1
EXHIBIT 4.1
================================================================================
KOMAG, INCORPORATED
as Company
----------------------------------
11 1/2% Convertible Subordinated Notes Due January 15, 2004
----------------------------------
INDENTURE
Dated as of [___], 2001
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
as Trustee
================================================================================
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE..................................................................1
Section 1.1 Definitions................................................................................1
Section 1.2 Other Definitions..........................................................................6
Section 1.3 Incorporation by Reference of Trust Indenture Act..........................................7
Section 1.4 Rules of Construction......................................................................8
ARTICLE II THE SECURITIES.............................................................................................8
Section 2.1 Form and Dating............................................................................8
Section 2.2 Execution and Authentication...............................................................9
Section 2.3 Registrar, Paying Agent and Conversion Agent..............................................10
Section 2.4 Paying Agent to Hold Money in Trust.......................................................10
Section 2.5 Noteholder Lists..........................................................................10
Section 2.6 Transfer and Exchange.....................................................................11
Section 2.7 Replacement Securities....................................................................12
Section 2.8 Outstanding Securities....................................................................12
Section 2.9 Treasury Securities.......................................................................12
Section 2.10 Temporary Securities......................................................................12
Section 2.11 Cancellation..............................................................................13
Section 2.12 Transfer of Interests in Global Securities................................................13
Section 2.13 Defaulted Interest........................................................................13
ARTICLE III REDEMPTION AND REPURCHASE................................................................................13
Section 3.1 Notices to Trustee........................................................................13
Section 3.2 Selection of Securities to be Redeemed....................................................13
Section 3.3 Notice of Redemption......................................................................14
Section 3.4 Effect of Notice of Redemption............................................................15
Section 3.5 Deposit of Redemption Price...............................................................15
Section 3.6 Securities Redeemed in Part...............................................................15
Section 3.7 Optional Redemption.......................................................................15
Section 3.8 Designated Event Offer....................................................................15
ARTICLE IV COVENANTS.................................................................................................17
Section 4.1 Payment of Securities.....................................................................17
Section 4.2 SEC Reports...............................................................................17
Section 4.3 Compliance Certificate....................................................................18
Section 4.4 Stay, Extension and Usury Laws............................................................18
Section 4.5 Corporate Existence.......................................................................18
Section 4.6 Taxes.....................................................................................19
Section 4.7 Designated Event..........................................................................19
-ii-
3
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Section 4.8 Shareholder Rights Plan...................................................................19
ARTICLE V CONVERSION.................................................................................................19
Section 5.1 Conversion Privilege......................................................................19
Section 5.2 Conversion Procedure......................................................................20
Section 5.3 Fractional Shares.........................................................................21
Section 5.4 Taxes on Conversion.......................................................................21
Section 5.5 Company to Provide Stock..................................................................21
Section 5.6 Adjustment of Conversion Price............................................................21
Section 5.7 No Adjustment.............................................................................24
Section 5.8 Other Adjustments.........................................................................25
Section 5.9 Adjustments for Tax Purposes..............................................................25
Section 5.10 Adjustments by the Company................................................................25
Section 5.11 Notice of Adjustment......................................................................25
Section 5.12 Notice of Certain Transactions............................................................25
Section 5.13 Effect of Reclassifications, Consolidations, Mergers or
Sales on Conversion Privilege.............................................................26
Section 5.14 Trustee's Disclaimer......................................................................27
Section 5.15 Automatic Conversion by Company...........................................................27
Section 5.16 Voluntary Conversion by Holders...........................................................29
ARTICLE VI SUBORDINATION.............................................................................................30
Section 6.1 Agreement to Subordinate..................................................................30
Section 6.2 No Payment on Securities if Senior Debt in Default........................................30
Section 6.3 Distribution on Acceleration of Securities; Dissolution
and Reorganization; Subrogation of Securities.............................................31
Section 6.4 Reliance by Senior Debt on Subordination Provisions.......................................34
Section 6.5 No Waiver of Subordination Provisions.....................................................34
Section 6.6 Trustee's Relation to Senior Debt.........................................................35
Section 6.7 Other Provisions Subject Hereto...........................................................35
Section 6.8 Certain Conversions, Interest Payments and Repurchases
in Common Stock Deemed Payment............................................................35
ARTICLE VII SUCCESSORS...............................................................................................36
Section 7.1 Merger, Consolidation or Sale of Assets...................................................36
Section 7.2 Successor Corporation Substituted.........................................................37
ARTICLE VIII DEFAULTS AND REMEDIES...................................................................................37
Section 8.1 Events of Default.........................................................................37
Section 8.2 Acceleration..............................................................................38
-iii-
4
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Section 8.3 Other Remedies............................................................................39
Section 8.4 Waiver of Past Defaults...................................................................39
Section 8.5 Control by Majority.......................................................................39
Section 8.6 Limitation on Suits.......................................................................39
Section 8.7 Rights of Noteholders to Receive Payment..................................................40
Section 8.8 Collection Suit by Trustee................................................................40
Section 8.9 Trustee May File Proofs of Claim..........................................................40
Section 8.10 Priorities................................................................................40
Section 8.11 Undertaking for Costs.....................................................................40
ARTICLE IX TRUSTEE...................................................................................................41
Section 9.1 Duties of Trustee.........................................................................41
Section 9.2 Rights of Trustee.........................................................................41
Section 9.3 Individual Rights of Trustee..............................................................42
Section 9.4 Trustee's Disclaimer......................................................................42
Section 9.5 Notice of Defaults........................................................................42
Section 9.6 Reports by Trustee to Noteholders.........................................................42
Section 9.7 Compensation and Indemnity................................................................43
Section 9.8 Replacement of Trustee....................................................................43
Section 9.9 Successor Trustee by Merger, Etc..........................................................44
Section 9.10 Eligibility; Disqualification.............................................................44
Section 9.11 Preferential Collection of Claims Against Company.........................................45
Section 9.12 Sections Applicable to Registrar, Paying Agent and
Conversion Agent..........................................................................45
ARTICLE X DISCHARGE OF INDENTURE.....................................................................................45
Section 10.1 Termination of Company's Obligations......................................................45
Section 10.2 Repayment to Company......................................................................45
ARTICLE XI AMENDMENTS, SUPPLEMENTS AND WAIVERS.......................................................................45
Section 11.1 Without Consent of Noteholders............................................................45
Section 11.2 With Consent of Noteholders...............................................................46
Section 11.3 Compliance with Trust Indenture Act.......................................................47
Section 11.4 Revocation and Effect of Consents.........................................................47
Section 11.5 Notation on or Exchange of Securities.....................................................48
Section 11.6 Trustee Protected.........................................................................48
ARTICLE XII MISCELLANEOUS............................................................................................48
Section 12.1 Trust Indenture Act Controls..............................................................48
Section 12.2 Notices...................................................................................48
Section 12.3 Communication by Noteholders with Other Noteholders.......................................49
-iv-
5
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Section 12.4 Certificate and Opinion as to Conditions Precedent........................................49
Section 12.5 Statements Required in Certificate or Opinion.............................................49
Section 12.6 Rules by Trustee and Agents...............................................................49
Section 12.7 Legal Holidays............................................................................49
Section 12.8 No Recourse Against Others................................................................50
Section 12.9 Counterparts..............................................................................50
Section 12.10 Variable Provisions.......................................................................50
Section 12.11 Governing Law.............................................................................51
Section 12.12 No Adverse Interpretation of Other Agreements.............................................51
Section 12.13 Successors................................................................................51
Section 12.14 Severability..............................................................................51
Section 12.15 Table of Contents Headings, Etc...........................................................51
Exhibit A - Form of Convertible Subordinated Note
-v-
6
INDENTURE dated as of [---], 2001 between Komag, Incorporated, a
Delaware corporation (the "Company") and Xxxxx Fargo Bank Minnesota, National
Association, a national banking association organized under the laws of the
United States of America, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the holders of the Company's 11 1/2%
Convertible Subordinated Notes due January 15, 2004 (the "Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
whether through the ownership of voting securities or by agreement or otherwise;
provided, however, that beneficial ownership of 10% or more of the voting
securities of a person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board.
"Board Resolution" means a duly authorized resolution of the Board of
Directors.
"Business Day" means any day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of equity interests in any
entity, including, without limitation, corporate stock and partnership
interests.
"Change of Control" means any event where: (i) any "person" or "group"
(as such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act) 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 ("Voting Stock"), (ii) the Company consolidates with or
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 reclassified into or exchanged
7
for any other property or security, unless the stockholders 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, (iii) the Company conveys,
transfers or leases all or substantially all of its assets (other than to a
wholly-owned subsidiary of the Company) or (iv) any time the 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 of Control shall not be deemed to have occurred if at least 90% of the
consideration (excluding cash payments for fractional shares) in the transaction
or transactions constituting the Change of Control consists of shares of common
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.
"Common Stock" means the common stock of the Company as the same exists
at the date of the execution of this Indenture or as such stock may be
constituted from time to time.
"Company" means the party named as such above until a successor
replaces it in accordance with Article VII and thereafter means the successor.
"Continuing Directors" means as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such board at the time of such
nomination or election.
"Custodian" means Xxxxx Fargo Bank Minnesota, National Association, as
custodian with respect to the Global Securities, or any successor entity
thereto.
"Daily Market Price" means the price of a share of Common Stock on the
relevant date, determined (a) on the basis of the last reported sale price
regular way of the Common Stock as reported on the NNM, or if the Common Stock
is not then listed on the NNM, as reported on such national securities exchange
upon which the Common Stock is listed, or (b) if there is no such reported sale
on the day in question, on the basis of the average of the closing bid and asked
quotations regular way as so reported, or (c) if the Common Stock is not listed
on the NNM or on any national securities exchange, on the basis of the average
of the high bid and low asked quotations regular way on the day in question in
the over-the-counter market as reported by the National Association of
Securities Dealers Automated Quotation System, or if not so quoted, as reported
by National Quotation Bureau, Incorporated, or a similar organization.
"Dealer Manager Agreement" means that certain Dealer Manager Agreement
relating to the Securities dated as of [---], 2001 between the Company and RSCO.
"Default" means any event that is, or with the passage of time or the
giving of notice or both, would be an Event of Default.
-2-
8
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Designated Event" means the occurrence of a Change of Control or a
Termination of Trading.
"Designated Senior Debt" means all Senior Debt which, at the date of
determination, has an aggregate principal amount outstanding of, or commitments
to lend up to, at least $10 million and is specifically designated by the
Company in the instrument evidencing or governing such Senior Debt as
"Designated Senior Debt" for purposes of this Indenture (provided, that such
instrument may place limitations and conditions on the right of such Senior Debt
to exercise the rights of Designated Senior Debt).
"Distribution Agreement" means that certain Distribution Agreement
relating to the Securities dated as of [---], 2001 between the Company and RSCO.
"Excess Payment" means the excess of (a) the aggregate of the cash and
fair market value of other consideration paid by the Company or any of its
Subsidiaries with respect to the shares acquired in a tender offer or other
negotiated transaction over (b) the Daily Market Price of such acquired shares
on the Trading Day immediately after giving effect to the completion of such
tender offer or other negotiated transaction.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Notes" means the Company's 5 3/4% Convertible Subordinated
Notes due January 15, 2004.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are in effect on the Issuance Date.
"Global Securities" means a permanent global note that contains the
Global Securities Legend referred to in the form of Security and Schedule A
attached thereto, as attached hereto as Exhibit A, and that is deposited with
and registered in the name of the Depositary.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" means, with respect to any person, all obligations,
whether or not contingent, of such person (i)(a) for borrowed money (including,
but not limited to, any indebtedness secured by a security interest, mortgage or
other lien on the assets of such person which is (1) given to secure all
-3-
9
or part of the purchase price of property subject thereto, whether given to the
vendor of such property or to another, or (2) existing on property at the time
of acquisition thereof), (b) evidenced by a note, debenture, bond or other
written instrument, (c) under a lease required to be capitalized on the balance
sheet of the lessee under GAAP or under any lease or related document (including
a purchase agreement) which provides that such person is contractually obligated
to purchase or to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances, (e) with
respect to Indebtedness secured by a mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in an encumbrance to which the
property or assets of such person are subject, whether or not the obligation
secured thereby shall have been assumed or Guaranteed by or shall otherwise be
such person's legal liability, (f) in respect of the balance of deferred and
unpaid purchase price of any property or assets, and (g) under interest rate or
currency swap agreements, cap, floor and collar agreements, spot and forward
contracts and similar agreements and arrangements; (ii) with respect to any
obligation of others of the type described in the preceding clause (i) or under
clause (iii) below, assumed by or guaranteed in any manner by such person or in
effect guaranteed by such person through an agreement to purchase (including,
without limitation, "take or pay" and similar arrangements), contingent or
otherwise (and the obligations of such person under any such assumptions,
Guarantees or other such arrangements); and (iii) any and all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.
"Indenture" means this Indenture, as amended from time to time.
"Issuance Date" means the date on which the Securities are first
authenticated and issued.
"Material Subsidiary" means any Subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the
Securities Act and the Exchange Act (as such Regulation is in effect on the date
hereof).
"Maturity" when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided.
"Noteholder" or "holder" means a person in whose name a Security is
registered.
"NNM" means the Nasdaq National Market.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers' Certificate" means a certificate signed by two Officers, one
of whom must be the Chairman of the Board, the President, the Treasurer or a
Vice-President of the Company. See Sections 12.4 and 12.5 hereof.
-4-
10
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee. See Sections 12.4 and 12.5 hereof.
"person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"principal" of a debt security means the principal of the security plus
the premium, if any, on the security.
"Representative" means the trustee, agent or representative (if any)
for an issue of Senior Debt.
"RSCO" means Xxxxxxxxx Xxxxxxxx, Inc.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Company's 11 1/2% Convertible Subordinated Notes
due January 15, 2004 issued, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means the principal of, interest on, fees costs and
expenses in connection with and other amounts due on Indebtedness of the
Company, whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or Guaranteed by the Company, unless, in the instrument
creating or evidencing or pursuant to which Indebtedness is outstanding, it is
expressly provided that such Indebtedness is not senior in right of payment to
the Securities. Senior Debt includes, with respect to the obligations described
above, interest accruing, pursuant to the terms of such Senior Debt, on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company, whether or not post-filing interest is allowed in such proceeding, at
the rate specified in the instrument governing the relevant obligation.
