant or provisions of the
Indenture which under Article XI thereof cannot be modified or amended without
the consent of all affected holders of Notes then outstanding.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
The Notes are issuable in registered form without coupons in denominations
of One Thousand United States Dollars ($1,000) principal amount and integral
multiples thereof. At the office of the Trustee or the Company referred to on
the face hereof, and in the manner and subject to the limitations provided in
the Indenture, without payment of any service charge but with payment of a sum
sufficient to cover any tax, assessments or other governmental charges that may
be imposed in connection with any exchange or registration of transfer of Notes,
Notes may be exchanged for a like aggregate principal amount of Notes of other
authorized denominations. All transfers are subject to the restrictions thereon
provided in the Indenture.
From and after October 20, 2008, the Company may, at its option, redeem all
or any part of the Notes, upon notice as set forth in the Indenture, and the
Company shall pay each holder of Notes redeemed a redemption price equal to the
principal amount of such Notes, plus accrued and unpaid interest thereon, if
any, to, but excluding, the date of redemption, subject to the proviso in the
final sentence of this paragraph. If notice of redemption has been given as
provided in the Indenture, the Notes or portion of Notes called for redemption
shall, unless converted into Common Stock pursuant to the terms of the
Indenture, become due and payable on the date and at the place or places stated
in such notice at the applicable redemption price and interest accrued to, but
excluding, the date fixed for redemption, and on and after such date (unless the
Company shall default in the deposit of the amount of money sufficient to redeem
such Notes) interest on the Notes or portion of Notes so called for redemption
shall cease to accrue and such Notes shall cease after the close of business on
the last Business Day prior to the date fixed for redemption to be convertible
into Common Stock and, except as provided in Sections 8.5 and 13.4 of the
Indenture, to be entitled to any benefit or security under the Indenture, and
the holders of such Notes shall have no right in respect of such Notes except
the right to receive the redemption price and unpaid interest to, but excluding,
the date fixed for redemption. On presentation and surrender of such Notes at a
place of payment specified in such notice, such Notes or the specified portions
thereof to be redeemed shall be paid and redeemed by the Company at the
applicable redemption price and interest accrued thereon to, but excluding, the
A-5
date fixed for redemption; provided that, if the applicable redemption date
falls after the record date for an Interest Payment Date and before the relevant
Interest Payment Date, then the semi-annual payment of interest becoming due on
such Interest Payment Date shall be paid to the holders of such Notes registered
as such on the relevant record date in the manner provided for the payment of
interest generally and shall not be paid to the holders surrendering the Notes
when they do so.
The Notes are not subject to redemption through the operation of any
sinking fund.
Upon the occurrence of a "Repurchase Event," the Noteholder has the right,
at such holder's option, to require the Company to repurchase all of such
holder's Notes, or any portion thereof (in the principal amounts of One Thousand
United States Dollars ($1,000) or integral multiples thereof) on the date set by
the Company that is no earlier than the Business Day immediately following the
earliest date permitted under Rule 13e-4 or Rule 14e-1 under the Exchange Act
(or any successor rules), if either such rule is applicable, and no later than
sixty (60) calendar days after the date of the notice of such Repurchase Event
that the Company is required by the Indenture to send (or, if such 60th day is
not a Business Day, the next succeeding Business Day) at a price equal to 100%
of the principal amount of the Notes such holder elects to require the Company
to repurchase together, in each case, with accrued interest, if any, to, but
excluding, the date fixed for repurchase (the "Repurchase Price"); provided that
if such Repurchase Date occurs after a record date or special record date and
before the related Interest Payment Date or special interest payment date, the
amount payable on such Interest Payment Date or special interest payment date,
shall be paid to the recordholder at the close of business on the record date or
special record date as provided in Section 2.3 of the Indenture and shall not
constitute part of the Repurchase Price. In addition, Notes shall be purchased
by the Company at the option of the holder on October 15, 2010, October 15, 2015
and October 15, 2020 (each, also a "Repurchase Date"), at the Repurchase Price.
