Exhibit 4.1
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Execution Copy
THE PMI GROUP, INC.
2.50% Senior Convertible Debentures due 2021
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INDENTURE
Dated as of July 16, 2001
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The Bank of New York
TRUSTEE
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions............................................................................. 1
Section 1.2 Other Definitions....................................................................... 4
Section 1.3 Incorporation by Reference of Trust Indenture Act....................................... 5
Section 1.4 Rules of Construction................................................................... 6
Section 1.5 Acts of Holders......................................................................... 6
ARTICLE II THE SECURITIES
Section 2.1 Form and Dating......................................................................... 7
Section 2.2 Execution and Authentication............................................................ 8
Section 2.3 Registrar, Paying Agent, Conversion Agent and Calculation Agent......................... 9
Section 2.4 Paying Agent to Hold Money and Securities in Trust...................................... 9
Section 2.5 Securityholder Lists.................................................................... 9
Section 2.6 Transfer and Exchange................................................................... 10
Section 2.7 Replacement Securities.................................................................. 11
Section 2.8 Outstanding Securities; Determinations of Holders' Action............................... 12
Section 2.9 Temporary Securities.................................................................... 12
Section 2.10 Cancellation............................................................................ 13
Section 2.11 Persons Deemed Owners................................................................... 13
Section 2.12 Global Securities....................................................................... 13
Section 2.13 CUSIP Numbers........................................................................... 18
Section 2.14 Ranking................................................................................. 18
ARTICLE III REDEMPTION AND PURCHASES
Section 3.1 Company's Right to Redeem; Notices to Trustee........................................... 19
Section 3.2 Selection of Securities to Be Redeemed.................................................. 19
Section 3.3 Notice of Redemption.................................................................... 19
Section 3.4 Effect of Notice of Redemption.......................................................... 20
Section 3.5 Deposit of Redemption Price............................................................. 20
Section 3.6 Securities Redeemed in Part............................................................. 21
Section 3.7 Purchase of Securities by the Company at Option of the Holder........................... 21
Section 3.8 Purchase of Securities at Option of the Holder upon Change of Control................... 22
Section 3.9 Company's Right to Elect Manner of Payment of Purchase Price and
Change of Control Purchase Price for Payment............................................ 27
Section 3.10 Effect of Purchase Notice or Change of Control Purchase Notice.......................... 31
Section 3.11 Deposit of Purchase Price or Change of Control Purchase Price........................... 33
Section 3.12 Securities Purchased in Part............................................................ 33
Section 3.13 Covenant to Comply With Securities Laws Upon Purchase of Securities..................... 33
Section 3.14 Repayment to the Company................................................................ 34
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ARTICLE IV COVENANTS
Section 4.1 Payment of Securities................................................................... 34
Section 4.2 SEC and Other Reports................................................................... 34
Section 4.3 Compliance Certificate.................................................................. 35
Section 4.4 Further Instruments and Acts............................................................ 35
Section 4.5 Maintenance of Office or Agency......................................................... 35
Section 4.6 Delivery of Certain Information......................................................... 35
Section 4.7 Tax Treatment of Securities............................................................. 36
ARTICLE V SUCCESSOR CORPORATION
Section 5.1 When Company May Merge or Transfer Assets............................................... 36
ARTICLE VI DEFAULTS AND REMEDIES
Section 6.1 Events of Default....................................................................... 37
Section 6.2 Acceleration............................................................................ 39
Section 6.3 Other Remedies.......................................................................... 39
Section 6.4 Waiver of Past Defaults................................................................. 40
Section 6.5 Control by Majority..................................................................... 40
Section 6.6 Limitation on Suits..................................................................... 40
Section 6.7 Rights of Holders to Receive Payment.................................................... 41
Section 6.8 Collection Suit by Trustee.............................................................. 41
Section 6.9 Trustee May File Proofs of Claim........................................................ 41
Section 6.10 Priorities.............................................................................. 42
Section 6.11 Undertaking for Costs................................................................... 42
Section 6.12 Waiver of Stay, Extension or Usury Laws................................................. 42
ARTICLE VII TRUSTEE
Section 7.1 Duties of Trustee....................................................................... 43
Section 7.2 Rights of Trustee....................................................................... 44
Section 7.3 Individual Rights of Trustee............................................................ 45
Section 7.4 Trustee's Disclaimer.................................................................... 45
Section 7.5 Notice of Defaults...................................................................... 45
Section 7.6 Reports by Trustee to Holders........................................................... 46
Section 7.7 Compensation and Indemnity.............................................................. 46
Section 7.8 Replacement of Trustee.................................................................. 47
Section 7.9 Successor Trustee by Merger............................................................. 47
Section 7.10 Eligibility; Disqualification........................................................... 47
Section 7.11 Preferential Collection of Claims Against Company....................................... 48
ARTICLE VIII DISCHARGE OF INDENTURE
Section 8.1 Discharge of Liability on Securities.................................................... 48
Section 8.2 Repayment to the Company................................................................ 48
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ARTICLE IX AMENDMENTS
Section 9.1 Without Consent of Holders.............................................................. 48