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not
include: (a) Indebtedness of or amounts owed by the Company for compensation to
employees, or for goods, services or materials purchased in the ordinary course
of business; (b) Indebtedness of the Company to a Subsidiary of the Company; (c)
any liability for Federal, state, local or other taxes owed or owing by the
Company; or (d) the Securities or the Existing Notes. For the purposes of this
definition of Senior Debt under this Indenture, it is the intent of the parties
hereto that the Securities issued under this Indenture be "Senior Debt" (as
defined under that certain Indenture, dated January 15, 1997 between the
Company, as assumed from HMT Technology Corporation, and State Street Bank and
Trust Company of California, N.A. (the "Existing Notes Indenture")) for purposes
of the Existing Notes Indenture and the Existing Notes, and in furtherance
thereof, the parties hereto agree that nothing contained in this Indenture or in
the definition of Senior Debt under this Indenture is meant to or shall be
construed to expressly provide that the Securities issued under this Indenture
are not superior to the Existing Notes.
-5-
11
"Subsidiary" means any corporation, association or other business
entity of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any person or one or more of the other
Subsidiaries of that person or a combination thereof.
"Termination of Trading" means an event where the Common Stock (or
other common stock into which the Securities are then convertible) is neither
listed for trading on a United States national securities exchange nor approved
for trading on an established automated over-the-counter trading market in the
United States.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of execution of this Indenture.
"Trading Day" shall mean (A) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or another
national securities exchange is open for business, (B) if the applicable
security is quoted on the NNM, a day on which trades may be made thereon or (C)
if the applicable security is not so listed, admitted for trading or quoted, any
day other than a Saturday or Sunday or a day on which banking institutions in
either the State of New York or the State of California are authorized or
obligated by law or executive order to close.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor.
"Trust Officer", when used with respect to the Trustee, means the
chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any senior vice president, any vice
president, any assistant vice president, the secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any senior trust
officer, any trust officer, the controller, any assistant controller, or any
other officer of the Trustee customarily performing functions similar to those
performed by the persons who at the time are such officers, respectively, and
also means, with respect to a particular corporate trust matter, any officer to
whom such corporate trust matter is referred because of his knowledge of and
familiarity with the particular subject.
Section 1.2 Other Definitions.
TERM DEFINED IN SECTION
---- ------------------
"Additional Interest" 2.1
"Additional Voluntary Conversion Interest" 5.16
"Agent Members" 2.1
"Automatic Conversion" 5.15
"Automatic Conversion Date" 5.15
"Automatic Conversion Notice" 5.15
-6-
12
TERM DEFINED IN SECTION
---- ------------------
"Applicable Procedures" 2.6
"Bankruptcy Law" 8.1
"Bankruptcy Custodian" 8.1
"Commencement Date" 3.8
"Conversion Agent" 2.3
"Conversion Date" 5.2
"Conversion Price" 5.1
"Conversion Shares" 5.6
"current market price" 5.6
"Designated Event Offer" 4.7
"Designated Event Payment" 3.8
"Designated Event Payment Date" 3.8
"Distribution Date" 5.6
"Distribution Record Date" 5.6
"Event of Default" 8.1
"Legal Holiday" 12.7
"Notice of Default" 8.1
"Officer" 12.10
"Paying Agent" 2.3
"Payment Blockage Notice" 6.2
"Payment Blockage Period" 6.2
"Payment Default" 8.1
"Purchase Date" 5.6
"Registrar" 2.3
"Rights" 5.6
"Tender Period" 3.8
Section 1.3 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Securities means the Company or any other obligor on
the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
-7-
13
Section 1.4 Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP consistently applied;
(c) references to "GAAP" shall mean GAAP in effect as of the time when
and for the period as to which such accounting principles are to be applied;
(d) "or" is not exclusive;
(e) words in the singular include the plural, and words in the plural
include the singular; and
(f) provisions apply to successive events and transactions.
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). The Company shall furnish any such legend not contained in
Exhibit A to the Trustee in writing. Each Security shall be dated the date of
its authentication. The terms and provisions of the Securities set forth in
Exhibit A are part of the terms 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.
(a) Global Securities. Securities shall be issued initially in the form
of one or more Global Securities in definitive, fully registered form without
interest coupons, which shall be deposited on behalf of the holders of the
Securities represented thereby with the Trustee, at its office at Sixth and
Marquette, MAC X0000-000, Xxxxxxxxxxx, XX 00000, Attention: Corporate Trust
Services, as Custodian for the Depositary, and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the Global Security may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its nominee
as hereinafter provided.
Each Global Security shall represent such of the outstanding Securities
as shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Securities from time to time endorsed thereon
and that the aggregate amount of outstanding Securities
-8-
14
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Security to reflect the amount of any increase or decrease in the amount of
outstanding Securities 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 2.6 hereof.
(b) Book-Entry Provisions. The Company shall execute and the Trustee
shall, in accordance with this Section 2.1(b), authenticate and deliver
initially one or more Global Securities that (a) shall be registered in the name
of the Depositary or nominee of the Depositary and (b) shall be delivered by the
Trustee to such Depositary or pursuant to such Depositary's instructions or held
by the Trustee as Custodian for the Depositary pursuant to a FAST Balance
Certificate Agreement between the Depositary and the Trustee.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as the Custodian of the
Depositary or under such Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall 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 impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in Sections 2.6(b),
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
Section 2.2 Execution and Authentication. Two Officers shall sign the
Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of an authorized officer of the Trustee. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
Upon a written order of the Company signed by two Officers, the Trustee
shall authenticate the Securities for original issue up to an aggregate
principal amount of $115,000,000. The aggregate principal amount of Securities
outstanding at any time shall not exceed such amount except as provided in
Section 2.7.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so.
-9-
15
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate.
Section 2.3 Registrar, Paying Agent and Conversion Agent. The Company
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Securities may be presented for registration of
transfer or for exchange ("Registrar"), (ii) an office or agency where
Securities may be presented for payment ("Paying Agent") and (iii) an office or
agency where Securities may be presented for conversion ("Conversion Agent").
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint the Registrar, the Paying Agent and the
Conversion Agent. The Company may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents in such
other locations as it shall determine; provided that no such designation shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York, State of New York, for
such purposes. The term "Paying Agent" includes any additional paying agent and
the term "Conversion Agent" includes any additional conversion agent. The
Company may change any Paying Agent, Registrar, co-registrar or Conversion Agent
without prior notice to any Noteholder. The Company shall notify the Trustee of
the name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar, Paying Agent or
Conversion Agent, the Trustee shall act as such. The Company or any of its
Affiliates may act as Paying Agent, Registrar, co-registrar or Conversion Agent.
The Company initially appoints the Trustee as Paying Agent, Registrar,
Conversion Agent and Custodian and the Trustee hereby accepts such appointments
and each of the corporate trust office of the Trustee at Sixth and Marquette,
MAC X0000-000, Xxxxxxxxxxx, XX 00000, Attention: Corporate Trust Services, and
the office or agency of the Trustee in the Borough of Manhattan, The City of New
York, State of New York (which shall be c/o Depository Trust Company, located at
1st Floor, TADS Department, 55 Water Street, New York, NY 10041), which shall be
considered as such office or agency of the Company for the aforesaid purposes.
Section 2.4 Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Noteholders or the Trustee
all money held by the Paying Agent for the payment of principal of, premium, if
any, or interest on the Securities, and will notify the Trustee of any default
by the Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee and to account for any money disbursed by it. Upon payment over
to the Trustee, the Paying Agent (if other than the Company or any Affiliate of
the Company) shall have no further liability for the money. If the Company or an
Affiliate of the Company acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Noteholders all money held by it as
Paying Agent.
Section 2.5 Noteholder Lists. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Noteholders. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee on or before each interest
-10-
16
payment date and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Noteholders.
Section 2.6 Transfer and Exchange. Where Securities are presented to
the Registrar or a co-registrar with a request to register a transfer or to
exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall issue and the Trustee shall
authenticate Securities at the Registrar's request. No service charge shall be
made for any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer tax or similar governmental charge
payable upon exchanges pursuant to Sections 2.6(f), 2.10, 3.6 or 11.5 hereof).
The Company and the Registrar shall not be required (i) to issue,
register the transfer of, or exchange Securities during a period beginning at
the opening of business 15 days before the day of any selection of Securities
for redemption under Section 3.2 hereof and ending at the close of business on
the day of selection, (ii) to exchange or register the transfer of any Security
so selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part or (iii) to issue, register the transfer of
or exchange Securities submitted for repurchase (and not withdrawn) under
Section 4.7 hereof.
(a) Restrictions on Transfer and Exchange of Global Securities. The
transfer and exchange of Global Securities or beneficial interests therein shall
be effected through the Depositary, in accordance with this Indenture and the
procedures of the Depositary therefor. Notwithstanding the aforementioned, a
Global Security may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(b) Authentication of Certificated Security in Absence of Depositary.
If at any time:
(i) the Depositary for the Securities notifies the Company
that the Depositary is unwilling or unable to continue as Depositary for the
Global Securities and a successor Depositary for the Global Securities is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) an Event of Default has occurred and is continuing
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
deliver, certificated Securities in an aggregate principal amount equal to the
principal amount of the Global Securities in exchange for such Global
Securities.
In the event of the occurrence of either of the events specified in
this Section, the Company will promptly make available to the Trustee a
reasonable supply of certificated Securities in definitive, fully registered
form without interest coupons.
-11-
17
Section 2.7 Replacement Securities. If the holder of a Security claims
that the Security has been lost, destroyed or wrongfully taken or if such
Security is mutilated and is surrendered to the Trustee, the Company shall issue
and the Trustee shall authenticate a replacement Security if the Trustee's and
the Company's requirements are met. If required by the Trustee or the Company,
an indemnity bond must be sufficient in the judgment of both to protect and hold
harmless the Company, the Trustee, any Agent or any authenticating agent from
any loss, liability or expense which any of them may suffer if a Security is
replaced. The Company may charge for its expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be redeemed or
purchased by the Company pursuant to Article III hereof or converted into shares
of Common Stock pursuant to Article V hereof, the Company in its discretion may,
instead of issuing a new Security, pay, redeem, purchase or convert such
Security, as the case may be.
Every replacement Security is an additional obligation of the Company
and shall be entitled to all the benefits provided under this Indenture equally
and proportionately with all other Securities duly issued hereunder.
Section 2.8 Outstanding Securities. The Securities outstanding at any
time are all the Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
If a Security is replaced (including pursuant to Section 2.1(a)), paid
or purchased pursuant to Section 2.7 hereof, it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced, paid or
purchased Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.1 hereof, they cease
to be outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
Section 2.9 Treasury Securities. In determining whether the Noteholders
of the required principal amount of Securities have concurred in any direction,
waiver or consent, Securities owned by the Company or an Affiliate of the
Company shall be considered as though they are not outstanding, except that for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities which a Trust Officer of
the Trustee actually knows are so owned shall be so disregarded.
Section 2.10 Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the
-12-
18
Company shall prepare and the Trustee shall authenticate definitive Securities
in exchange for temporary Securities.
Section 2.11 Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar, Paying Agent and
Conversion Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, redemption, conversion, exchange or payment. The
Trustee shall promptly cancel all Securities surrendered for registration of
transfer, redemption, conversion, exchange, payment, replacement or
cancellation, shall destroy such canceled Securities (subject to the record
retention requirement of the Exchange Act) and deliver to the Company a
certificate of a Trust Officer certifying as to such destruction. The Company
may not issue new Securities to replace Securities that it has paid or that have
been delivered to the Trustee for cancellation or that any holder has converted.
Section 2.12 Transfer of Interests in Global Securities. The registered
holder of a Global Security may grant proxies and otherwise authorize any
person, including Agent Members and persons that may hold interests through
Agent Members, to take any action which a holder is entitled to take under this
Indenture or the Securities.
Section 2.13 Defaulted Interest. If the Company fails to make a payment
of interest on the Securities, it shall pay such defaulted interest plus any
interest payable on the defaulted interest, in any lawful manner. It may pay
such defaulted interest, plus any such interest payable on it, to the persons
who are Noteholders on a subsequent special record date. The Company shall fix
any such record date and payment date. At least 15 days before any such record
date, the Company shall cause to be mailed to Noteholders a notice that states
the record date, payment date, and amount of such interest to be paid.
ARTICLE III
REDEMPTION AND REPURCHASE
Section 3.1 Notices to Trustee. If the Company elects to redeem
Securities pursuant to the optional redemption provision of Section 3.7 hereof,
it shall notify the Trustee of the redemption date and the principal amount of
Securities to be redeemed. The Company shall give each notice to the Trustee
provided for in this Section 3.1 at least 20 days before the redemption date
(unless a shorter notice period shall be satisfactory to the Trustee).
Section 3.2 Selection of Securities to be Redeemed. If less than all
the Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which the Securities are listed, or, if the
Securities are not so listed, on a pro rata basis, provided however, that the
event of a pro rata redemption of less than all of the Notes pursuant to this
Section 3.2, the Trustee shall not be required to issue Notes in denominations
of less than $1,000. The Trustee shall make the selection not more than 60 days
and not less than 15 days before the redemption date from Securities outstanding
not previously called for redemption. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than
$1,000. Securities and portions of them it selects
-13-
19
shall be in amounts of $1,000 or integral multiples of $1,000. Provisions of
this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the
Company promptly of the Securities or portions of Securities to be called for
redemption.
If any Security selected for partial redemption is converted in part
after such selection, the converted portion of such Security shall be deemed (so
far as may be) to be the portion to be selected for redemption. The Securities
(or portions thereof) so selected shall be deemed duly selected for redemption
for all purposes hereof, notwithstanding that any such Security is converted in
whole or in part before the mailing of the notice of redemption. Upon any
redemption of less than all the Securities, the Company and the Trustee may
treat as outstanding any Securities surrendered for conversion during the period
15 days next preceding the mailing of a notice of redemption and need not treat
as outstanding any Security authenticated and delivered during such period in
exchange for the unconverted portion of any Security converted in part during
such period.