If a redemption date pursuant to Article III of the Indenture shall occur prior
to any Repurchase Date established pursuant to a Company Notice under Section
16.2 of the Indenture, provided that the Company shall have deposited or set
aside an amount of money sufficient to redeem such Notes as set forth in Section
3.2 of the Indenture on or before such Repurchase Date, all such Notes shall be
redeemed pursuant to Article III of the Indenture and the repurchase rights
under Article XVI of the Indenture shall have no effect.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time following the date of original issuance of the
Notes and prior to the close of business on October 15, 2025 (except that, with
respect to any Note or portion of a Note that shall be called for redemption or
shall have been noticed for automatic conversion, such right shall terminate,
except as otherwise provided in the Indenture, at the close of business on the
last Business Day prior to the date fixed for redemption or automatic conversion
unless the Company shall default in payment due upon redemption or the delivery
of shares on automatic conversion thereof), to convert the principal hereof or
any portion of such principal which is One Thousand United States Dollars
($1,000) or an integral multiple thereof, into that number of fully paid and
non-assessable shares of the Company's Common Stock (as such shares shall then
be constituted), obtained by dividing the principal amount of this Note or
portion thereof surrendered for conversion by the Conversion Price of $4.20, or
such Conversion Price as adjusted from time to time as provided in the
Indenture. In order to exercise the conversion privilege, the holder must take
the actions specified in the Indenture. These actions
A-6
include (i) delivery of a conversion notice, (ii) if this Note or portion hereof
is surrendered for conversion during the period from the close of business on
the record date for any Interest Payment Date through the close of business on
the last Business Day prior to such Interest Payment Date, pay by wire transfer
of immediately available funds or other method acceptable to the Company, an
amount equal to the interest otherwise payable on such Interest Payment Date on
the principal amount being converted; provided, however, that no such payment
need be made if there shall exist at the time of conversion a default in the
payment of interest on the Notes (subject to certain exceptions specified in the
Indenture), (iii) pay by wire transfer of immediately available funds or other
method acceptable to the Company the transfer taxes, if any, required pursuant
to the Indenture and (iv) surrender the Note to be converted in whole or in
part. No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion, but a cash adjustment in lieu of such
fractional share will be paid to the holder, as provided in the Indenture.
If a the holder of this Note elects to convert all or any portion of this
Note into shares of Common Stock and the Company does not have a sufficient
number of authorized shares of Common Stock to deliver upon conversion, the
Company may choose to satisfy all or any portion of its conversion obligation in
cash in the manner prescribed in the Indenture. For purposes of the foregoing
sentence, the Company, when determining whether it has a sufficient number of
authorized shares of Common Stock to deliver upon conversion, may treat as
outstanding any shares reserved (as of the date of this Indenture) by the
Company's Board of Directors for a specific purpose including issuance under any
existing stock option or other equity plan of the Company or other obligation of
the Company to issue shares of Common Stock.
The Company may, at its option, automatically convert all or a portion of
the Notes (an "Automatic Conversion") at any time prior to October 15, 2025 if
the Closing Price (as defined in the Indenture) per share of the Common Stock
has exceeded one hundred and fifty percent (150%) of the Conversion Price then
in effect for at least fifteen (20) Trading Days within a period of thirty (30)
consecutive Trading Days ending within five (5) Trading Days of the date the
Company gives to all holders of Notes a notice of the Automatic Conversion,
provided that either (x) a registration statement covering the resale of the
Conversion Shares is effective and available for use from the date of the notice
of Automatic Conversion through and including the earlier of the date on which
the Automatic Conversion becomes effective or the last date on which the
registration statement is required to be kept effective under the terms of the
Registration Rights Agreement, or (y) the shares of Common Stock issuable upon
the Automatic Conversion may be sold pursuant to Rule 144(k) under the
Securities Act (assuming, for purposes of such determination, that no recipient
of Conversion Shares is an "affiliate" of the Company within the meaning of such
Rule and that all recipients of Conversion Shares have held the Notes since the
date of their original issuance). The Company may only elect an Automatic
Conversion with respect to all or any part of the Notes if it has, as of the
date of the Automatic Conversion Notice, sufficient shares of Common Stock
authorized and available for issuance on conversion of the Notes so called for
Automatic Conversion. If the effective date of an Automatic Conversion is prior
to October 15, 2008, the Company shall make an additional payment in cash or, at
the election of the Company under certain circumstances, in shares of Common
Stock, to each holder of Notes (or portion thereof) with respect to the Notes
(or portion thereof) converted, in an amount equal to $181.33 per each One
Thousand United States Dollars ($1,000) principal amount of the holder's Notes
(or portion thereof) (the
A-7
"Company Conversion Provisional Payment"), less the amount of any interest
actually paid on the holder's Notes (or portion thereof) prior to the effective
date of the Automatic Conversion (and, if the relevant Notes are converted after
a record date and before the related Interest Payment Date, less interest
payable on such Notes (or portion thereof) on such Interest Payment Date).