Section 9.2 With Consent of Holders................................................................. 49
Section 9.3 Compliance with Trust Indenture Act..................................................... 50
Section 9.4 Revocation and Effect of Consents, Waivers and Actions.................................. 51
Section 9.5 Notation on or Exchange of Securities................................................... 51
Section 9.6 Trustee to Sign Supplemental Indentures................................................. 51
Section 9.7 Effect of Supplemental Indentures....................................................... 51
ARTICLE X CONVERSIONS
Section 10.1 Conversion Privilege................................................................... 51
Section 10.2 Conversion Procedure; Conversion Price; Fractional Shares.............................. 54
Section 10.3 Adjustment of Conversion Price for Common Stock........................................ 55
Section 10.4 Consolidation or Merger of the Company................................................. 64
Section 10.5 Notice of Adjustment................................................................... 65
Section 10.6 Notice in Certain Events............................................................... 66
Section 10.7 Company To Reserve Stock: Registration; Listing........................................ 67
Section 10.8 Taxes on Conversion.................................................................... 67
Section 10.9 Conversion After Record Date........................................................... 67
Section 10.10 Company Determination Final............................................................ 68
Section 10.11 Responsibility of Trustee for Conversion Provisions.................................... 68
Section 10.12 Unconditional Right of Holders to Convert.............................................. 68
ARTICLE XI MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls........................................................... 69
Section 11.2 Notices................................................................................ 69
Section 11.3 Communication by Holders with Other Holders............................................ 70
Section 11.4 Certificate and Opinion as to Conditions Precedent..................................... 70
Section 11.5 Statements Required in Certificate or Opinion.......................................... 70
Section 11.6 Separability Clause.................................................................... 70
Section 11.7 Rules by Trustee, Paying Agent, Conversion Agent and Registrar........................ 70
Section 11.8 Legal Holidays......................................................................... 70
Section 11.9 GOVERNING LAW.......................................................................... 71
Section 11.10 No Recourse Against Others............................................................. 71
Section 11.11 Successors............................................................................. 71
Section 11.12 Multiple Originals..................................................................... 71
EXHIBIT A Form of Global Security
EXHIBIT B Form of Certificated Security
EXHIBIT C Transfer Certificate
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INDENTURE dated as of July 16, 2001 between THE PMI GROUP,
INC., a Delaware corporation ("Company"), and THE BANK OF NEW YORK, a New York
banking company ("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
2.50% Senior Convertible Debentures due 2021:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
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"144A Global Security" means a permanent Global Security in
the form of the Security attached hereto as Exhibit A, and that is deposited
with and registered in the name of the Depositary, representing Securities sold
in reliance on Rule 144A under the Securities Act.
"Affiliate" of any specified person means any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct or cause the direction of the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of such board.
"Board Resolution" means a resolution of the Board of
Directors.
"Business Day" means, with respect to any Security, a day that
in the City of New York, is not a day on which banking institutions are
authorized by law or regulation to close.
"Calculation Agent" shall mean initially The Bank of New York
and its successors and assigns.
"Capital Stock" for any corporation means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) stock issued by that
corporation.
"Certificated Securities" means Securities that are in the
form of the Securities attached hereto as Exhibit B.
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"Common Stock" shall mean the Common Stock, $0.01 par value
per share, of the Company existing on the date of this Indenture or any other
shares of Capital Stock of the Company into which such Common Stock shall be
reclassified or changed.
"Company" means the party named as the "Company" in the first
Section of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by any two Officers.
"Conversion Price" means initially $88.31, subject to
adjustment as set forth herein.
"Corporate Trust Office" means the principal office of the
Trustee at which at any time its corporate trust business shall be administered,
which office at the date hereof is located at 000 Xxxxxxx Xxxxxx, Xxxxx 00X, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust Trustee Administration, or such
other address as the Trustee may designate from time to time by notice to the
Holders and the Company, or the principal corporate trust office of any
successor Trustee (or such other address as a successor Trustee may designate
from time to time by notice to the Holders and the Company).
"Default" means an Event of Default.
"Global Securities" means Securities that are in the form of
the Securities attached hereto as Exhibit A, and that are registered in the
register of Securities in the name of a Depositary or a nominee thereof, and to
the extent that such Securities are required to bear the Legend required by
Section 2.6, such Securities will be in the form of a 144A Global Security.
"Holder" or "Securityholder" means a person in whose name a
Security is registered on the Registrar's books.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof, including the provisions
of the TIA that are deemed to be a part hereof.
"Issue Date" of any Security means the date on which the
Security was originally issued or deemed issued as set forth on the face of the
Security.
"NYSE" means The New York Stock Exchange, Inc..
"Officer" means the Chairman of the Board, the Vice Chairman,
the Chief Executive Officer, the President, any Executive Vice President, any
Senior Vice President, the Treasurer, the Controller, or the Secretary or any
Assistant Treasurer or Assistant Secretary of the Company.
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"Officers' Certificate" means a written certificate containing
the information specified in Sections 11.4 and 11.5, signed in the name of the
Company by any two Officers, and delivered to the Trustee. An Officers'
Certificate given pursuant to Section 4.3 shall be signed by an authorized
financial or accounting Officer of the Company but need not contain the
information specified in Sections 11.4 and 11.5.
"Opinion of Counsel" means a written opinion containing the
information specified in Sections 11.4 and 11.5, 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.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"PMI" shall mean PMI Mortgage Insurance Co., an Arizona
corporation.