Section 3.3 Notice of Redemption. At least 15 days but not more than 60
days before a redemption date, the Company shall mail a notice of redemption to
each holder whose Securities are to be redeemed at such holder's registered
address.
The notice shall identify the Securities to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the redemption
date, upon cancellation of such Security, a new Security or Securities in
principal amount equal to the unredeemed portion will be issued in the name of
the holder thereof;
(d) the name and address of the Paying Agent;
(e) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price plus accrued interest, if any;
(f) that, unless the Company defaults in making such redemption payment
or the Paying Agent is prohibited from making such payment pursuant to the terms
of this Indenture, interest on Securities called for redemption ceases to accrue
on and after the redemption date; and
(g) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed.
Such notice shall also state the current Conversion Price and the date
on which the right to convert such Securities or portions thereof into Common
Stock of the Company will expire.
-14-
20
At the Company's request, the Trustee shall give notice of redemption
in the Company's name and at its expense.
Section 3.4 Effect of Notice of Redemption. Once notice of redemption
is mailed, Securities called for redemption become due and payable on the
redemption date at the price set forth in the Security.
Section 3.5 Deposit of Redemption Price. On or before the redemption
date, the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest, if any, up to
but not including the redemption date on all Securities to be redeemed on that
date (subject to the right of holders of record on the relevant record date to
receive interest, if any, due on an interest payment date) unless theretofore
converted into Common Stock pursuant to the provisions hereof. The Trustee or
the Paying Agent shall return to the Company any money not required for that
purpose.
Section 3.6 Securities Redeemed in Part. Upon cancellation of a
Security that is redeemed in part, the Company shall issue and the Trustee shall
authenticate for the holder at the expense of the Company a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
Section 3.7 Optional Redemption. The Company may redeem all or any
portion of the Securities, upon the terms and at the redemption prices set forth
in each of the Securities. Any redemption pursuant to this Section 3.7 shall be
made pursuant to the provisions of Section 3.1 through 3.6 hereof.
Section 3.8 Designated Event Offer.
(a) In the event that, pursuant to Section 4.7 hereof, the Company
shall commence a Designated Event Offer, the Company shall follow the procedures
in this Section 3.8.
(b) The Designated Event Offer shall remain open for a period specified
by the Company which shall be no less than 30 calendar days and no more than 40
calendar days following its commencement on the date of the mailing of notice in
accordance with Section 3.8(e) hereof (the "Commencement Date"), except to the
extent that a longer period is required by applicable law (the "Tender Period").
Upon the expiration of the Tender Period (the "Designated Event Payment Date"),
the Company shall purchase the principal amount of Securities required to be
purchased pursuant to Section 4.7 hereof at a purchase price equal to 101% of
principal thereof, together with accrued and unpaid interest thereon, if any
(the "Designated Event Payment").
(c) If the Designated Event Payment Date is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest will be paid to the person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Noteholders who tender Securities pursuant to the
Designated Event Offer.
-15-
21
(d) The Company shall provide the Trustee with notice of the Designated
Event Offer at least 10 Business Days before the Commencement Date.
(e) On or before the Commencement Date, the Company or the Trustee
(upon the request and at the expense of the Company) shall send, by first class
mail, a notice to each of the Noteholders, which shall govern the terms of the
Designated Event Offer and shall state:
(i) that the Designated Event Offer is being made pursuant
to this Section 3.8 and Section 4.7 hereof and that all Securities tendered will
be accepted for payment;
(ii) the purchase price (as determined in accordance with
Section 4.7 hereof), the length of time the Designated Event Offer will remain
open and the Designated Event Payment Date;
(iii) that any Security or portion thereof not tendered
for payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of
the Designated Event Payment, any Security or portion thereof accepted for
payment pursuant to the Designated Event Offer shall cease to accrue interest
and, if applicable, after the Designated Event Payment Date;
(v) that Noteholders electing to have a Security or
portion thereof purchased pursuant to any Designated Event Offer will be
required to surrender the Security, with the form entitled "Option of Noteholder
To Elect Purchase" on the reverse of the Security completed, to the Paying Agent
at the address specified in the notice prior to the close of business on the
third Business Day preceding the Designated Event Payment Date;
(vi) that Noteholders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business on
the second Business Day preceding the Designated Event Payment Date, or such
longer period as may be required by law, a letter or a telegram, telex or
facsimile transmission (receipt of which is confirmed and promptly followed by a
letter) setting forth the name of the Noteholder, the principal amount of the
Security or portion thereof the Noteholder delivered for purchase and a
statement that such Noteholder is withdrawing his election to have the Security
or portion thereof purchased; and
(vii) that Noteholders whose Securities are being
purchased only in part will be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral multiple
thereof.
In addition, the notice shall contain all instructions and materials
that the Company shall reasonably deem necessary to enable such Noteholders to
tender Securities pursuant to the Designated Event Offer.
-16-
22
(f) On or prior to the Designated Event Payment Date, the Company shall
irrevocably deposit with the Trustee or a Paying Agent in immediately available
funds an amount equal to the Designated Event Payment to be held for payment in
accordance with the terms of this Section 3.8. On the Designated Event Payment
Date, the Company shall, to the extent lawful, (i) accept for payment the
Securities or portions thereof tendered pursuant to the Designated Event Offer,
(ii) deliver or cause to be delivered to the Trustee Securities so accepted and
(iii) deliver to the Trustee an Officers' Certificate stating such Securities or
portions thereof have been accepted for payment by the Company in accordance
with the terms of this Section 3.8. The Paying Agent shall promptly (but in any
case not later than ten (10) calendar days after the Designated Event Payment
Date) mail or deliver to each tendering Noteholder an amount equal to the
purchase price of the Securities tendered by such Noteholder, and the Trustee
shall promptly authenticate and mail or deliver to such Noteholders a new
Security equal in principal amount to any unpurchased portion of the Security
surrendered, if any; provided, that each new Security shall be in a principal
amount of $1,000 or an integral multiple thereof. Any Securities not so accepted
shall be promptly mailed or delivered by or on behalf of the Company to the
holder thereof. The Company will publicly announce the results of the Designated
Event Offer on, or as soon as practicable after, the Designated Event Payment
Date.
(g) The Designated Event Offer shall be made by the Company in
compliance with all applicable provisions of the Exchange Act, and all
applicable tender offer rules promulgated thereunder, and shall include all
instructions and materials that the Company shall reasonably deem necessary to
enable such Noteholders to tender their Securities.
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities. The Company shall pay the principal
of, premium, if any and interest on the Securities on the dates and in the
manner provided in the Securities. Principal and interest shall be considered
paid on the date due if the Paying Agent (other than the Company or an Affiliate
of the Company) holds on that date money designated for and sufficient to pay
all principal, premium, if any and interest then due and such Paying Agent is
not prohibited from paying such money to the Noteholders on that date pursuant
to the terms of this Indenture. To the extent lawful, the Company shall pay
interest (including post petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the rate borne by the Securities, compounded
semiannually.
Section 4.2 SEC Reports. Whether or not required by the rules and
regulations of the SEC, so long as any Securities are outstanding, the Company
will file with the SEC and, if requested, furnish to the Trustee and to the
holders of Securities all quarterly and annual financial information required to
be contained in a filing with the SEC on Forms 10-Q and 10-K, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to annual information only, a report thereon by
the Company's certified independent accountants.
-17-
23
Section 4.3 Compliance Certificate. The Company shall deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company, an
Officers' Certificate stating that a review of the activities of the Company and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under, and
complied with the covenants and conditions contained in, this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge, the Company has kept, observed, performed and
fulfilled each and every covenant, and complied with the covenants and
conditions contained in this Indenture and is not in default in the performance
or observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which he or she may have knowledge) and that to the best of
his or her knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal or of interest, if any, on the
Securities are prohibited.
One of the Officers signing such Officers' Certificate shall be either
the Company's principal executive officer, principal financial officer or
principal accounting officer.
The Company will, so long as any of the Securities are outstanding,
deliver to the Trustee, forthwith upon becoming aware of:
(a) any Default, Event of Default or default in the performance of any
covenant, agreement or condition contained in this Indenture; or
(b) any event of default under any other mortgage, indenture or
instrument described in Section 8.1(e), an Officers' Certificate specifying such
Default, Event of Default or default.
Section 4.4 Stay, Extension and Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it will 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 wherever enacted, now or at any time hereafter
in force, 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.
Section 4.5 Corporate Existence. Subject to Article VII hereof, the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate, partnership or
other existence of each Subsidiary of the Company in accordance with the
respective organizational documents of each Subsidiary and the rights (charter
and statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any Subsidiary, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries taken as a whole and that the loss thereof is not adverse in
any material respect to the
-18-
24
Noteholders. Notwithstanding the foregoing, the corporate existence of any
Subsidiary may also be terminated in connection with any Board approved
corporate restructuring or reorganization.
Section 4.6 Taxes. The Company shall, and shall cause each of its
Subsidiaries to, pay prior to delinquency all taxes, assessments and
governmental levies, except as contested in good faith and by appropriate
proceedings.
Section 4.7 Designated Event.
(a) Upon the occurrence of a Designated Event, each holder of Securities
shall have the right, in accordance with this Section 4.7 and Section 3.8
hereof, to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of such holder's Securities pursuant to the terms
of Section 3.8 (the "Designated Event Offer") at a purchase price in cash equal
to 101% of the principal amount thereof, together with accrued and unpaid
interest thereon, if any, to the Designated Event Payment Date (the "Designated
Event Payment").
(b) On or before the Commencement Date, the Company shall mail to each
holder the notice provided by Section 3.8(e).
(c) Payment by the Company of the Designated Event Payment upon the
occurrence of a Designated Event is subject to the subordination provisions of
Article VI.
Section 4.8 Stockholder Rights Plan. In the event that the Company
implements a stockholder rights plan, such rights plan shall provide that upon
conversion of the Securities the holders will receive, in addition to the Common
Stock issuable upon such conversion, the rights issued under such rights plan
(whether or not such rights have separated from the Common Stock at the time of
such conversion), provided that a holder of Securities shall be subject to all
of the terms and conditions of any such rights plan.
ARTICLE V
CONVERSION
Section 5.1 Conversion Privilege. A holder of a Security may convert the
principal amount thereof (or any portion thereof that is an integral multiple of
$1,000) into fully paid and nonassessable shares of Common Stock of the Company
at any time prior to the close of business (New York time) on the date of the
Security's maturity at the Conversion Price then in effect, except that, with
respect to any Security called for redemption, such conversion right shall
terminate at the close of business on the Business Day immediately preceding the
redemption date (unless the Company shall default in making the redemption
payment when it becomes due, in which case the conversion right shall terminate
on the date such default is cured). A Security in respect of which a holder has
delivered an "Option of Noteholder to Elect Purchase" form appearing in Exhibit
A attached hereto exercising the option of such holder to require the Company to
purchase such Security may be converted only if the notice of exercise is
withdrawn as provided in Section 3.8. The number of shares of Common Stock
issuable upon conversion of a Security is determined by
-19-
25
dividing the principal amount of the Security converted by the conversion price
in effect on the Conversion Date (the "Conversion Price").
The initial Conversion Price is stated in paragraph 10 of the Securities
and is subject to adjustment as provided in this Article V.
Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of it. A holder of Securities is
not entitled to any rights of a holder of Common Stock (other than as provided
in Section 4.8 hereof) until such holder of Securities has converted such
Securities into Common Stock, and only to the extent that such Securities are
deemed to have been converted into Common Stock under this Article V.
Section 5.2 Conversion Procedure. To convert a Security, a holder must
satisfy the requirements in paragraph 10 of the Securities. The date on which
the holder satisfies all of those requirements is the conversion date (the
"Conversion Date"). As soon as practicable after the Conversion Date, the
Company shall deliver to the holder through the Conversion Agent a certificate
for the number of whole shares of Common Stock issuable upon the conversion and
a check for any fractional share determined pursuant to Section 5.3. Such
certificate shall bear any legends set forth on the converted Security, unless
and to the extent the restrictions contained in such legends no longer apply to
such Common Stock. The person in whose name the certificate is registered shall
become the stockholder of record on the Conversion Date and, as of such date,
such person's rights as a Noteholder shall cease; provided, however, that no
surrender of a Security on any date when the stock transfer books of the Company
shall be closed shall be effective to constitute the person entitled to receive
the shares of Common Stock upon such conversion as the stockholder of record of
such shares of Common Stock on such date, but such surrender shall be effective
to constitute the person entitled to receive such shares of Common Stock as the
stockholder of record thereof for all purposes at the close of business on the
next succeeding day on which such stock transfer books are open; provided
further, however, that such conversion shall be at the Conversion Price in
effect on the date that such Security shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
No payment or adjustment will be made for accrued and unpaid interest on
a converted Security or for dividends or distributions on shares of Common Stock
issued upon conversion of a Security, but if any holder surrenders a Security
for conversion after the close of business on the record date for the payment of
an installment of interest and prior to the opening of business on the next
interest payment date, then, notwithstanding such conversion, the interest
payable on such interest payment date shall be paid to the holder of such
Security on such record date. In such event, such Security, when surrendered for
conversion, must be accompanied by payment in funds acceptable to the Company of
an amount equal to the interest (but in no circumstance shall this requirement
to pay interest upon conversion result in any holder being required to pay
Additional Interest or Additional Voluntary Conversion Interest) and payable on
such interest payment date on the portion so converted unless the Security has
been called for redemption by the Company and a notice of redemption has been
mailed to the holders.
-20-
26
If a holder converts more than one Security at the same time, the number
of whole shares of Common Stock issuable upon the conversion shall be based on
the total principal amount of Securities converted.
Upon surrender of a Security that is converted in part, the Trustee
shall authenticate for the holder a new Security equal in principal amount to
the unconverted portion of the Security surrendered.
Section 5.3 Fractional Shares. The Company will not issue fractional
shares of Common Stock upon conversion of a Security. In lieu thereof, the
Company will pay an amount in cash based upon the Daily Market Price of the
Common Stock on the trading day prior to the date of conversion.