Except as provided in the immediately preceding sentence, if the Automatic
Conversion Date with respect to any Notes (or portions thereof) subject to an
Automatic Conversion occurs following a record date and prior to the related
Interest Payment Date, then unless the Company defaults in its obligation to
deliver the shares of Common Stock issuable on such Automatic Conversion. the
Company shall not be obligated to pay any interest on such Interest Payment
Date, either to the holder of such Notes (or portions thereof) at the close of
business on the relevant record date or to the holder of such Notes (or portions
thereof) to whom the Company issues the shares of Common Stock issuable on the
Automatic Conversion. Common Stock used to pay any Company Conversion
Provisional Payment shall be valued at ninety-five percent (95%) of the Closing
Prices per share of the Common Stock for the ten (10) consecutive Trading Days
ending on and including the second Trading Day immediately preceding the
Conversion Date.
If the Company elects to convert all or a portion of the Notes pursuant to
its Automatic Conversion right, the Company, or at its request (which must be
received by the Trustee at least five (5) Business Days prior to the date the
Trustee is requested to give notice as described below unless a shorter period
is agreed to by the Trustee), the Trustee in the name of and at the expense of
the Company, shall send or cause to be sent a notice of the Automatic Conversion
not more than thirty (30) days but not less than five (5) days before the date
of effectiveness of the Automatic Conversion as set forth in the Indenture.
In connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes not converted prior to the expiration of
such conversion right 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 Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price and interest accrued to the date fixed for
redemption of such Notes.
[INCLUDE EITHER OF THE FOLLOWING PARAGRAPHS ONLY BASED UPON HOLDER'S
ELECTION UNDER SECTION 2(K) OF THE SECURITIES PURCHASE AGREEMENT] [Conversion
Limitation. The holder hereby agrees that in no event will it convert any of the
Notes in excess of the number of such Notes upon the conversion of which (x) the
number of shares of Common Stock beneficially owned by such holder (other than
the shares which would otherwise be deemed beneficially owned except for being
subject to a limitation on conversion analogous to the limitation contained in
this paragraph) plus (y) the number of shares of Common Stock issuable upon the
conversion of such Notes would be equal to or exceed 9.99% of the number of
shares of Common Stock then issued and outstanding (after giving effect to such
conversion), it being the intent of the Company and the holder that the holder
not be deemed at any time to have the power to vote or dispose of greater than
9.99% of the number of shares of Common Stock issued and outstanding. As used
herein, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
To the extent that the limitation contained in this paragraph applies (and
without limiting any rights the Company may
A-8
otherwise have), the Company may rely on the holder's determination of whether
the Notes are convertible pursuant to the terms hereof, the Company having no
obligation whatsoever to verify or confirm the accuracy of such determination,
and the submission of the Conversion Notice by the holder shall be deemed to be
the holder's representation that the Notes specified therein are convertible
pursuant to the terms hereof. Nothing contained herein shall be deemed to
restrict the right of a holder to convert the Notes at such time as the
conversion thereof will not violate the provisions of this paragraph.]