"PMI Australia" shall mean PMI Mortgage Insurance Ltd., a
company organized under the laws of Australia
"PMI Australia Holdings" shall mean PMI Mortgage Insurance
Australia (Holdings) Pty Limited, a company organized under the laws of
Australia.
"Redemption Date" or "redemption date" shall mean the date
specified in a notice of redemption on which the Securities may be redeemed in
accordance with the terms of the Securities and this Indenture.
"Redemption Price" or "redemption price" shall have the
meaning set forth in Section 5 of the Securities.
"Registration Rights Agreement" means the Resale Registration
Rights Agreement, dated as of the date hereof, among the Company, Banc of
America Securities LLC and Xxxxxx Brothers Inc.
"Responsible Officer" shall mean, when used with respect to
the Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Restricted Security" means a Security required to bear the
restrictive legend set forth in the form of Security set forth in Exhibits A and
B of this Indenture.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"SEC" means the Securities and Exchange Commission.
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"Securities" means any of the Company's 2.50% Senior
Convertible Debentures due 2021, as amended or supplemented from time to time,
issued under this Indenture.
"Securityholder" or "Holder" means a person in whose name a
Security is registered on the Registrar's books.
"Stated Maturity", when used with respect to any Security,
means July 15, 2021.
"Subsidiary" means any person of which at least a majority of
the outstanding Voting Stock shall at the time directly or indirectly be owned
or controlled by the Company or by one or more Subsidiaries or by the Company
and one or more Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 as in effect on
the date of this Indenture, provided, however, that in the event the TIA is
amended after such date, TIA means, to the extent required by any such
amendment, the TIA as so amended.
"Trading Day" means a day during which trading in securities
generally occurs on the NYSE or, if the Common Stock is not listed on the NYSE,
on the principal other national or regional securities exchange on which the
Common Stock then is listed or, if the Common Stock is not listed on a national
or regional securities exchange, on the National Association of Securities
Dealers Automated Quotation System or, if the Common Stock is not quoted on the
National Association of Securities Dealers Automated Quotation System, on the
principal other market on which the Common Stock is then traded.
"Trustee" means the party named as the "Trustee" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.
"Voting Stock" of a person means Capital Stock of such person
of the class or classes pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of such person (irrespective of whether
or not at the time Capital Stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
Section 1.2 Other Definitions
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Term Section: Defined in:
"Agent Members" .............................. 2.12(e)
"Applicable Stock ............................ 3.8(c)
"beneficial owner" ........................... 3.8(a)
"cash" ....................................... 3.9(a)
"Change of Control" .......................... 3.8(a)
"Change of Control Purchase Date" ............ 3.8(a)
"Change of Control Purchase Notice" .......... 3.8(c)
"Change of Control Purchase Price" ........... 3.8(a)
"Company Notice" ............................. 3.9(d)
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"Company Notice Date" ........................ 3.9(b)
"Continuing Director" ........................ 3.8(a)
"Conversion Agent" ........................... 2.3
"Conversion Period" .......................... 10.1(b)
"Conversion Rate" ............................ 10.1(b)
"Conversion Value" ........................... 10.1(b)
"Depositary" ................................. 2.1(a)
"Designated Subsidiary" ...................... 6.1
"Event of Default" ........................... 6.1
"Ex-Dividend Time" ........................... 10.1(b)
"Excess Amount" .............................. 10.3(f)
"Exchange Act" ............................... 2.12(e)
"Expiration Time" ............................ 10.3(f)
"Institutional Accredited Investors" ......... 2.12(a)(iv)
"Legal Holiday" .............................. 11.8
"Legend" ..................................... 2.6(f)
"Market Price" ............................... 3.9(c)
"Non-Electing Share" ......................... 10.4
"Notice of Default" .......................... 6.1
"Paying Agent" ............................... 2.3
"Purchase Date" .............................. 3.7(a)
"Purchase Notice" ............................ 3.7(a)
"Purchase Price" ............................. 3.7(a)
"QIB" ........................................ 2.1(a)
"Reference Period" ........................... 10.3(d)(2)
"Registrar" .................................. 2.3
"Rule 144A Information" ...................... 4.6
"Sale Price" ................................. 3.9(c)
"Securities Act" ............................. 2.6(f)
"Spin-Off" ................................... 10.3(d)(2)
"Trading Price" .............................. 10.1(b)
"Trigger Event" .............................. 10.3(d)(3)
Section 1.3 Incorporation by Reference of Trust Indenture Act.
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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:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
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"obligor" on the indenture securities means the Company.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
Section 1.4 Rules of Construction. Unless the context
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otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted
accounting principles as in effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including, without limitation; and
(5) words in the singular include the plural, and words in the
plural include the singular.
Section 1.5 Acts of Holders. (a) Any request, demand,
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authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company, as described in Section 11.2. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of Holders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such officer the execution thereof.