Section 5.4 Taxes on Conversion. The issuance of certificates for shares
of Common Stock upon the conversion of any Security shall be made without charge
to the converting Noteholder for such certificates or for any tax in respect of
the issuance of such certificates, and such certificates shall be issued in the
respective names of, or in such names as may be directed by, the holder or
holders of the converted Security; provided, however, that in the event that
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of the Security converted, such Security, when
surrendered for conversion, shall be accompanied by an instrument of transfer,
in form satisfactory to the Company, duly executed by the registered holder
thereof or his duly authorized attorney; and provided further, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the holder of the converted Security, and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance 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 or is not applicable.
Section 5.5 Company to Provide Stock. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock, solely for the purpose of issuance upon conversion of
Securities as herein provided, a sufficient number of shares of Common Stock to
permit the conversion of all outstanding Securities for shares of Common Stock.
All shares of Common Stock which may be issued upon conversion of the
Securities shall be duly authorized, validly issued, fully paid and
nonassessable when so issued.
Section 5.6 Adjustment of Conversion Price. The Conversion Price shall
be subject to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend in shares of Common
Stock to holders of Common Stock, (2) make a distribution in shares of Common
Stock to holders of Common Stock, (3) subdivide its outstanding shares of Common
Stock into a greater number of shares of Common Stock or (4) combine its
outstanding shares of Common Stock into a smaller number of shares of
-21-
27
Common Stock, the Conversion Price in effect immediately prior to such action
shall be adjusted so that the holder of any Security thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock
which he would have owned immediately following such action had such Securities
been converted immediately prior thereto. Any adjustment made pursuant to this
subsection (a) shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision or combination.
(b) In case the Company shall issue rights or warrants to substantially
all holders of Common Stock entitling them (for a period commencing no earlier
than the record date for the determination of holders of Common Stock entitled
to receive such rights or warrants and expiring not more than 45 days after such
record date) to subscribe for or purchase shares of Common Stock (or securities
convertible into Common Stock) at a price per share less than the current market
price (as determined pursuant to subsection (f) below) of the Common Stock on
such record date, the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to such record date by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding on such record date, plus
the number of shares of Common Stock which the aggregate offering price of the
offered shares of Common Stock (or the aggregate conversion price of the
convertible securities so offered) would purchase at such current market price,
and of which the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock offered (or into which the convertible securities so offered are
convertible). Such adjustments shall become effective immediately after such
record date.
(c) In case the Company shall distribute to all holders of Common Stock
shares of any class of Capital Stock of the Company other than Common Stock,
evidences of indebtedness or other assets (other than cash dividends out of
current or retained earnings), or shall distribute to substantially all holders
of Common Stock rights or warrants to subscribe for securities (other than those
securities referred to in subsection (b) above), then in each such case the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the date of such distribution by a fraction of which the numerator shall be the
current market price (determined as provided in subsection (f) below) of the
Common Stock on the record date mentioned below less the then fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive evidence of such fair market value and described in a Board
Resolution) of the portion of the assets so distributed or of such subscription
rights or warrants applicable to one share of Common Stock, and of which the
denominator shall be such current market price of the Common Stock. Such
adjustment shall become effective immediately after the record date for the
determination of the holders of Common Stock entitled to receive such
distribution. Notwithstanding the foregoing, in the event that the Company shall
distribute rights or warrants to subscribe for additional shares of the
Company's Capital Stock (other than the Common Stock referred to in subsection
(b) above) ("Rights") pro rata to holders of Common Stock, the Company may, in
lieu of making any adjustment pursuant to this Section 5.6, make proper
provision so that each holder of a Security who converts such Security (or any
portion thereof) after the record date for such distribution and prior to the
expiration or redemption of the
-22-
28
Rights shall be entitled to receive upon such conversion, in addition to the
shares of Common Stock issuable upon such conversion (the "Conversion Shares"),
a number of Rights to be determined as follows: (i) if such conversion occurs on
or prior to the date for the distribution to the holders of Rights of separate
certificates evidencing such Rights (the "Distribution Date")," the same number
of Rights to which a holder of a number of shares of Common Stock equal to the
number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the Rights; and
(ii) if such conversion occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares of Common Stock into which the
principal amount of the Security so converted was convertible immediately prior
to the Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the Rights.
(d) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (including any distributions
of cash out of current or retained earnings of the Company but excluding any
cash that is distributed as part of a distribution requiring a Conversion Price
adjustment pursuant to paragraph (c) of this Section) in an aggregate amount
that, together with the sum of (x) the aggregate amount of any other
distributions to all holders of its Common Stock made in cash plus (y) all
Excess Payments, in each case made within the 12 months preceding the date fixed
for determining the stockholders entitled to such distribution (the
"Distribution Record Date") and in respect of which no Conversion Price
adjustment pursuant to paragraphs (c) or (e) of this Section or this paragraph
(d) has been made, exceeds 15% of the product of the current market price per
share (determined as provided in paragraph (f) of this Section) of the Common
Stock on the Distribution Record Date times the number of shares of Common Stock
outstanding on the Distribution Record Date (excluding shares held in the
treasury of the Company), the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying such Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this paragraph (d) by a fraction of which the numerator shall be
the current market price per share (determined as provided in paragraph (f) of
this Section) of the Common Stock on the Distribution Record Date less the
amount of such cash and other consideration (including any Excess Payments) so
distributed applicable to one share (based on the pro rata portion of the
aggregate amount of such cash and other consideration (including any Excess
Payments), divided by the shares of Common Stock outstanding on the Distribution
Record Date) of Common Stock and the denominator shall be such current market
price per share (determined as provided in paragraph (f) of this Section) of the
Common Stock on the Distribution Record Date, such reduction to become effective
immediately prior to the opening of business on the day following the
Distribution Record Date.
(e) In case a tender offer or other negotiated transaction made by the
Company or any Subsidiary of the Company for all or any portion of the Common
Stock shall be consummated, if an Excess Payment is made in respect of such
tender offer or other negotiated transaction and the amount of such Excess
Payment, together with the sum of (x) the aggregate amount of all Excess
Payments plus (y) the aggregate amount of all distributions to all holders of
the Common Stock made in cash (specifically including distributions of cash out
of retained earnings), in each case made within the 12 months preceding the date
of payment of such current negotiated transaction
-23-
29
consideration or expiration of such current tender offer, as the case may be
(the "Purchase Date"), and as to which no adjustment pursuant to paragraph (c)
or paragraph (d) of this Section or this paragraph (e) has been made, exceeds
15% of the product of the current market price per share (determined as provided
in paragraph (f) of this Section) of the Common Stock on the Purchase Date times
the number of shares of Common Stock outstanding (including any tendered shares
but excluding any shares held in the treasury of the Company) on the Purchase
Date, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying such Conversion Price in effect immediately
prior to the effectiveness of the Conversion Price reduction contemplated by
this paragraph (e) by a fraction of which the numerator shall be the current
market price per share (determined as provided in paragraph (f) of this Section)
of the Common Stock on the Purchase Date less the amount of such Excess Payments
and such cash distributions, if any, applicable to one share (based on the pro
rata portion of the aggregate amount of such Excess Payments and such cash
distributions, divided by the shares of Common Stock outstanding on the Purchase
Date) of Common Stock and the denominator shall be such current market price per
share (determined as provided in paragraph (f) of this Section) of the Common
Stock on the Purchase Date, such reduction to become effective immediately prior
to the opening of business on the day following the Purchase Date.
(f) The current market price per share of Common Stock on any date shall
be deemed to be the average of the Daily Market Prices for the shorter of (i) 30
consecutive Business Days ending on the last full trading day on the exchange or
market referred to in determining such Daily Market Prices prior to the time of
determination or (ii) the period commencing on the date next succeeding the
first public announcement of the issuance of such rights or such warrants or
such other distribution or such negotiated transaction through such last full
trading day on the exchange or market referred to in determining such Daily
Market Prices prior to the time of determination.
(g) In any case in which this Section 5.6 shall require that an
adjustment be made immediately following a record date for an event, the Company
may elect to defer, until such event, issuing to the holder of any Security
converted after such record date the shares of Common Stock and other Capital
Stock of the Company issuable upon such conversion over and above the shares of
Common Stock and other Capital Stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to adjustment; and,
in lieu of the shares the issuance of which is so deferred, the Company shall
issue or cause its stock transfer agent to issue due bills or other appropriate
evidence of the right to receive such shares.
Section 5.7 No Adjustment. No adjustment in the Conversion Price shall
be required until cumulative adjustments amount to 1% or more of the Conversion
Price as last adjusted; provided, however, that any adjustments which by reason
of this Section 5.7 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Article V shall be made to the nearest cent or to the nearest one hundredth of a
share, as the case may be. No adjustment need be made for rights to purchase
Common Stock pursuant to a Company plan for reinvestment of dividends or
interest. No adjustment need be made for a change in the par value or no par
value of the Common Stock.
-24-
30
Section 5.8 Other Adjustments.
(a) In the event that, as a result of an adjustment made pursuant to
Section 5.6 above, the holder of any Security thereafter surrendered for
conversion shall become entitled to receive any shares of Capital Stock of the
Company other than shares of its Common Stock, thereafter the Conversion Price
of such other shares so receivable upon conversion of any Securities shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in this Article V.
(b) In the event that shares of Common Stock are not delivered after the
expiration of any of the rights or warrants referred to in Section 5.6(b) and
Section 5.6(c) hereof, the Conversion Price shall be readjusted to the
Conversion Price which would otherwise be in effect had the adjustment 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.
Section 5.9 Adjustments for Tax Purposes. The Company may, at its
option, make such reductions in the Conversion Price, in addition to those
required by Section 5.6 above, as it determines to be advisable in order that
any stock dividend, subdivision of shares, distribution of rights to purchase
stock or securities or distribution of securities convertible into or
exchangeable for stock made by the Company to its stockholders will not be
taxable to the recipients thereof.
Section 5.10 Adjustments by the Company. The Company from time to time
may, to the extent permitted by law, reduce the Conversion Price by any amount
for any period of at least 20 days, in which case the Company shall give at
least 15 days, notice of such reduction in accordance with Section 5.11, if the
Board of Directors has made a determination that such reduction would be in the
best interests of the Company, which determination shall be conclusive.
Section 5.11 Notice of Adjustment. Whenever the Conversion Price is
adjusted, the Company shall promptly mail to Noteholders at the addresses
appearing on the Registrar's books a notice of the adjustment and file with the
Trustee an Officers' Certificate briefly stating the facts requiring the
adjustment and the manner of computing it. The certificate shall be conclusive
evidence of the correctness of such adjustment.
Section 5.12 Notice of Certain Transactions. In the event that:
(1) the Company takes any action which would require an
adjustment in the Conversion Price;
(2) the Company takes any action that would require a
supplemental indenture pursuant to Section 5.13; or
(3) there is a dissolution or liquidation of the Company;
a holder of a Security may wish to convert such Security into shares of Common
Stock prior to the record date for or the effective date of the transaction so
that he may receive the rights, warrants,
-25-
31
securities or assets which a holder of shares of Common Stock on that date may
receive. Therefore, the Company shall mail to Noteholders at the addresses
appearing on the Registrar's books and the Trustee a notice stating the proposed
record or effective date, as the case may be. The Company shall mail the notice
at least 15 days before such date; however, failure to mail such notice or any
defect therein shall not affect the validity of any transaction referred to in
clause (1), (2) or (3) of this Section 5.12.
Section 5.13 Effect of Reclassifications, Consolidations, Mergers or
Sales on Conversion Privilege. If any of the following shall occur, namely: (i)
any reclassification or change of outstanding shares of Common Stock issuable
upon conversion of Securities (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 or merger to which the
Company is a party other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification of, or change
(other than a change in name, or par value, or from par value to no par value,
or from no par value to par value or as a result of a subdivision or
combination) in, outstanding shares of Common Stock or (iii) any sale or
conveyance of all or substantially all of the property or business of the
Company as an entirety, then the Company, or such successor or purchasing
corporation, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture in form satisfactory to the
Trustee providing that the holder of each Security then outstanding shall have
the right to convert such Security into the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock deliverable upon conversion of such
Security immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this
Article V. The foregoing, however, shall not in any way affect the right a
holder of a Security may otherwise have, pursuant to clause (ii) of the last
sentence of subsection (c) of Section 5.6, to receive Rights upon conversion of
a Security. If, in the case of any such consolidation, merger, sale or
conveyance, the stock or other securities and property (including cash)
receivable thereupon by a holder of Common Stock includes shares of stock or
other securities and property of a corporation other than the successor or
purchasing corporation, as the case may be, in such consolidation, merger, sale
or conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the
interests of the holders of the Securities as the Board of Directors of the
Company shall reasonably consider necessary by reason of the foregoing. The
provision of this Section 5.13 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental indenture pursuant
to this Section 5.13, the Company shall promptly file with the Trustee an
Officers' Certificate briefly stating the reasons therefor, the kind or amount
of shares of stock or securities or property (including cash) receivable by
holders of the Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, sale or conveyance and any
adjustment to be made with respect thereto.
-26-
32
Section 5.14 Trustee's Disclaimer. The Trustee has no duty to determine
when an adjustment under this Article V should be made, how it should be made or
what such adjustment should be, but may accept as conclusive evidence of the
correctness of any such adjustment, and shall be protected in relying upon the
Officers' Certificate with respect thereto which the Company is obligated to
file with the Trustee pursuant to Section 5.11. The Trustee makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
Company's failure to comply with any provisions of this Article V.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 5.13, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 5.13.
Section 5.15 Automatic Conversion by the Company.
(a) The Company may elect to automatically convert the Securities (an
"Automatic Conversion") at any time prior to Maturity if the average Daily
Market Price of the Company's Common Stock has exceeded 200% of the Conversion
Price for at least 20 Trading Days during a 30-day Trading Day period ending
within five Trading Days prior to the notice of Automatic Conversion.
(b) In the event that the date that the Securities will be automatically
converted (the "Automatic Conversion Date") occurs on or prior to [---], 2003,
the Company will pay Additional Interest (as defined below) in cash or, at the
Company's election, in Common Stock. In the event that the Company elects to pay
Additional Interest, if any, on the Securities in Common Stock upon an Automatic
Conversion, the shares of Common Stock will be valued at 90% of the average of
the Daily Market Price for the five Trading Days immediately preceding the
second Trading Day preceding the Automatic Conversion Date. "Additional
Interest" shall be equal to $[230] per each $1,000 principal amount of
Securities, less any interest actually paid or provided for with respect to such
Securities prior to the Automatic Conversion Date.