[Each holder hereby agrees that in no event will it convert any of the
Notes in excess of the number of such Notes upon the conversion of which (x) the
number of shares of Common Stock beneficially owned by such holder (other than
the shares which would otherwise be deemed beneficially owned except for being
subject to a limitation on conversion analogous to the limitation contained in
this paragraph) plus (y) the number of shares of Common Stock issuable upon the
conversion of such Notes, would be equal to or exceed 4.99% of the number of
shares of Common Stock then issued and outstanding (after giving effect to such
conversion), it being the intent of the Company and the holder that the holder
not be deemed at any time to have the power to vote or dispose of greater than
4.99% of the number of shares of Common Stock issued and outstanding. As used
herein, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
To the extent that the limitation contained in this paragraph applies (and
without limiting any rights the Company may otherwise have), the Company may
rely on the holder's determination of whether the Notes are convertible pursuant
to the terms hereof, the Company having no obligation whatsoever to verify or
confirm the accuracy of such determination, and the submission of the Conversion
Notice by the holder shall be deemed to be the holder's representation that the
Notes specified therein are convertible pursuant to the terms hereof. Nothing
contained herein shall be deemed to restrict the right of a holder to convert
the Notes at such time as the conversion thereof will not violate the provisions
of this paragraph.]
Prior to due presentment for the registration of a transfer of this Note,
the Trustee, any agent and the Company may deem and treat the Person in whose
name this Note is registered as the absolute owner of this Note, for the purpose
of receiving payment of principal of and interest on this Note and for all other
purposes and none of the Trustee, any agent or the Company shall be affected by
any notice to the contrary. All such payments so made to, or upon the order of,
such registered holder shall be valid, and, to the extent of the sum or sums so
paid, effectual to satisfy and discharge the liability for monies payable on
this Note.
No direct or indirect partner, employee, incorporator, shareholder,
director or officer, as such, past, present or future of the Company or any
successor Person or any Subsidiary or any of the Company's Affiliates, shall
have any personal liability in respect of the obligations of the Company under
this Note or the Indenture by reason of his, her or its status as such partner,
employee, incorporator, shareholder, director or officer. The holder hereof by
accepting this Note waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of this Note.
A-9
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
________________________ Custodian
(Cust)
TEN ENT - as tenants by the entireties ________________________
(Minor)
JT TEN - as joint tenants with right
of survivorship and not as tenants Uniform Gifts to Minors Act _______
in common (State)
Additional abbreviations may also be used though not in the above list.
A-10
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in another
Global Note, or exchanges of a part of another Global Note for an interest in
this Global Note, have been made:
Amount of Amount of Principal Amount
decrease in increase in of this Global Note Signature of
Principal Amount Principal Amount following such authorized officer
of this Global of this Global decrease (or of Trustee or
Date of Exchange Note Note increase) Note Custodian
---------------- ---------------- ---------------- ------------------- ------------------
A-11
EXHIBIT B
[FORM OF CONVERSION NOTICE]
ATS Medical, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Xxxxx Fargo Bank, National Association
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Administration
Fax: (000) 000-0000
The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion hereof (which is One Thousand
United States Dollars ($1,000) principal amount or an integral multiple thereof)
below designated, into shares of Common Stock in accordance with the terms of
the Indenture referred to in this Note, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Notes representing any unconverted principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this Note
not converted 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 and, if applicable, deliver a Certificate of Transfer. Any amount
required to be paid by the undersigned on account of interest accompanies this
Note.
If you want the shares issuable on conversion of this Note credited to your
balance account with The Depositary Trust Company through its Deposit Withdrawal
Agent Commission system, check the box (such delivery is subject to the
eligibility of the shares to be delivered for such delivery): [ ]
Dated:
------------------------------ ----------------------------------------
----------------------------------------
Signature(s)
-------------------------------------
Signature Guarantee
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee
B-1
medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if
shares of Common Stock are to be issued, or Notes to be delivered, other than to
and in the name of the registered holder.