Where such execution is by a signer acting in a capacity other than such
signer's individual capacity, such certificate or affidavit shall also
constitute sufficient proof of such signer's authority. The fact and date of the
execution of any such instrument or writing, or the authority of the person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
(c) The principal amount and serial number of any Security and
the ownership of Securities shall be proved by the register for the Securities.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and
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the Holder of every Security issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Security.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the Holders of record at
the close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating The Securities and the Trustee's
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certificate of authentication shall be substantially in the form of Exhibits A
and B, which are a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule or usage (provided
that any such notation, legend or endorsement required by usage is in a form
acceptable to the Company). The Company shall provide any such notations,
legends or endorsements to the Trustee in writing. Each Security shall be dated
the date of its authentication.
(a) 144A Global Securities. Securities offered and sold within
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the United States to qualified institutional buyers as defined in Rule 144A
("QIBs") in reliance on Rule 144A shall be issued, initially in the form of a
144A Global Security, which shall be deposited with the Trustee at its Corporate
Trust Office, as custodian for the Depositary (as defined below) and registered
in the name of The Depository Trust Company ("DTC") or the nominee thereof (DTC,
or any successor thereto, and any such nominee being hereinafter referred to as
the "Depositary"), duly executed by the Company and authenticated by the Trustee
as hereinafter provided. The aggregate principal amount of the 144A Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary as hereinafter provided.
(b) Global Securities in General. Each Global Security shall
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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 represented thereby may from time to time
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be reduced or increased, as appropriate, to reflect exchanges, redemptions,
repurchases and conversions.
Any adjustment of the aggregate principal amount 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 in
accordance with instructions given by the Holder thereof as required by Section
2.12 hereof and shall be made on the records of the Trustee and the Depositary.
(c) Book-Entry Provisions. This Section 2.1(c) shall apply
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only to Global Securities deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(c), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depositary, (b) shall
be delivered by the Trustee to the Depositary or pursuant to the Depositary's
instructions and (c) shall be substantially in the form of Exhibit A attached
hereto.
(d) Certificated Securities. Securities not issued as
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interests in the Global Securities will be issued in certificated form
substantially in the form of Exhibit B attached hereto.
Section 2.2 Execution and Authentication. The Securities shall
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be executed on behalf of the Company by any Officer. The signature of the
Officer on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at the time of the execution of the Securities Officers
shall bind the Company, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery of
such Securities or did not hold such offices at the date of authentication of
such Securities.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein duly executed by the Trustee by manual signature of an authorized
signatory, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder.
The Trustee shall authenticate and deliver the Securities for
original issue in an aggregate principal amount of up to $360,000,000 upon one
or more Company Orders without any further action by the Company (other than as
contemplated in Section 11.4 and Section 11.5 hereof). The aggregate principal
amount of the Securities due at the Stated Maturity thereof outstanding at any
time may not exceed the amount set forth in the foregoing sentence, except upon
the accrual of contingent interest as contemplated in the form of Security
attached hereto as Exhibit A.
The Securities shall be issued only in registered form without
coupons and only in denominations of $1,000 of principal amount and any integral
multiple of $1,000.
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Section 2.3 Registrar, Paying Agent, Conversion Agent and
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Calculation Agent The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be presented for
purchase or payment ("Paying Agent") and 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
have one or more co-registrars, one or more additional paying agents and one or
more additional conversion agents. The term Paying Agent includes any additional
paying agent, including any named pursuant to Section 4.5. The term Conversion
Agent includes any additional conversion agent, including any named pursuant to
Section 4.5.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent, Conversion Agent, Calculation Agent or
co-registrar (in each case, if such Registrar, agent or co-registrar is a Person
other than the Trustee). The agreement shall implement the provisions of this
Indenture that relate to such agent. The Company shall notify the Trustee of the
name and address of any such agent. If the Company fails to maintain a
Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation therefor pursuant to Section 7.7.
The Company or any Subsidiary or an Affiliate of either of them may act as
Paying Agent, Registrar, Conversion Agent or co-registrar.
The Company initially appoints the Trustee as Registrar,
Conversion Agent, Calculation Agent and Paying Agent in connection with the
Securities.
Section 2.4 Paying Agent to Hold Money and Securities in
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Trust. Except as otherwise provided herein, on or prior to each due date of
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payments in respect of any Security, the Company shall deposit with the Paying
Agent a sum of money (in immediately available funds if deposited on the due
date) or shares of Common Stock sufficient to make such payments when so
becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money and shares of Common Stock
held by the Paying Agent for the making of payments in respect of the Securities
and shall notify the Trustee of any default by the Company in making any such
payment. At any time during the continuance of any such default, the Paying
Agent shall, upon the written request of the Trustee, forthwith pay to the
Trustee all money and shares of Common Stock so held in trust. If the Company, a
Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall
segregate the money and shares of Common Stock held by it as Paying Agent and
hold it as a separate trust fund. The Company at any time may require a Paying
Agent to pay all money and shares of Common Stock held by it to the Trustee and
to account for any funds and Common Stock disbursed by it. Upon doing so, the
Paying Agent shall have no further liability for the money or shares of Common
Stock.
Section 2.5 Securityholder Lists. The Trustee shall preserve
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in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall cause to be furnished to the Trustee at least
semiannually on January 1 and July 1 a listing of Securityholders dated within
15 days of the date on which the list is furnished and at such other times as
the Trustee
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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 Securityholders.