(i) The shares of Common Stock deliverable in payment of the
Additional Interest shall have a fair market value as of the Automatic
Conversion Date of not less than the Additional Interest as determined by this
Section 5.15. For purposes of this Section 5.15, the fair market value of shares
of Common Stock shall be determined by the Company and shall be equal to 90% of
the average of the Daily Market Price for the five consecutive Trading Days
immediately preceding the second Trading Day prior to the Automatic Conversion
Date;
(ii) Additional Interest shall be paid only in cash in the event
any shares of Common Stock to be issued for the payment of Additional Interest
in the Securities hereunder (i) require registration under any federal
securities law before such shares may be freely transferable without being
subject to any transfer restrictions under the Securities Act upon an Automatic
Conversion and if such registration is not completed or does not become
effective prior to the
-27-
33
Automatic Conversion Date, and/or (ii) require registration with or approval of
any governmental authority under any state law or any other federal law before
such shares may be validly issued or delivered upon an Automatic Conversion and
if such registration is not completed or does not become effective or such
approval is not obtained prior to the Automatic Conversion Date;
(iii) The Common Stock is, or shall have been, approved for
quotation on the NNM or listing on the New York Stock Exchange, in either case,
prior to the Automatic Conversion Date; and
(iv) All shares of Common Stock which may be issued with respect
to the payment of interest on the Securities will be issued out of the Company's
authorized but unissued Common Stock and will, upon issue, be duly and validly
issued and fully paid and non-assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 5.15(b) are not
satisfied in accordance with the terms thereof, the interest required to be paid
or duly provided for by the Company pursuant to this Section shall be paid by
the Company only in cash.
(c) Unless the Company shall have theretofore called for redemption all
of the outstanding Securities, the Company or, at the request and expense of the
Company, the Trustee, shall give to all holders of Securities notice (the
"Automatic Conversion Notice") of the Automatic Conversion not more than 30 days
but not less than 15 days prior to the Automatic Conversion Date. The Company
shall also deliver a copy of such notice of an Automatic Conversion to the
Trustee.
Each Automatic Conversion Notice shall state:
(i) the Automatic Conversion Date,
(ii) whether the Additional Interest, if any, shall be paid
by the Company in cash or by delivery of shares of
Common Stock,
(iii) the place or places where such Securities are to be
surrendered for conversion and accrued Additional
Interest, if any, and
(iv) the Conversion Price then in effect.
If any of the foregoing provisions or other provisions of this Section
are inconsistent with applicable law, such law shall govern.
(d) In the event of an Automatic Conversion, the Company shall issue and
deliver a certificate or certificates for the number of full shares of Common
Stock issuable upon conversion of the Securities and the Additional Interest, if
any, due on such Securities along with any cash in respect of any fractional
shares of Common Stock otherwise issuable upon conversion or in the event that
the Company elects to pay Additional Interest, if any, in Common Stock instead
of cash,
-28-
34
for payment to the holder as promptly after the Automatic Conversion Date as
practicable in accordance with the provisions of this Article V.
(e) All Securities subject to the Automatic Conversion shall be
delivered to the Trustee to be canceled at the direction of the Trustee, which
shall dispose of the same as provided in Section 2.11 hereof.
Section 5.16 Voluntary Conversion by Holders.
(a) If a holder elects to voluntarily convert Securities at any time
prior on or prior to [---], 2003, such holder will receive a payment of
additional interest equal to Additional Interest (as defined in Section 5.15(b))
("Additional Voluntary Conversion Interest") in cash or, at the Company's
election, in Common Stock, as long as the Company has not previously mailed an
Automatic Conversion Notice. In the event that the Company elects to pay
Additional Voluntary Conversion Interest, if any, on the Securities in Common
Stock upon a voluntary conversion, the shares of Common Stock will be valued at
the Conversion Price, less any interest actually paid or provided for with
respect to such Securities prior to the date of such voluntary conversion.
(i) Additional Voluntary Conversion Interest shall be paid only
in cash in the event any shares of Common Stock to be issued for the payment of
Additional Voluntary Conversion Interest in the Securities hereunder (i) require
registration under any federal securities law before such shares may be freely
transferable without being subject to any transfer restrictions under the
Securities Act upon a voluntary conversion and if such registration is not
completed or does not become effective prior to the date of such voluntary
conversion, and/or (ii) require registration with or approval of any
governmental authority under any state law or any other federal law before such
shares may be validly issued or delivered upon a voluntary conversion and if
such registration is not completed or does not become effective or such approval
is not obtained prior to the date of such voluntary conversion;
(ii) The Common Stock is, or shall have been, approved for
quotation on the NNM or listing on the New York Stock Exchange, in either case,
prior to the date of the voluntary conversion; and
(iii) All shares of Common Stock which may be issued with respect
to the payment of interest on the Securities will be issued out of the Company's
authorized but unissued Common Stock and, will upon issue, be duly and validly
issued and fully paid and non-assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 5.16(b) are not
satisfied in accordance with the terms thereof, the interest required to be paid
or duly provided for by the Company pursuant to this Section shall be paid by
the Company only in cash.
(b) In the event of a voluntary conversion by a holder, the Company
shall issue and deliver a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion of the Securities submitted for
conversion and the Additional Voluntary Conversion
-29-
35
Interest, if any, due on such Securities along with any cash in respect of any
fractional shares of Common Stock otherwise issuable upon conversion or in the
event that the Company elects to pay Additional Voluntary Conversion Interest,
if any, in Common Stock instead of cash, for payment to the holder as promptly
after the date of the voluntary conversion as practicable in accordance with the
provisions of this Article V.
(c) All Securities submitted for voluntary conversion shall be delivered
to the Trustee to be canceled at the direction of the Trustee, which shall
dispose of the same as provided in Section 2.11 hereof.
ARTICLE VI
SUBORDINATION
Section 6.1 Agreement to Subordinate. The Company, for itself and its
successors, and each Noteholder, by his acceptance of Securities, agree that the
payment of the principal of or interest on or any other amounts due on the
Securities is subordinated in right of payment, to the extent and in the manner
stated in this Article VI, to the prior payment in full of all existing and
future Senior Debt.
Section 6.2 No Payment on Securities if Senior Debt in Default. Anything
in this Indenture to the contrary notwithstanding, no payment on account of
principal of or redemption or repurchase of, interest on or other amounts due on
the Securities, including any payments on a Designated Event Offer, and no
redemption, purchase, or other acquisition of the Securities (including, without
limitation, upon a Designated Event), shall be made by or on behalf of the
Company (i) unless full payment of amounts then due for principal and interest
and of all other amounts then due on all Senior Debt has been made or duly
provided for pursuant to the terms of the instrument governing such Senior Debt,
(ii) if, at the time of such payment, redemption, purchase or other acquisition,
or immediately after giving effect thereto, there shall exist under any Senior
Debt, or any agreement pursuant to which any Senior Debt is issued, any default,
which default shall not have been cured or waived and which default shall have
resulted in the full amount of such Senior Debt being declared due and payable
or (iii) if, at the time of such payment, redemption, purchase or other
acquisition, the Trustee shall have received written notice from a
Representative of the holders of Designated Senior Debt (a "Payment Blockage
Notice") that there exists under such Designated Senior Debt, or any agreement
pursuant to which such Designated Senior Debt is issued, any default, which
default shall not have been cured or waived, permitting the holders thereof to
declare any amounts of such Designated Senior Debt due and payable, but only for
the period (the "Payment Blockage Period") commencing on the date of receipt of
the Payment Blockage Notice and ending (unless earlier terminated by notice
given to the Trustee by a Representative of the holders of such Designated
Senior Debt) on the earlier of (a) the date on which such event of default shall
have been cured or waived or (b) 180 days from the receipt of the Payment
Blockage Notice. Notwithstanding the provisions described in the immediately
preceding sentence (other than in clauses (i) and (ii)), unless the holders of
such Designated Senior Debt or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Debt, the Company may resume
payments on the
-30-
36
Securities after the end of such Payment Blockage Period. Not more than one
Payment Blockage Notice may be given in any consecutive 360-day period
irrespective of the number of defaults with respect to Senior Debt during such
period.
In the event that, notwithstanding the provisions of this Section 6.2,
payments are made by or on behalf of the Company in contravention of the
provisions of this Section 6.2, such payments shall be held by the Trustee, any
Paying Agent or the holders, as applicable, in trust for the benefit of, and
shall be paid over to and delivered to, the Representative of the holders of
Senior Debt or the trustee under the indenture or other agreement (if any),
pursuant to which any instruments evidencing any Senior Debt may have been
issued for application to the payment of all Senior Debt ratably according to
the aggregate amounts remaining unpaid to the extent necessary to pay all Senior
Debt in full in accordance with the terms of such Senior Debt, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
The Company shall give prompt written notice to the Trustee and any
Paying Agent of any default or event of default under any Senior Debt or under
any agreement pursuant to which any Senior Debt may have been issued. The
Trustee and the Paying Agent may assume that all payments have been made with
respect to all Senior Debt unless the Trustee or the Paying Agent, as the case
may be, has received written notice that payment has not been made and three (3)
Business Days have expired.
Section 6.3 Distribution on Acceleration of Securities; Dissolution and
Reorganization; Subrogation of Securities.
(a) If the Securities are declared due and payable because of the
occurrence of an Event of Default, the Company shall give prompt written notice
to the holders of all Senior Debt or to the trustee(s) for such Senior Debt of
such acceleration. The Company may not pay the principal of, premium, if any, or
interest on or any other amounts due on the Securities until five days after
such holders or trustee(s) of Senior Debt receive such notice and, thereafter,
the Company may pay the principal of or interest on or any other amounts due on
the Securities only if the provisions of this Article VI permit such payment.
(b) Upon (i) any acceleration of the principal amount due on the
Securities because of an Event of Default or (ii) any distribution of assets of
the Company upon any dissolution, winding up, liquidation or reorganization of
the Company (whether in bankruptcy, insolvency or receivership proceedings or
upon an assignment for the benefit of creditors or any other dissolution,
winding up, liquidation or reorganization of the Company):
(1) the holders of all Senior Debt shall first be entitled to
receive payment in full of the principal thereof, the interest thereon and any
other amounts due thereon before the holders are entitled to receive payment on
account of the principal of or interest on or any other amounts due on the
Securities;
(2) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than
securities of the Company as reorganized or
-31-
37
readjusted or securities of the Company or any other corporation provided for by
a plan of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in this Article with respect to the Securities, to
the payment in full without diminution or modification by such plan of all
Senior Debt), to which the holders or the Trustee would be entitled except for
the provisions of this Article, shall be paid by the liquidating trustee or
agent or other person making such a payment or distribution, directly to the
holders of Senior Debt (or their representatives(s) or trustee(s) acting on
their behalf), ratably according to the aggregate amounts remaining unpaid on
account of the principal of or interest on and other amounts due on the Senior
Debt held or represented by each, to the extent necessary to make payment in
full of all Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt; and
(3) in the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities (other than securities of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Article with respect to the
Securities, to the payment in full without diminution or modification by such
plan of Senior Debt), shall be received by the Trustee or the holders before all
Senior Debt is paid in full, such payment or distribution shall be held in trust
for the benefit of, and be paid over to upon request by a holder of the Senior
Debt, the holders of the Senior Debt remaining unpaid (or their representatives)
or trustee(s) acting on their behalf, ratably as aforesaid, for application to
the payment of such Senior Debt until all such Senior Debt shall have been paid
in full, after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
Subject to the payment in full of all Senior Debt, the holders shall be
subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Debt until the principal of, premium, if any, and interest, if any, on
the Securities shall be paid in full and, for purposes of such subrogation, no
such payments or distributions to the holders of Senior Debt of cash, property
or securities which otherwise would have been payable or distributable to
holders shall, as between the Company, its creditors other than the holders of
Senior Debt, and the holders, be deemed to be a payment by the Company to or on
account of the Senior Debt, it being understood that the provisions of this
Article are and are intended solely for the purpose of defining the relative
rights of the holders, on the one hand, and the holders of Senior Debt, on the
other hand.
Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall (i) impair, as between the Company and
its creditors other than the holders of Senior Debt, the obligation of the
Company, which is absolute and unconditional, to pay to the holders the
principal of, premium, if any, and interest, if any, on the Securities as and
when the same shall become due and payable in accordance with the terms of the
Securities, (ii) affect the relative rights of the holders and creditors of the
Company other than holders of Senior Debt or, as between the Company and the
Trustee, the obligations of the Company to the Trustee, or (iii) prevent the
Trustee or the holders from exercising all remedies otherwise permitted by
applicable law upon
-32-
38
default under this Indenture, subject to the rights, if any, under this Article
of the holders of Senior Debt in respect of cash, property and securities of the
Company received upon the exercise of any such remedy.
Upon distribution of assets of the Company referred to in this Article,
the Trustee, subject to the provisions of Section 9.1 hereof, and the holders
shall be entitled to rely upon a certificate of the liquidating trustee or agent
or other person making any distribution to the Trustee or to the holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt. Nothing contained in this Article or elsewhere in this
Indenture, or in any of the Securities, shall prevent the good faith application
by the Trustee of any moneys which shall have been deposited with it hereunder,
prior to its receipt of written notice of facts which would prohibit such
application, for the purpose of the payment of or on account of the principal
of, premium, if any, or interest on the Securities unless, prior to the date on
which such application is made by the Trustee, the Trustee shall be charged with
actual notice under Section 6.3(d) hereof of the facts which would prohibit the
making of such application.
(c) The provisions of this Article shall not be applicable to any cash,
properties or securities received by the Trustee or by any holder that are
received as a holder of Senior Debt and nothing in Section 9.11 hereof or
elsewhere in this indenture shall deprive the Trustee or such holder of any of
its rights as such holder.