Fill in for registration of shares if to be issued, and Notes if to be
delivered, other than to and in the name of the registered holder:
-------------------------------------
(Name)
-------------------------------------
(Street Address)
-------------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all):
$______,000
----------------------------------------
Social Security or Other Taxpayer
Identification Number
B-2
EXHIBIT C
[FORM OF OPTION TO ELECT REPAYMENT
UPON A REPURCHASE DATE]
ATS Medical, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Xxxxx Fargo Bank, National Association
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Administration
Fax: (000) 000-0000
The undersigned registered owner of this Note hereby acknowledges receipt
of a notice from ATS Medical, Inc. (the "Company") as to the occurrence of a
Repurchase Date and requests and instructs the Company to repay the entire
principal amount of this Note, or the portion thereof (which is One Thousand
United States Dollars ($1,000) principal amount or an integral multiple thereof)
below designated, in accordance with the terms of the Indenture referred to in
this Note, together with accrued interest (including Liquidated Damages, if any)
to, but excluding, such date (unless otherwise provided in the Indenture), to
the registered holder hereof.
Dated:
------------------------------
----------------------------------------
----------------------------------------
Signature(s)
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid
(if less than all):
$______,000
NOTICE: The above signatures of the
holder(s) hereof must correspond with
the name as written upon the face of the
Note in every particular without
alteration or enlargement or any change
whatever.
C-1
EXHIBIT D
FORM OF CERTIFICATE OF TRANSFER
ATS Medical, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Xxxxx Fargo Bank, National Association
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Administration
Fax: (000) 000-0000
Re: 6% Convertible Senior Notes due 2025
Reference is hereby made to the Indenture, dated as of October 7, 2005 (the
"Indenture"), among ATS Medical, Inc., as issuer (the "Company"), and Xxxxx
Fargo Bank, National Association, as trustee (the "Trustee"). Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
___________________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A.
The Transfer is being effected pursuant to and in accordance with Rule 144A
under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that (i) the
beneficial interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A,
(ii) the Transferor has taken reasonable steps to ensure that the Person to whom
the Transfer being effected is aware that the Transferor may rely on the
exemption from the
D-1
Securities Act provided by Rule 144A and (iii) such Transfer is in compliance
with any applicable blue sky securities laws of any state of the United States.
Upon consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
2. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE IAI GLOBAL NOTE OR A RESTRICTED DEFINITIVE NOTE
PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A
OR RULE 144.
The Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) [ ] Such Transfer is being effected to the Company or a subsidiary
thereof;
or
(b) [ ] Such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of
the Securities Act other than Rule 144A or Rule 144, and the Transferor
hereby further certifies that it has not engaged in any general
solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive
Notes and the requirements of the exemption claimed, which certification is
supported by (1) a certificate executed by the Transferee in the form of
Exhibit F to the Indenture and (2) an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached
to this certification), to the effect that such Transfer is in compliance
with the Securities Act. Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the IAI Global Note
and/or the Definitive Notes and in the Indenture and the Securities Act.
3. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT. Such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act. Upon consummation
of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be
subject to the restrictions
D-2
on transfer enumerated in the Private Placement Legend printed on the
Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state
of the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Global Notes, on Restricted Definitive
Notes and in the Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption
from the registration requirements of the Securities Act other than Rule
144, and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will not be subject to
the restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Global Notes or Restricted Definitive Notes and
in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
----------------------------------------
[Insert Name of Transferor]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Dated:
------------------------------
-------------------------------------
Signature Guarantee
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or
Notes to be delivered, other than to and in the name of the registered holder.