Section 2.6 Transfer and Exchange. (a) Subject to Section 2.12
---------------------
hereof, upon surrender for registration of transfer of any Security, together
with a written instrument of transfer satisfactory to the Registrar duly
executed by the Securityholder or such Securityholder's attorney duly authorized
in writing, at the office or agency of the Company designated as Registrar or
co-registrar pursuant to Section 2.3, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denomination or
denominations, of a like aggregate principal amount. The Company shall not
charge a service charge for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges that may be imposed in connection with the transfer
or exchange of the Securities from the Securityholder requesting such transfer
or exchange.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations, of a like
aggregate principal amount upon surrender of the Securities to be exchanged,
together with a written instrument of transfer satisfactory to the Registrar
duly executed by the Securityholder or such Securityholder's attorney duly
authorized in writing, at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
The Company shall not be required to make, and the Registrar
need not register, transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities in respect of which a Purchase Notice or
Change of Control Purchase Notice has been given and not withdrawn by the Holder
thereof in accordance with the terms of this Indenture (except, in the case of
Securities to be purchased in part, the portion thereof not to be purchased) or
any Securities for a period of 15 days before the mailing of a notice of
redemption of Securities to be redeemed.
(b) Notwithstanding any provision to the contrary herein, so
long as a Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, shall be made
only in accordance with Section 2.12 and this Section 2.6(b). Transfers of a
Global Security shall be limited to transfers of such Global Security in whole
or in part, to the Depositary, to nominees of the Depositary or to a successor
of the Depositary or such successor's nominee.
(c) Successive registrations and registrations of transfers
and exchanges as aforesaid may be made from time to time as desired, and each
such registration shall be noted on the register for the Securities.
(d) Any Registrar appointed pursuant to Section 2.3 hereof
shall provide to the Trustee such information as the Trustee may reasonably
require in connection with the delivery by such Registrar of Securities upon
transfer or exchange of Securities.
11
(e) No Registrar shall be required to make registrations of
transfer or exchange of Securities during any periods designated in the text of
the Securities or in this Indenture as periods during which such registration of
transfers and exchanges need not be made.
(f) If Securities are issued upon the transfer, exchange or
replacement of Securities subject to restrictions on transfer and bearing the
legends set forth on the forms of Security attached hereto as Exhibits A and B
setting forth such restrictions (collectively, the "Legend"), or if a request is
made to remove the Legend on a Security, the Securities so issued shall bear the
Legend, or the Legend shall not be removed, as the case may be, unless there is
delivered to the Company and the Registrar such satisfactory evidence, which
shall include an opinion of counsel, as may be reasonably required by the
Company and the Registrar and the Trustee (if not the same Person as the
Trustee), that neither the Legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the provisions
of Rule 144A or Rule 144 under the Securities Act of 1933, as amended
("Securities Act") or that such Securities are not "restricted" within the
meaning of Rule 144 under the Securities Act. Upon (i) provision of such
satisfactory evidence, or (ii) notification by the Company to the Trustee and
Registrar of the sale of such Security pursuant to a registration statement that
is effective at the time of such sale, the Trustee, at the written direction of
the Company, shall authenticate and deliver a Security that does not bear the
Legend. If the Legend is removed from the face of a Security and the Security is
subsequently held by the Company or an Affiliate of the Company, the Legend
shall be reinstated.
Section 2.7 Replacement Securities. If (a) any mutilated
----------------------
Security is surrendered to the Trustee, or (b) the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon its
written request the Trustee shall authenticate and deliver, in exchange for any
such mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount, bearing a
certificate number not contemporaneously outstanding.
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 purchased by
the Company pursuant to Article 3 hereof, the Company in its discretion may,
instead of issuing a new Security, pay or purchase such Security, as the case
may be.
Upon the issuance of any new Securities under this Section
2.7, the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section 2.7 in lieu
of any mutilated, destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
12
The provisions of this Section 2.7 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.8 Outstanding Securities; Determinations of Holders'
--------------------------------------------------
Action. Securities outstanding at any time are all the Securities authenticated
------
by the Trustee except for those cancelled by it, those paid pursuant to Section
2.7, those delivered to it for cancellation and those described in this Section
2.8 as not outstanding. A Security does not cease to be outstanding because the
Company or an Affiliate thereof holds the Security; provided, however, that in
determining whether the Holders of the requisite principal amount of Securities
have given or concurred in any request, demand, authorization, direction,
notice, consent, waiver, or other Act hereunder, Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or such
other obligor shall be disregarded and deemed not to be outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, waiver or other
Act, only Securities which a Responsible Officer of the Trustee actually knows
to be so owned shall be so disregarded. Subject to the foregoing, only
Securities outstanding at the time of such determination shall be considered in
any such determination (including, without limitation, determinations pursuant
to Articles 6 and 9).
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds, in accordance with this Indenture,
on a Redemption Date, or on the Business Day following a Purchase Date or a
Change of Control Purchase Date, or on Stated Maturity, money or securities, if
permitted hereunder, sufficient to pay Securities payable on that date, then
immediately after such Redemption Date, Purchase Date, Change of Control
Purchase Date or Stated Maturity, as the case may be, such Securities shall
cease to be outstanding and interest, including contingent interest and
additional interest, if any, on such Securities shall cease to accrue; provided,
that if such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made.