(d) The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment of
money to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article. The Trustee, subject to the provisions of Section
9.1 hereof, shall be entitled to assume that no such fact exists unless the
Company or any holder of Senior Debt or any trustee therefor has given written
notice thereof to the Trustee. Notwithstanding the provisions of this Article or
any other provisions of this indenture, the Trustee shall not be charged with
knowledge of the existence of any fact which would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Securities pursuant to
the provisions in this Article, unless and until three Business Days after the
Trustee shall have received written notice thereof from the Company or any
holder or holders of Senior Debt or from any trustee therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 9.1 hereof, shall be entitled in all respects conclusively to assume
that no such facts exist; provided that if on a date not less than three
Business Days immediately preceding the date upon which, by the terms hereof,
any such moneys may become payable for any purpose (including, without
limitation, the principal of or interest on any Security), the Trustee shall not
have received with respect to such moneys the notice provided for in this
Section 6.3(d), then anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such moneys and to
apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such prior date.
-33-
39
The Trustee shall be entitled to conclusively rely on the delivery to it
of a written notice by a person representing himself to be a holder of Senior
Debt (or a trustee on behalf of such holder) to establish that such notice has
been given by a holder of Senior Debt (or a trustee on behalf of any such holder
or holders). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such person, the extent to which such person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
person under this Article, and, if such evidence is not furnished, the Trustee
may defer any payment to such person pending judicial determination as to the
right of such person to receive such payment; nor shall the Trustee be charged
with knowledge of the curing or waiving of any default of the character
specified in Section 6.2 hereof or that any event or any condition preventing
any payment in respect of the Securities shall have ceased to exist, unless and
until the Trustee shall have received written notice to such effect.
(e) The provisions of this Section 6.3 applicable to the Trustee shall
(unless the context requires otherwise) also apply to any Paying Agent for the
Company.
Section 6.4 Reliance by Senior Debt on Subordination Provisions. Each
holder of any Security by his acceptance thereof acknowledges and agrees that
the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration for each holder of any Senior Debt, whether such
Senior Debt was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Debt, and such holder of Senior Debt shall be deemed conclusively to have relied
on such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Debt. Notice of any default in the payment of
any Senior Debt, except as expressly stated in this Article, and notice of
acceptance of the provisions hereof are hereby expressly waived. Except as
otherwise expressly provided herein, no waiver, forbearance or release by any
holder of Senior Debt under such Senior Debt or under this Article shall
constitute a release of any of the obligations or liabilities of the Trustee or
holders of the Securities provided in this Article.
Section 6.5 No Waiver of Subordination Provisions. Except as otherwise
expressly provided herein, no right of any present or future holder of any
Senior Debt to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of, or notice to, the Trustee or the holders of the Securities, without
incurring responsibility to the holders of the Securities and without impairing
or releasing the subordination provided in this Article VI or the obligations
hereunder of the holders of the Securities to the holders of Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
of, or renew or alter, Senior Debt, or otherwise
-34-
40
amend or supplement in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt, is outstanding; (ii) sell,
exchange, release or otherwise dispose of any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any person liable in any manner
for the collection of Senior Debt; and (iv) exercise or refrain from exercising
any rights against the Company or any other person.
Section 6.6 Trustee's Relation to Senior Debt. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article in respect of any Senior Debt at any time held by it, to the same extent
as any holder of Senior Debt, and nothing in Section 9.11 hereof or elsewhere in
this Indenture shall deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations, as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not owe any fiduciary duty to the holders
of Senior Debt but shall have only such obligations to such holders as are
expressly set forth in this Article.
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding up or liquidation or
reorganization under any applicable bankruptcy law of the Company (whether in
bankruptcy, insolvency or receivership proceedings or otherwise), the timely
filing of a claim for the unpaid balance of such holder's Securities in the form
required in such proceedings and the causing of such claim to be approved. If
the Trustee does not file a claim or proof of debt in the form required in such
proceedings prior to 30 days before the expiration of the time to file such
claims or proofs, then any holder or holders of Senior Debt or their
representative or representatives shall have the right to demand, xxx for,
collect, receive and receipt for the payments and distributions in respect of
the Securities which are required to be paid or delivered to the holders of
Senior Debt as provided in this Article and to file and prove all claims
therefor and to take all such other action in the name of the holders or
otherwise, as such holders of Senior Debt or representative thereof may
determine to be necessary or appropriate for the enforcement of the provisions
of this Article.
Section 6.7 Other Provisions Subject Hereto. Except as expressly stated
in this Article, notwithstanding anything contained in this Indenture to the
contrary, all the provisions of this Indenture and the Securities are subject to
the provisions of this Article. However, nothing in this Article shall apply to
or adversely affect the claims of, or payment to, the Trustee pursuant to
Section 9.7. Notwithstanding the foregoing, the failure to make a payment on
account of principal of or interest on the Securities by reason of any provision
of this Article VI shall not be construed as preventing the occurrence of an
Event of Default under Section 8.1.
Section 6.8 Certain Conversions, Interest Payments and Repurchases in
Common Stock Deemed Payment. For the purposes of this Article VI only, (1) the
issuance and delivery of junior securities upon (i) conversion of Securities in
accordance with Article V, (ii) upon the payment of interest in accordance with
Section 1 of the form of Security (iii) upon the payment of Additional
-35-
41
Interest in accordance with Section 5.15 or (iv) upon the payment of Additional
Voluntary Conversion Interest in accordance with Section 5.16, in each case in
the manner specified in such respective Sections, shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest on Securities or on account of the purchase or other
acquisition of Securities, and will therefore not be subject to the
subordination provisions of this Article VI, and (2) the payment, issuance or
delivery of cash (excluding cash paid for fractional shares upon conversion of a
Security or payment of interest, Additional Interest or Additional Voluntary
Conversion Interest), property or securities (other than junior securities) upon
conversion, payment of interest, payment of Additional Interest or payment of
Additional Voluntary Conversion Interest shall be deemed to constitute payment
on account of the principal of such Security. For the purposes of this Section,
the term "junior securities" means (a) shares of any stock of any class of the
Company and (b) securities of the Company which are subordinated in right of
payment to all Senior Debt which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a greater
extent than, the Securities are so subordinated as provided in this Article VI.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Debt and the holders of the Securities, the right,
which is absolute and unconditional, of the holder of any Security to convert
such Security in accordance with Article V.
ARTICLE VII
SUCCESSORS
Section 7.1 Merger, Consolidation or Sale of Assets. The Company may not
consolidate or merge with or into any person (whether or not the Company is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets unless:
(a) the Company is the surviving corporation or the entity or the person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(b) the entity or person formed by or surviving any such consolidation
or merger (if other than the Company) assumes all the Obligations of the
Company, pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee, under the Securities and the Indenture;
(c) such sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's properties or assets
shall be as an entirety or virtually as an entirety to one person and such
person shall have assumed all the Obligations of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, under
the Securities and the Indenture;
(d) immediately after such transaction no Default or Event of Default
exists; and
-36-
42
(e) the Company or such person shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
transaction and the supplemental indenture comply with the Indenture and that
all conditions precedent in the Indenture relating to such transaction have been
satisfied.
Section 7.2 Successor Corporation Substituted. Upon any consolidation or
merger, or any sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 7.1 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for and may exercise every right and power of,
the Company under this indenture with the same effect as if such successor
person has been named as the Company herein; provided, however, that the
predecessor Company in the case of a sale, assignment, transfer, lease,
conveyance or other disposition shall not be released from the obligation to pay
the principal of and interest on the Securities.
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1 Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest on any Security when
the same becomes due and payable, whether or not such payments shall be
prohibited by Article VI, and the Default continues for a period of 30 days
after the date due and payable;
(b) the Company defaults in the payment of the principal of any Security
when the same becomes due and payable at maturity, upon redemption or otherwise,
whether or not such payment shall be prohibited by Article VI;
(c) the Company defaults in the payment of the Designated Event Payment
when the same becomes due and payable, whether or not such payment may be
prohibited by Article VI;
(d) the Company fails to provide notice of any Designated Event in
accordance with Section 4.7;
(e) the Company fails to observe or perform any other covenant or
agreement contained in this Indenture or the Securities, required by it to be
performed and the Default continues for a period of 60 days after the receipt of
written notice from the Trustee to the Company or from the holders of 25% in
aggregate principal amount of the then outstanding Securities to the Company and
the Trustee stating that such notice is a "Notice of Default";
(f) there is a default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any Subsidiary of the Company
(or the payment of which is guaranteed by the
-37-
43
Company or any Subsidiary of the Company), whether such Indebtedness or
guarantee now exists or is created after the Issuance Date, which default (i) is
caused by a failure to pay when due principal of or interest on such
Indebtedness within the grace period provided for in such Indebtedness (which
failure continues beyond the longer of any applicable grace period and 30 days)
(a "Payment Default") or (ii) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there is a Payment Default or the maturity of which has
been so accelerated, aggregates $10 million or more;
(g) a final, non-appealable judgment or final, non-appealable judgments
(other than any judgment as to which a reputable insurance company has accepted
full liability) for the payment of money are entered by a court or courts of
competent jurisdiction against the Company or any Subsidiary of the Company and
remain undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all such
judgments exceeds $10 million;
(h) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law: (i) commences a voluntary case, (ii) consents to
the entry of an order for relief against it in an involuntary case in which it
is the debtor, (iii) consents to the appointment of a Bankruptcy Custodian of it
or for all or substantially all of its property, (iv) makes a general assignment
for the benefit of its creditors, or (v) makes the admission in writing that it
generally is unable to pay its debts as the same become due; or
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (i) is for relief against the Company or any Material
Subsidiary of the Company in an involuntary case, (ii) appoints a Bankruptcy
Custodian of the Company or any Material Subsidiary of the Company or for all or
substantially all of its property, and the order or decree remains unstayed and
in effect for 60 days, or (iii) orders the liquidation of the Company or any
Material Subsidiary of the Company, and the order or decree remains unstayed and
in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Bankruptcy Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
Section 8.2 Acceleration. If an Event of Default (other than an Event of
Default specified in clauses (h) and (i) of Section 8.1 hereof) occurs and is
continuing, the Trustee by notice to the Company, or the Noteholders of at least
25% in principal amount of the then outstanding Securities by notice to the
Company and the Trustee, may declare all the Securities to be due and payable.
Upon such declaration, the principal of, premium, if any, and accrued and unpaid
interest on the Securities shall be due and payable immediately. If an Event of
Default specified in clause (h) or (i) of Section 8.1 hereof occurs, such an
amount shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Noteholder. The
Noteholders of a majority in aggregate principal amount of the then outstanding
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict
-38-
44
with any judgment or decree and if all existing Events of Default have been
cured or waived except nonpayment of principal or interest that has become due
solely because of the acceleration.
Section 8.3 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal or interest then due and payable on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 8.4 Waiver of Past Defaults. The Noteholders of a majority in
aggregate principal amount of the then outstanding Securities by notice to the
Trustee may waive an existing Default or Event of Default and its consequences
except a continuing Default or Event of Default in the payment of the Designated
Event Payment or the principal of, or interest on, any Security. When a Default
or Event of Default is waived, it is cured and ceases; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
Section 8.5 Control by Majority. The Noteholders of a majority in
principal amount of the then outstanding Securities may 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 it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture, is
unduly prejudicial to the rights of other Noteholders, or would involve the
Trustee in personal liability.
Section 8.6 Limitation on Suits. A Noteholder may pursue a remedy with
respect to this Indenture or the Securities only if:
(a) the Noteholder gives to the Trustee notice of a continuing Event of
Default;
(b) the Noteholders of at least 25% in principal amount of the then
outstanding Securities make a request to the Trustee to pursue the remedy;
(c) such Noteholder or Noteholders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Noteholders of a majority in principal
amount of the then outstanding Securities do not give the Trustee a direction
inconsistent with the request.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
-39-
45
Section 8.7 Rights of Noteholders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Noteholder of a Security
to receive payment of principal and interest on the Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Noteholder made pursuant to this
Section.
Section 8.8 Collection Suit by Trustee. If an Event of Default specified
in Section 8.1(a) or (b) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount of principal and interest remaining unpaid on the
Securities and interest on overdue principal and interest and such further
amount as shall be sufficient to cover the costs and, to the extent lawful,
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 8.9 Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Noteholders allowed in any
judicial proceedings relative to the Company, its creditors or its property.
Nothing contained herein shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Noteholder thereof, or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceeding.
Section 8.10 Priorities. If the Trustee collects any money or property
pursuant to this Article, it shall pay out the money or proceeds, in the case of
property, in the following order:
First: to the Trustee for amounts due under Section 9.7 hereof; -----
Second: to the holders of Senior Debt to the extent required by Article
VI;
Third: to Noteholders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and
Fourth: to the Company.
Except as otherwise provided in Section 2.12 hereof, the Trustee may fix
a record date and payment date for any payment to Noteholders made pursuant to
this Section.
Section 8.11 Undertaking for Costs. 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 a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not
-40-
46
apply to a suit by the Trustee, a suit by a holder pursuant to Section 8.7
hereof, or a suit by Noteholders of more than 10% in principal amount of the
then outstanding Securities.
ARTICLE IX
TRUSTEE
Section 9.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, 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 man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default: (i) the
Trustee need perform only those duties that are specifically set forth in this
Indenture and no others and (ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that (i) this paragraph does not limit the effect of paragraph (b) of this
Section 9.1; (ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts and (iii) the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 8.5 hereof.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 9.1. No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 9.2 Rights of Trustee.
-41-
47
(a) The Trustee may rely on any document reasonably believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it (unless other
evidence be herein specifically prescribed) may require an Officers' Certificate
or an Opinion of Counsel, or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and nominees and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith, without negligence or willful misconduct, and that
it reasonably believes to be authorized or within its rights or powers.
(e) The Trustee shall not be charged with knowledge of any Event of
Default under subsection (c), (d), (e), (f), (g), (h) or (i) of Section 8.1
unless either (1) a Trust Officer assigned to its Corporate Trust Services
division shall have actual knowledge thereof, or (2) the Trustee shall have
received notice thereof in accordance with Section 12.2 hereof from the Company
or any holder.
Section 9.3 Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or an Affiliate with the same rights it would
have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 9.10 and 9.11 hereof.
Section 9.4 Trustee's Disclaimer. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from any Securities
authenticated and delivered by the Trustee in conformity with the provisions of
this Indenture, and it shall not be responsible for any statement of the Company
in the Indenture or any statement in the Securities other than its
authentication.
Section 9.5 Notice of Defaults. If a Default or Event of Default occurs
and is continuing and if it is actually known to the Trustee, the Trustee shall
mail to Noteholders a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
on any Security, the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Noteholders.