D-3
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP _________), or
(ii) [ ] IAI Global Note (CUSIP _________); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP _________), or
(ii) [ ] IAI Global Note (CUSIP _________); or
(iii) [ ] Unrestricted Global Note (CUSIP _________); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
D-4
EXHIBIT E
FORM OF CERTIFICATE OF EXCHANGE
ATS Medical, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Xxxxx Fargo Bank, National Association
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Administration
Fax: (000) 000-0000
Re: 6% Convertible Senior Notes due 2025
(CUSIP [__________])
Reference is hereby made to the Indenture, dated as of October 7, 2005 (the
"Indenture"), among ATS Medical, Inc., as issuer (the "Company"), and Xxxxx
Fargo Bank, National Association, as trustee (the "Trustee"). Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
__________________________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL NOTE.
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global
Note in an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Global Notes and pursuant to and in
accordance with the United States Securities Act of 1933, as amended (the
"Securities Act"), (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United
States.
E-1
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for
an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United
States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired for
the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted
Definitive Note is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.
2. EXCHANGE OF BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED
DEFINITIVE NOTES.
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange
of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the
Owner's own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the
Restricted Definitive Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
----------------------------------------
[Insert Name of Transferor]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
E-2
Dated:
------------------------------
-------------------------------------
Signature Guarantee
Signature(s) must be guaranteed by an eligible Guarantor Institution
(banks, stock brokers, savings and loan associations and credit unions) with
membership in an approved signature guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to
be issued, or Notes to be delivered, other than to and in the name of the
registered holder.
E-3
EXHIBIT F
FORM OF TRANSFER LETTER OF REPRESENTATIONS
(TO BE DELIVERED BY HOLDER
UPON CERTAIN TRANSFERS OF NOTES WITHOUT
EFFECTIVE REGISTRATION STATEMENT)
We are delivering this letter in connection with the sale or transfer to us
of Notes (as defined in the Indenture, dated as of October 7, 2005, between ATS
Medical, Inc., a Minnesota corporation (the "Company") and Xxxxx Fargo Bank,
National Association, a national banking association, as trustee (the
"Trustee")), other than pursuant to a registration statement that has been
declared effective under the Securities Act of 1933, as amended (the "Securities
Act").
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1),(2), (3), (5), (6), (7) or (8) under the Securities Act;
(ii) any purchase or receipt of the Notes by us will be for our own
account, not as a nominee or agent;
(iii) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing or receiving the Notes;
(iv) we do not have need for liquidity in our investment in the Notes,
we have the ability to bear the economic risks of our investment in the
Notes for an indefinite period of time and we are able to afford the
complete loss of our investment in the Notes;
(v) we are not acquiring the Notes with a view to any distribution
thereof in a transaction that would violate the Securities Act or the
securities laws of any State of the United States or any other applicable
jurisdiction, and we have no present intention of selling, granting any
participation in, or otherwise distributing the same;
(vi) we have had access to such information regarding the Company
necessary in order for us to make an informed decision and any such
information which we have requested have been made available for us or our
attorney, accountant, or advisor; and
(vii) we or our attorney, accountant, or advisor have had a reasonable
opportunity to ask questions of and receive answers from a person or
persons acting on behalf of the Company concerning the business, management
and financial affairs of the Company and the terms and conditions of the
acquisition by us of the Notes and all such questions have been answered to
our full satisfaction, and we have acquired sufficient
F-1
information about the Company to make an informed and knowledgeable
decision to acquire the Notes.
We understand that the Notes have not been registered under the Securities
Act, and we agree, on our own behalf and on behalf of each account for which we
acquire any Notes, that such Notes may be offered, resold, pledged or otherwise
transferred only (i) in accordance with an exemption from the registration
requirements of the Securities Act, (ii) to the Company or (iii) pursuant to an
effective registration statement, and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction. We agree that we will furnish the Company and the
Trustee an opinion of counsel, if the Company so requests, that the foregoing
restrictions on transfer have been complied with. We understand that the Trustee
will not be required to accept for registration of transfer any Notes, except
upon presentation of evidence satisfactory to the Company, including an opinion
of counsel if the Company so requests, that the foregoing restrictions on
transfer have been complied with.
We acknowledge that the Company and others will rely upon our
confirmations, acknowledgements and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
----------------------------------------
(Name)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
-------------------------------
F-2