If a Security is converted in accordance with Article 10, then
from and after the time of conversion on the date of conversion, such Security
shall cease to be outstanding and interest, including contingent interest and
additional interest, if any, shall cease to accrue on such Security.
Section 2.9 Temporary Securities. Pending the preparation of
--------------------
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
13
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 2.3,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
Section 2.10 Cancellation. All Securities surrendered for payment,
------------
purchase by the Company pursuant to Article 3, conversion, redemption or
registration of transfer or exchange shall, if surrendered to any person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly cancelled by the Trustee. The Company may not issue new
Securities to replace Securities it has paid or delivered to the Trustee for
cancellation or that any Holder has converted pursuant to Article 10. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be disposed of by
the Trustee in accordance with the Trustee's customary procedure.
Section 2.11 Persons Deemed Owners. Prior to due presentment of a
---------------------
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of the Security or the payment of any Redemption Price, Purchase Price
or Change of Control Purchase Price in respect thereof, and interest thereon,
for the purpose of conversion and for all other purposes whatsoever, whether or
not such Security be overdue, and neither the Company, the Trustee nor any agent
of the Company or the Trustee shall be affected by notice to the contrary.
Section 2.12 Global Securities. (a) Notwithstanding any other
-----------------
provisions of this Indenture or the Securities, (A) transfers of a Global
Security, in whole or in part, shall be made only in accordance with Section 2.6
and Section 2.12(a)(i), (B) transfers of a beneficial interest in a Global
Security for a Certificated Security shall comply with Section 2.6, Section
2.12(a)(ii) below and Section 2.12(e)(1) below, and (C) transfers of a
Certificated Security shall comply with Section 2.6 and Sections 2.12(a)(iii)
and (iv) below.
(i) Transfer of Global Security. A Global Security may not
---------------------------
be transferred, in whole or in part, to any person other than the
Depositary or a nominee or any successor thereof, and no such transfer to
any such other person may be registered; provided that this clause (i)
shall not prohibit any transfer of a Security that is issued in exchange
for a Global Security but is not itself a Global Security. No transfer of a
Security to any person shall be effective under this Indenture or the
Securities unless and until such Security has been registered in the name
of such person. Nothing in this Section 2.12(a)(i) shall prohibit or render
ineffective any transfer of a beneficial interest
14
in a Global Security effected in accordance with the other provisions
of this Section 2.12(a).
(ii) Restrictions on Transfer of a Beneficial Interest
-------------------------------------------------
in a Global Security for a Certificated Security. A beneficial interest
------------------------------------------------
in a Global Security may not be exchanged for a Certificated Security
except upon satisfaction of the requirements set forth below and in
Section 2.12(e)(1) below. Upon receipt by the Trustee of a transfer of
a beneficial interest in a Global Security in accordance with
Applicable Procedures for a Certificated Security in the form
satisfactory to the Trustee, together with:
(A) so long as the Securities are Restricted
Securities, certification in the form set forth in
Exhibit C;
(B) written instructions to the Trustee to make, or
direct the Registrar to make, an adjustment on its
books and records with respect to such Global Security
to reflect a decrease in the aggregate principal amount
of the Securities represented by the Global Security,
such instructions to contain information regarding the
Depositary account to be credited with such decrease;
and
(C) if the Company so requests, an opinion of counsel
or other evidence reasonably satisfactory to it as to
the compliance with the restrictions set forth in the
Legend, then the Trustee shall cause, or direct the
Registrar to cause, in accordance with the standing
instructions and procedures existing between the
Depositary and the Registrar, the aggregate principal
amount of the Securities represented by the Global
Security to be decreased by the aggregate principal
amount of the Certificated Security to be issued, shall
issue such Certificated Security and shall debit or
cause to be debited to the account of the person
specified in such instructions a beneficial interest in
the Global Security equal to the principal amount of
the Certificated Security so issued.
(iii) Transfer and Exchange of Certificated Securities.
------------------------------------------------
When Certificated Securities are presented to the Registrar with a
request:
(y) to register the transfer of such Certificated
Securities; or
(z) to exchange such Certificated Securities for an equal
principal amount of Certificated Securities of other
authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Certificated Securities surrendered for transfer or exchange:
(1) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory
to the Company and the Registrar, duly executed by the
Holder thereof or his attorney duly authorized in
writing; and
15
(2) so long as such Securities are Restricted Securities,
such Securities are being transferred or exchanged
pursuant to an effective registration statement under
the Securities Act or pursuant to clause (A), (B) or
(C) below, and are accompanied by the following
additional information and documents, as applicable:
(A) if such Certificated Securities are being
delivered to the Registrar by a Holder for registration
in the name of such Holder, without transfer, a
certification from such Holder to that effect; or
(B) if such Certificated Securities are being
transferred to the Company, a certification to that
effect; or
(C) if such Certificated Securities are being
transferred pursuant to an exemption from registration,
(i) a certification to that effect (in the form set
forth in Exhibit C, if applicable) and (ii) if the
Company so requests, an opinion of counsel or other
evidence reasonably satisfactory to it as to the
compliance with the restrictions set forth in the
Legend.