Section 9.6 Reports by Trustee to Noteholders. Within 60 days after the
reporting date stated in Section 12.10, the Trustee shall mail to Noteholders a
brief report dated as of such reporting date that complies with TIA Section
313(a) if and to the extent required by such Section 313(a). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail
all reports as required by TIA Section 313(c).
-42-
48
A copy of each report at the time of its mailing to Noteholders shall be
filed with the SEC and each stock exchange on which the Securities are listed.
The Company shall notify the Trustee when the Securities are listed on any stock
exchange.
Section 9.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services hereunder.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable and duly documented disbursements, expenses and
advances incurred or made by it. Such disbursements and expenses may include the
reasonable and duly documented disbursements, compensation and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee and its officers, directors,
employees and all other agents against any loss or liability incurred by it
except as set forth in the next paragraph. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. The Company shall defend
the claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable and duly documented
fees, disbursements and expenses of such counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably
withheld.
The Company need not reimburse any expense or indemnify against any loss
or liability incurred by the Trustee through negligence, bad faith or willful
misconduct.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee, except money or property held in trust to pay
principal and interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.1(h) or (i) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 9.7 shall survive the termination of this
Indenture, as provided by Section 10.1 hereof.
Section 9.8 Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Noteholders of a
majority in principal amount of the then outstanding Securities may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA Section 310(b);
-43-
49
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Bankruptcy Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the
Noteholders of a majority in principal amount of the then outstanding Securities
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Noteholders of at least 10% in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA Section 310(b), any
Noteholder who has been a bona fide holder of a Security for at least six months
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, the
Company shall promptly pay all amounts due and payable to the retiring Trustee
pursuant to Section 9.7 hereof and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. The successor
Trustee shall mail a notice of its succession to Noteholders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 9.7 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 9.8, the
Company's obligations under Section 9.7 hereof shall continue for the benefit of
the retiring Trustee with respect to expenses and liabilities incurred by it
prior to such replacement.
Section 9.9 Successor Trustee by Merger, Etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
Section 9.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (5). The Trustee, or if the Trustee is
a member of a bank holding company system, its bank holding company, shall
always have a combined capital and surplus as stated in Section 12.10 hereof.
The Trustee is subject to TIA Section 310(b).
-44-
50
Section 9.11 Preferential Collection of Claims Against Company. The
Trustee is subject to TIA Section 311(a), excluding any creditor relationship
listed in TIA Section 311(b). A Trustee who has resigned or been removed shall
be subject to TIA Section 311(a) to the extent indicated therein.
Section 9.12 Sections Applicable to Registrar, Paying Agent and
Conversion Agent. The term "Trustee" as used in Sections 6.3, 9.1, 9.2, 9.3, 9.4
and 9.7 hereof shall (unless the context requires otherwise) be construed as
extending to and including the Trustee acting in its capacity, if any, as
Registrar, Paying Agent and Conversion Agent.
ARTICLE X
DISCHARGE OF INDENTURE
Section 10.1 Termination of Company's Obligations. This Indenture shall
cease to be of further effect (except that the Company's obligations under
Sections 9.7 and 10.2 hereof shall survive) when all outstanding Securities
theretofore authenticated and issued have been delivered to the Trustee for
cancellation and the Company has paid all sums payable hereunder.
Thereupon, the Trustee upon request of the Company, shall acknowledge in
writing the discharge of the Company's obligations under this Indenture, except
for those surviving obligations specified above.
Section 10.2 Repayment to Company. The Trustee and the Paying Agent
shall promptly pay to the Company upon request any excess money or securities
held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal, premium, if any, or
interest, if any, that remains unclaimed for the period ending on the earlier of
10 Business Days prior to the date such funds would escheat to the State or two
years after the date upon which such payment shall have become due; provided,
however, that the Company, or the Trustee at the request of the Company, shall
have first caused notice of such payment to the Company to be mailed to each
Noteholder entitled thereto no less than 30 days prior to such payment. After
payment to the Company, the Trustee and the Paying Agent shall have no further
liability with respect to such money and Noteholders entitled to the money must
look to the Company for payment as general creditors unless any applicable
abandoned property law designates another person.
ARTICLE XI
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 11.1 Without Consent of Noteholders. The Company and the Trustee
may amend or supplement this Indenture or the Securities without the consent of
any Noteholder:
(a) to cure any ambiguity, defect or inconsistency;
-45-
51
(b) to comply with Sections 5.13 and 7.1 hereof;
(c) to provide for uncertificated Securities in addition to certificated
Securities;
(d) to make any change that does not adversely affect the rights
hereunder of any Noteholder;
(e) to qualify this Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA; or
(f) to make any change that provides any additional rights or benefits
to the holders of Securities.
An amendment under this Section may not make any change that adversely
affects the rights under Article VI of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to give a consent) consent to such change.
Section 11.2 With Consent of Noteholders. Subject to Section 8.7 hereof,
the Company and the Trustee may amend or supplement this Indenture or the
Securities with the written consent (including consents obtained in connection
with any tender offer or exchange offer for Securities) of the Noteholders of at
least a majority in principal amount of the then outstanding Securities. Subject
to Sections 8.4 and 8.7 hereof, the Noteholders of a majority in principal
amount of the Securities then outstanding may also by their written consent
(including consents obtained in connection with any tender offer or exchange
offer for Securities) waive any existing Default as provided in Section 8.4 or
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Securities. However, without the consent of each
Noteholder affected, an amendment, supplement or waiver under this Section may
not (with respect to any Securities held by a nonconsenting Noteholder):
(a) reduce the amount of Securities whose Noteholders must consent to an
amendment, supplement or waiver;
(b) reduce the rate of or change the time for payment of interest on any
Security;
(c) reduce the principal of or change the fixed maturity of any Security
or alter the redemption provisions with respect thereto;
(d) make any Security payable in money other than that stated in the
Security;
(e) make any change in Section 8.4, 8.7 or 11.2 hereof (this sentence);
(f) waive a default in the payment of the Designated Event Payment or
the principal of, or interest on, any Security (other than as provided in
Section 8.4);
(g) waive a redemption payment payable on any Security;
-46-
52
(h) make any change that adversely affects the right of Noteholders to
convert Securities into Common Stock of the Company; or
(i) make any change in Articles V or VI hereof that adversely affects
the interests of the Noteholders.
To secure a consent of the Noteholders under this Section 11.2, it shall
not be necessary for the Noteholders to approve the particular form of any
proposed amendment supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
An amendment under this Section may not make any change that adversely
affects the rights under Article VI of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to give a consent) consent to such change.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of Securities or as an inducement to
any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Securities unless such consideration is offered to be paid or
agreed to be paid to all holders of the Securities that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Noteholders a notice briefly describing the
amendment or waiver.
Section 11.3 Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall be set forth in a supplemental indenture
that complies with the TIA as then in effect.
Section 11.4 Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Noteholder of a
Security is a continuing consent by the Noteholder and every subsequent
Noteholder of a Security or portion of a Security that evidences the same debt
as the consenting Noteholder's Security, even if notation of the consent is not
made on any Security. However, any such Noteholder or subsequent Noteholder may
revoke the consent as to such Noteholder's Security or portion of a Security if
the Trustee receives the notice of revocation before the date on which the
Trustee receives an Officers' Certificate certifying that the Noteholders of the
requisite principal amount of Securities have consented to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Noteholders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those persons who were
Noteholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such persons
continue to be Noteholders after such record date. No consent shall be valid or
effective for more than 90 days after such record date
-47-
53
unless consents from Noteholders of the principal amount of Securities required
hereunder or such amendment or waiver to be effective shall have also been given
and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall bind
every Noteholder, unless it is of the type described in any of clauses (a)
through (i) of Section 11.2 hereof. In such case, the amendment or waiver shall
bind each Noteholder who has consented to it and every subsequent Noteholder of
a Security or portion of a Security that evidences the same debt as the
consenting Noteholder's Security.
Section 11.5 Notation on or Exchange of Securities. The Trustee may
place an appropriate notation about an amendment or waiver on any Security
thereafter authenticated. The Company in exchange for all Securities may issue
and the Trustee shall authenticate new Securities that reflect the amendment or
waiver.
Section 11.6 Trustee Protected. The Trustee shall sign all supplemental
indentures, except that the Trustee may, but need not, sign any supplemental
indenture that adversely affects its rights.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
automatically deemed to be incorporated in this Indenture by the TIA, the
incorporated provision shall control.
Section 12.2 Notices. Any notice or communication by the Company or the
Trustee to the other is duly given if in writing and delivered in person or
mailed by first class mail or nationally recognized courier to the other's
address stated in Section 12.10 hereof. The Company or the Trustee by notice to
the other may designate additional or different addresses for subsequent notices
or communications.
Any notice or communication to a Noteholder shall be mailed by first
class mail to his address shown on the register kept by the Registrar. Failure
to mail 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 mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Noteholders, it shall
mail a copy to the Trustee and each Agent at the same time.
All notices or communications shall be in writing.
-48-
54
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by the Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
Section 12.3 Communication by Noteholders with Other Noteholders.
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Securities.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
Section 12.4 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 12.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than pursuant to Section 4.3) shall
include:
(a) a statement that the person signing such certificate or rendering
such opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such person, such person has
made such examination or investigation as is necessary to enable such person to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
Section 12.6 Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by, or a meeting of, Noteholders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions.
Section 12.7 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday
or a day on which banking institutions either in the State of New York, the
State of Minneapolis or the State of California are not required to be open. If
a payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
-49-
55
interest shall accrue for the intervening period. If any other operative date
for purposes of this Indenture shall occur on a Legal Holiday then for all
purposes the next succeeding day that is not a Legal Holiday shall be such
operative date.
Section 12.8 No Recourse Against Others. A director, officer, employee
or stockholder, as such of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Noteholder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Securities.
Section 12.9 Counterparts. This Indenture may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
Section 12.10 Variable Provisions. "Officer" means the Chairman of the
Board, the President, any Vice-President, the Treasurer, the Secretary, any
Assistant Treasurer or any Assistant Secretary of the Company.
The first certificate pursuant to Section 4.3 hereof shall be for the
2001 fiscal year ending on December 30, 2001.
The reporting date for Section 9.6 hereof is May 15 of each year. The
first reporting date is May 15, 2001.
The Trustee, or if the Trustee is a member of a bank holding company
system, its bank holding company, shall always have a combined capital and
surplus of at least $50,000,000 as set forth in its most recent published annual
report of condition.
The Company's address is: Komag, Incorporated
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Financial
Officer
Telephone number: (408)
576-2000
Telefax number: (000) 000-0000
with a copy to: Xxxxxxxx Xxxxx
Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Telephone number: (650)
493-9300
Telefax number: (000) 000-0000
The Trustee's address is: Xxxxx Fargo Bank Minnesota,
National Association
Sixth and Marquette
-50-
56
MAC X0000-000
Xxxxxxxxxxx, XX 00000
Attention: Corporate Trust
Services
Telephone Number: (612)
667-2344
Telefax Number: (000) 000-0000
Section 12.11 Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT
OF LAWS PROVISIONS THEREOF.
Section 12.12 No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or an Affiliate. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
Section 12.13 Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
Section 12.14 Severability. In case any provision in this Indenture or
in the Securities shall be, invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 12.15 Table of Contents Headings, Etc. The Table of Contents,
Cross Reference Table, 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.
-51-
57
IN WITNESS WHEREOF the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
KOMAG, INCORPORATED,
as Company,
By:_____________________________________
Name:
Title:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:_____________________________________
Name:
Title:
58
EXHIBIT A
[FORM OF FACE OF NOTE]
[GLOBAL SECURITIES LEGEND]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN SUCH NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO SUCH 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 OWNED HEREOF HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
-2-
59
No. ______________
Cusip No. __________
KOMAG, INCORPORATED
11 1/2% CONVERTIBLE SUBORDINATED NOTE
DUE 2004
KOMAG, INCORPORATED
Komag, Incorporated, a Delaware corporation (the "Company") promises to
pay to ____________________________________________ or registered assigns, the
principal sum indicated on Schedule A hereof on January 15, 2004, and to pay
interest thereon in the manner set forth on the reverse hereof accruing from
[_____], 2001 at the rate of 11 1/2% per annum.
Interest Payment Dates: January 15 and July 15, commencing July 15, 2001
Record Dates: June 30 and December 31
Reference is hereby made to the further provisions of this Convertible
Note set forth on the reverse hereof which further provisions shall for all
purposes have the same effect as if set forth at this place.
-3-
60
IN WITNESS WHEREOF, Komag, Incorporated has caused this Convertible Note
to be signed manually or by facsimile by its duly authorized officers.
Dated: _______________
KOMAG, INCORPORATED
By:___________________________________
By:___________________________________
[Seal]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the 11 1/2% Convertible
Subordinated Notes due January 15, 2004 described
in the within-mentioned Indenture.
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By: _______________________________________
Authorized Officer
-4-
61
KOMAG, INCORPORATED
11 1/2% CONVERTIBLE SUBORDINATED NOTE DUE JANUARY 15, 2004
1. Interest. Komag, Incorporated, a Delaware corporation (the
"Company"), is the issuer of this 11 1/2% Convertible Subordinated Note due
January 15, 2004 (the "Convertible Note"). The Company promises to pay interest
on the Convertible Notes in cash or in Common Stock, at the option of the
Company, semiannually on each January 15 and July 15, commencing on July 15,
2001, to holders of record on the immediately preceding June 30 and December 31.
In the event that the Company elects to pay interest in the
Company's Common Stock, such Common Stock will be valued at 90% of the average
of the Daily Market Price for the five trading days immediately preceding the
second Trading Day prior to the interest payment date.
Interest on the Convertible Notes will accrue from the most
recent date to which interest has been paid, or if no interest has been paid,
from January 15, 2001. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. To the extent lawful, the Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable grace period)
at the rate borne by the Convertible Notes, compounded annually.
2. Method of Payment. The Company will pay interest on the Convertible
Notes (except defaulted interest) to the persons who are registered holders of
the Convertible Notes entitled to such payments at the close of business on the
record date for the next interest payment date even though Convertible Notes are
canceled after the record date and on or before the interest payment date. The
Noteholder hereof must surrender Convertible Notes to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a holder's registered
Address.