(iv) Restrictions on Transfer of a Certificated
------------------------------------------
Security for a Beneficial Interest in a Global Security. A
-------------------------------------------------------
Certificated Security may not be exchanged for a beneficial interest
in a Global Security except upon satisfaction of the requirements
set forth below.
Upon receipt by the Trustee of a Certificated Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(I) so long as the Securities are Restricted Securities,
certification, in the form set forth in Exhibit C, that such
Certificated Security is being transferred to a QIB in
accordance with Rule 144A, or to an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7)
of Regulation D of the Securities Act; and
(II) written instructions directing the Trustee to make, or
to direct the Registrar to make, an adjustment on its books
and records with respect to such Global Security to reflect an
increase in the aggregate principal amount of the Securities
represented by the Global Security, such instructions to
contain information regarding the Depositary account to be
credited with such increase, then the Trustee shall cancel
such Certificated Security and cause, or direct the Registrar
to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Registrar,
the aggregate principal amount of Securities represented by
the Global Security to be increased by the aggregate principal
amount of the Certificated Security to be exchanged, and
16
shall credit or cause to be credited to the account of the person
specified in such instructions a beneficial interest in the Global
Security equal to the principal amount of the Certificated Security so
cancelled. If no Global Securities are then outstanding, the Company
shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global
Security in the appropriate principal amount.
(b) Subject to the succeeding Section (c), every Security shall be
subject to the restrictions on transfer provided in the Legend including the
delivery of an opinion of counsel, if so provided. Whenever any Restricted
Security is presented or surrendered for registration of transfer or for
exchange for a Security registered in a name other than that of the Holder, such
Security must be accompanied by a certificate in substantially the form set
forth in Exhibit C, dated the date of such surrender and signed by the Holder of
such Security, as to compliance with such restrictions on transfer. The
Registrar shall not be required to accept for such registration of transfer or
exchange any Security not so accompanied by a properly completed certificate.
(c) The restrictions imposed by the Legend upon the transferability
of any Security shall cease and terminate when such Security has been sold
pursuant to an effective registration statement under the Securities Act or
transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or, if earlier, upon the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision). Any Security as to which such restrictions on
transfer shall have expired in accordance with their terms or shall have
terminated may, upon a surrender of such Security for exchange to the Registrar
in accordance with the provisions of this Section 2.12 (accompanied, in the
event that such restrictions on transfer have terminated by reason of a transfer
in compliance with Rule 144 or any successor provision, by an opinion of counsel
having substantial experience in practice under the Securities Act and otherwise
reasonably acceptable to the Company, addressed to the Company and in form
acceptable to the Company, to the effect that the transfer of such Security has
been made in compliance with Rule 144 or such successor provision), be exchanged
for a new Security, of like tenor and aggregate principal amount, which shall
not bear the restrictive Legend. The Company shall inform the Trustee of the
effective date of any registration statement registering the Securities under
the Securities Act. The Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the aforementioned
opinion of counsel or registration statement.
(d) As used in the preceding two paragraphs of this Section 2.12, the
term "transfer" encompasses any sale, pledge, transfer, loan, hypothecation, or
other disposition of any Security.
(e) The provisions of clauses (1), (2), (3) and (4) below shall apply
only to Global Securities:
(1) Notwithstanding any other provisions of this Indenture or the
Securities, a Global Security shall not be exchanged in whole or
in part for a Security
17
registered in the name of any person other than the
Depositary or one or more nominees thereof, provided
that a Global Security may be exchanged for Securities
registered in the names of any person designated by the
Depositary in the event that (i) the Depositary has
notified the Company that it is unwilling or unable to
continue as Depositary for such Global Security or such
Depositary has ceased to be a "clearing agency"
registered under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and a successor
Depositary is not appointed by the Company within 90
days or (ii) an Event of Default has occurred and is
continuing with respect to the Securities. Any Global
Security exchanged pursuant to clause (i) above shall
be so exchanged in whole and not in part, and any
Global Security exchanged pursuant to clause (ii) above
may be exchanged in whole or from time to time in part
as directed by the Depositary. Any Security issued in
exchange for a Global Security or any portion thereof
shall be a Global Security; provided that any such
Security so issued that is registered in the name of a
person other than the Depositary or a nominee thereof
shall not be a Global Security.
(2) Securities issued in exchange for a Global Security or
any portion thereof shall be issued in definitive,
fully registered form, without interest coupons, shall
have an aggregate principal amount equal to that of
such Global Security or portion thereof to be so
exchanged, shall be registered in such names and be in
such authorized denominations as the Depositary shall
designate and shall bear the applicable legends
provided for herein. Any Global Security to be
exchanged in whole shall be surrendered by the
Depositary to the Trustee, as Registrar. With regard to
any Global Security to be exchanged in part, either
such Global Security shall be so surrendered for
exchange or, if the Trustee is acting as custodian for
the Depositary or its nominee with respect to such
Global Security, the principal amount thereof shall be
reduced, by an amount equal to the portion thereof to
be so exchanged, by means of an appropriate adjustment
made on the records of the Trustee. Upon any such
surrender or adjustment, the Trustee shall authenticate
and deliver the Security issuable on such exchange to
or upon the order of the Depositary or an authorized
representative thereof.
(3) Subject to the provisions of clause (5) below, the
registered Holder may grant proxies and otherwise
authorize any person, including Agent Members (as
defined below) 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.