3. Paying Agent and Registrar. The Trustee will act as Paying Agent,
Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar, co-registrar or Conversion Agent without prior notice. The Company or
any of its Affiliates may act in any such capacity.
4. Indenture. The Company issued the Convertible Notes under an
indenture, dated as of [---], 2001 (the "Indenture"), between the Company and
Xxxxx Fargo Bank Minnesota, National Association, as Trustee. The terms of the
Convertible Notes include those stated in the Indenture (which is incorporated
hereby as though fully set forth herein) and those made part of the Indenture by
the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in
effect on the date of the Indenture. The Convertible Notes are subject to, and
ratified by, all such terms, certain of which are summarized hereon, and
Noteholders are referred to the Indenture and such Act for a statement of such
terms. The Convertible Notes are unsecured obligations of the Company limited to
(except as otherwise provided in the Indenture) up to an aggregate principal
amount of $[---], and are
62
subordinated in right of payment to all existing and future Senior Debt of the
Company as provided in the Indenture. The Indenture does not limit the ability
of the Company or any of its Subsidiaries to incur indebtedness or to grant
security interests or liens in respect of their assets. Any holder of this
Convertible Note shall be deemed to have agreed to and be bound by all the terms
and conditions contained in the Indenture applicable to a holder of a
Convertible Note. All capitalized terms herein that are not otherwise defined
shall have the meaning ascribed thereto in the Indenture.
5. Optional Redemption. The Convertible Notes are not subject to
redemption at the Company's option prior to [---], 2003. On such date and
thereafter, the Convertible Notes will be subject to redemption at the option of
the Company, in whole or in part (in any integral multiple of $1,000), upon not
less than 15 nor more than 60 days' prior notice by mail at the following
redemption price (expressed as a percentage of the principal amount set forth
below):
REDEMPTION
YEAR PRICE
--------------------------------------------------------- -----------
Beginning on [---], 2003 and ending on January 14, 2004 102.3%
January 15, 2004 100%
in each case together with accrued and unpaid interest up to but not including
the redemption date (subject to the right of holders of record an the relevant
record date to receive interest due on an interest payment date). On or after
the redemption date, interest will cease to accrue on the Convertible Notes, or
portion thereof, called for redemption.
6. Notice of Redemption. Notice of redemption will be mailed at least 15
days but not more than 60 days before the redemption date to each holder of the
Convertible Notes to be redeemed at his address of record. The Convertible Notes
in denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000. In the event of a redemption of less than all of the
Convertible Notes, the Convertible Notes will be chosen for redemption by the
Trustee in accordance with the Indenture. Unless the Company defaults in making
such redemption payment, or the Paying Agent is prohibited from making such
payment pursuant to the Indenture, interest cease to accrue on the Convertible
Notes or portions of them called for redemption on and after the redemption
date.
If this Convertible Note is redeemed subsequent to a record date with
respect to any interest payment date specified above and on or prior to such
interest payment date, then any accrued interest payable on such interest
payment date will be paid to the person in whose name this Convertible Note is
registered at the close of business on such record date.
7. Mandatory Redemption. The Company will not be required to make
mandatory redemption payments with respect to the Convertible Notes. There are
no sinking fund payments with respect to the Convertible Notes.
-2-
63
8. Repurchase at Option of Holder. If there is a Designated Event, the
Company shall be required to offer to purchase on the Designated Event Payment
Date all outstanding Convertible Notes at a purchase price equal to 101% of the
principal amount thereof on the date of purchase, plus accrued and unpaid
interest to the Designated Event Payment Date. Holders of Convertible Notes that
are subject to such a Designated Event Offer will be mailed a notice of
Designated Event Offer from the Company prior to any related Designated Event
Payment Date and, in accordance with the procedures and terms set forth in the
Indenture, may elect to have such Convertible Notes or portions thereof in
authorized denominations purchased by completing the form entitled "Option of
Noteholder To Elect Purchase." Noteholders have the right to withdraw their
election by delivering a written notice of withdrawal to the Paying Agent in
accordance with the terms of the Indenture.
9. Subordination. The payment of the principal of, premium, if any,
interest on, or any other amounts due on the Convertible Notes is subordinated
in right of payment to all existing and future Senior Debt of the Company, as
described in the Indenture. Each Noteholder, by accepting a Convertible Note,
agrees to such subordination and authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and appoints the Trustee as its attorney-in-fact for
such purpose.
10. Conversion. The holder of any Convertible Note has the right at any
time prior to the close of business (New York time) on the date of the
Convertible Note's maturity, to convert the principal amount thereof (or any
portion thereof that is an integral multiple of $1,000) into shares of Common
Stock at the initial Conversion Price of $3.00 per share, subject to adjustment
under certain circumstances as more fully described in the Indenture, except
that if a Convertible Note is called for redemption, the conversion right will
terminate at the close of business on the Business Day immediately preceding the
date fixed for redemption.
To convert a Convertible Note, a holder must (1) complete and sign a
notice of election to convert substantially in the form set forth below, (2)
surrender the Convertible Note to a Conversion Agent, (3) furnish appropriate
endorsements or transfer documents if required by the Registrar or Conversion
Agent and (4) pay any transfer or similar tax, if required. Upon conversion, no
adjustment or payment will be made for interest or dividends, but if any
Noteholder surrenders a Convertible Note for conversion after the close of
business on the record date for the payment of an installment of interest and
prior to the opening of business on the next interest payment date, then,
notwithstanding such conversion, the interest payable on such interest payment
date will be paid to the registered holder of such Convertible Note on such
record date. In such event, such Convertible Note, when surrendered for
conversion, must be accompanied by payment in funds acceptable to the Company of
an amount equal to the interest payable on such interest payment date on the
portion so converted. The number of shares of Common Stock issuable upon
conversion of a Convertible Note is determined by dividing the principal amount
of the Convertible Note converted by the Conversion Price in effect on the
Conversion Date. No fractional shares will be issued upon conversion but a cash
adjustment will be made for any fractional interest.
A Convertible Note in respect of which a holder has delivered an "Option
of Noteholder to Elect Purchase" form appearing below exercising the option of
such holder to require the Company
-3-
64
to purchase such Convertible Note may be converted only if the notice of
exercise is withdrawn as provided above and in accordance with the terms of the
Indenture. The above description of conversion of the Convertible Notes is
qualified by reference to, and is subject in its entirety by, the more complete
description thereof contained in the Indenture.
11. Automatic Conversion by Company. If at any time the average Daily
Market Price of the Company's Common Stock exceeds 200% of the Conversion Price
for at least 20 Trading Days during a 30-day trading day period, the Company may
elect to automatically convert the Convertible Notes pursuant to the terms of
the Indenture. In the event that the date that the Securities will be
automatically converted occurs on or prior to [---], 2003, the Company will pay
Additional Interest in cash or, at the Company's election, in Common Stock to
the Holders. The Company may elect to pay Additional Interest, if any, on the
Convertible Notes in Common Stock, which shares of Common Stock will be valued
at 90% of the average of the Daily Market Price for the five Trading Days
immediately preceding the second Trading Day preceding the date of the Automatic
Conversion. In the event of an Automatic Conversion on or prior to [---], 2003,
each Holder of the Convertible Notes will receive Additional Interest in an
amount of $[230] in Common Stock or cash at the election of the Company per each
$1,000 principal amount of the Convertible Notes, less any interest actually
paid or provided for prior to the date of the Automatic Conversion.
12. Voluntary Conversion by Holder. If any Holder elects to voluntarily
convert their Convertible Notes at any time on or prior to [---], 2003, such
Holders will receive a payment of Additional Voluntary Conversion Interest upon
conversion so long as the Company has not previously mailed an automatic
conversion notice to Holders. The Company will pay Additional Voluntary
Conversion Interest upon conversion equal to two years of interest, less any
interest actually paid or provided for prior to the date of the voluntary
conversion, payable at the Company's option in cash or Common Stock, or a
combination of cash and Common Stock, valued at the Conversion Price.
13. Denominations, Transfer, Exchange. The Convertible Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. The transfer of Convertible Notes may be registered, and
Convertible Notes may be exchanged, as provided in the Indenture. The Registrar
may require a Noteholder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Convertible Note or portion of a Convertible Note selected
for redemption (except the unredeemed portion of any Convertible Note being
redeemed in part). Also, the Registrar need not exchange or register the
transfer of any Convertible Note for a period of 15 days before a selection of
Convertible Notes to be redeemed.
14. Persons Deemed Owners. Except as provided in paragraph 2 of this
Convertible Note, the registered Noteholder of a Convertible Note may be treated
as its owner for all purposes.
15. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for the shorter of two years after such payment was due or a
period ending 10 Business Days prior to the date, such funds would escheat to
the State, the Trustee and the Paying Agent shall
-4-
65
pay the money back to the Company at its request. After that, Noteholders of
Convertible Notes entitled to the money must look to the Company for payment
unless an abandoned property law designates another person and all liability of
the Trustee and such Paying Agent with respect to such money shall cease.
16. Defaults and Remedies. The Convertible Notes shall have the Events
of Default as set forth in Section 8.1 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company or the Noteholders of at least 25% in
aggregate principal amount of the then outstanding Convertible Notes by notice
to the Company and the Trustee may declare all the Convertible Notes to be due
and payable immediately, except that in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, all unpaid principal, interest
accrued on the Convertible Notes shall become due and payable immediately
without further action or notice. Upon acceleration as described in either of
the preceding sentences, the subordination provisions of the Indenture preclude
any payment being made to Noteholders for at least 5 days except as otherwise
provided in the Indenture and may preclude payment entirely.
The Noteholders of a majority in principal amount of the Convertible
Notes then outstanding by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration. Noteholders may not enforce the Indenture or the
Convertible Notes except as provided in the Indenture. Subject to certain
limitations, Noteholders of a majority in principal amount of the then
outstanding Convertible Notes issued under the Indenture may direct the Trustee
in its exercise of any trust or power. The Company must furnish compliance
certificates to the Trustee annually. The above description of Events of Default
and remedies is qualified by reference to, and subject in its entirety by, the
more complete description thereof contained in the Indenture.
17. Amendments, Supplements and Waivers. Subject to certain exceptions,
the Indenture or the Convertible Notes may be amended or supplemented with the
consent of the Noteholders of at least a majority in principal amount of the
then outstanding Convertible Notes (including consents obtained in connection
with a tender offer or exchange offer for Convertible Notes), and any existing
default may be waived with the consent of the Noteholders of a majority in
principal amount of the then outstanding Convertible Notes including consents
obtained in connection with a tender offer or exchange offer for Convertible
Notes. Without the consent of any Noteholder, the Indenture or the Convertible
Notes may be amended, among other things, to cure any ambiguity, defect or
inconsistency, to provide for assumption of the Company's obligations to
Noteholders, to make any change that does not adversely affect the rights of any
Noteholder, to qualify the Indenture under the TIA, and to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
18. Trustee Dealings with the Company. The Trustee, in its individual or
any other capacity, may become the owner or pledgee of Convertible Notes and may
otherwise deal with the Company or an Affiliate with the same rights it would
have if it were not Trustee, subject to certain
-5-
66
limitations provided for in the Indenture and in the TIA. Any Agent may do the
same with like rights.
19. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Notes or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Noteholder, by accepting a Convertible Note, waives and releases
all such liability. The waiver and release are part of the consideration for the
issue of the Convertible Notes.
20. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE CONVERTIBLE NOTES WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.
21. Authentication. The Convertible Notes shall not be valid until
authenticated by the manual signature of an authorized officer of the Trustee or
an authenticating agent.
22. Abbreviations. Customary abbreviations may be used in the name of a
Noteholder or an assignee, such as: TEN COM (for tenants in common), TEN ENT
(for tenants by the entireties), JT TEN (for joint tenants with right of
survivorship and not as tenants in common), CUST (for Custodian), and U/G/M/A
(for Uniform Gifts to Minors Act).
23. Definitions. Capitalized terms not defined in this Convertible Note
have the meaning given to them in the Indenture.
The Company will furnish to any Noteholder of the Convertible Notes upon
written request and without charge a copy of the Indenture. Request may be made
to:
Komag, Incorporated
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention of: Investor Relations
-6-
67
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The initial principal amount at maturity of this Global Security shall
be $__________. The following increases or decreases in the principal amount of
this Global Security have been made:
AMOUNT OF INCREASE IN
PRINCIPAL AMOUNT OF THIS
GLOBAL SECURITY
INCLUDING UPON EXERCISE AMOUNT OF DECREASE IN PRINCIPAL AMOUNT OF SIGNATURE OF
DATE OF THE OVER-ALLOTMENT PRINCIPAL AMOUNT OF THIS THIS GLOBAL SECURITY AUTHORIZED OFFICER OF
MADE OPTION GLOBAL SECURITY FOLLOWING SUCH DECREASE TRUSTEE OR SECURITIES
OR INCREASE CUSTODIAN
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
68
OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have this Convertible Note or a portion thereof
repurchased by the Company pursuant to Section 3.8 or 4.7 of the Indenture,
check the box: [ ]
If the purchase is in part, indicate the portion (in denominations of
$1,000 or any integral multiple thereof) to be purchased: __________
Your Signature: _______________________________________________________
(Sign exactly as your name appears on the other side of
this Convertible Note)
Date:___________________
Signature Guarantee:(1)________________________________________________
--------------------
(1) Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
69
ELECTION TO CONVERT
To: Komag, Incorporated
The undersigned owner of $________ in principal of Komag,
Incorporated's 11 1/2% Convertible Subordinated Notes due January 15, 2004 (the
"Convertible Note") hereby irrevocably exercises the option to convert the
Convertible Note, or the portion below designated, into Common Stock of Komag,
Incorporated in accordance with the terms of the Indenture referred to in the
Convertible Note, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
in the name of and delivered to the undersigned, unless a different name has
been indicated in the assignment below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Date:
Amount of Convertible Note to
be converted ($1,000 or
integral multiples thereof);
$______________________
Signature (for conversion
only)
_______________________________________
Please Print or Typewrite
Name and Address, Including
Zip Code, and Social Security
or Other Identifying Number
_______________________________________
Signature Guarantee(2)
---------------------
(2) Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