(4) In the event of the occurrence of any of the events
specified in clause (1) above, the Company will
promptly make available to the Trustee a reasonable
supply of Certificated Securities in definitive, fully
registered form, without interest coupons.
18
(5) Neither any members of, or participants in, the Depositary
(collectively, the "Agent Members") nor any other persons on
whose behalf Agent Members may act shall have any rights under
this Indenture with respect to any Global Security registered in
the name of the Depositary or any nominee thereof, or under any
such Global Security, and the Depositary or such nominee, as the
case may be, may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner and
holder of such Global 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 such nominee, as the
case may be, or impair, as between the Depositary, its Agent
Members and any other person on whose behalf an Agent Member may
act, the operation of customary practices of such Persons
governing the exercise of the rights of a holder of any Security.
Section 2.13 CUSIP Numbers. The Company may issue the Securities with
-------------
one or more "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
Section 2.14 Ranking. The indebtedness of the Company arising under or
-------
in connection with this Indenture and every outstanding Security issued under
this Indenture from time to time constitutes and will constitute a senior
unsecured general obligation of the Company, ranking equally with other existing
and future senior unsecured Indebtedness of the Company and ranking senior in
right of payment to any future Indebtedness of the Company that is expressly
made subordinate to the Securities by the terms of such Indebtedness. For
purposes of this Section 2.14 only, "Indebtedness" means, without duplication,
the principal or face amount of (i) all obligations for borrowed money, (ii) all
obligations evidenced by debentures, notes or other similar instruments, (iii)
all obligations in respect of letters of credit or bankers acceptances or
similar instruments (or reimbursement obligations with respect thereto), (iv)
all obligations to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of business, (v)
all obligations as lessee which are capitalized in accordance with generally
accepted accounting principles, and (vi) all Indebtedness of others guaranteed
by the Company or any of its Subsidiaries or for which the Company or any of its
Subsidiaries is legally responsible or liable (whether by agreement to purchase
indebtedness of, or to supply funds or to invest in, others).
19
ARTICLE III
REDEMPTION AND PURCHASES
Section 3.1 Company's Right to Redeem; Notices to Trustee.
---------------------------------------------
Prior to July 15, 2006, the Securities will not be redeemable at the Company's
option. Beginning on July 15, 2006, the Company, at its option, may redeem the
Securities in accordance with the provisions of Section 5 of the Securities for
cash at any time as a whole, or from time to time in part, at a redemption price
equal to the principal amount of those Securities plus any accrued and unpaid
interest, including contingent interest and additional interest, if any, on
those Securities to the Redemption Date. If the Company elects to redeem
Securities pursuant to Section 5 of the Securities, it shall notify the Trustee
in writing of the Redemption Date, the principal amount of Securities to be
redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for
in this Section 3.1 by a Company Order, at least 40 days before the Redemption
Date (unless a shorter notice 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, unless the procedures of the
Depositary provide otherwise, the Trustee shall select the Securities to be
redeemed by lot, on a pro rata basis or by another method the Trustee considers
fair and appropriate (so long as such method is not prohibited by the rules of
any stock exchange on which the Securities are then listed). The Trustee shall
make the selection within five Business Days after it receives the notice
provided for in Section 3.1 from outstanding Securities not previously called
for redemption. The Trustee may select for redemption portions of the principal
amount of Securities that have denominations larger than $1,000.
Securities and portions of Securities that the Trustee selects
shall be in principal amounts of $1,000 or an integral multiple 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 the Securities to be
redeemed.
Securities and portions of Securities that are to be redeemed
are convertible by the Holder until the close of business on the second Business
Day prior to the Redemption Date. If any Security selected for partial
redemption is converted in part before termination of the conversion right with
respect to the portion of the Security so selected, the converted portion of
such Security shall be deemed (so far as may be) to be the portion selected for
redemption. Securities which have been converted during a selection of
Securities to be redeemed may be treated by the Trustee as outstanding for the
purpose of such selection.
Section 3.3 Notice of Redemption. At least 30 days but not
--------------------
more than 60 days before a Redemption Date, the Company shall mail a notice of
redemption by first-class mail, postage prepaid, to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
20
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Price;
(4) the name and address of the Paying Agent and Conversion
Agent;
(5) that Securities called for redemption may be converted
at any time before the close of business on the second
Business Day prior to the Redemption Date;
(6) that Holders who want to convert their Securities must
satisfy the requirements set forth in Section 8 of the
Securities;
(7) that Securities called for redemption must be
surrendered to the Paying Agent to collect the
Redemption Price;
(8) if fewer than all of the outstanding Securities are to
be redeemed, the certificate numbers, if any, and
principal amounts of the particular Securities to be
redeemed;
(9) that, unless the Company defaults in making payment of
such Redemption Price, interest, including contingent
interest and additional interest, if any, on Securities
called for redemption will cease to accrue interest on
and after the Redemption Date; and
(10) the CUSIP number(s) of the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense, provided that the
Company makes such request at least seven Business Days prior to the date by
which such notice of redemption must be given to Holders in accordance with this
Section 3.3.
Section 3.4 Effect of Notice of Redemption. Once notice of
------------------------------
redemption is given, Securities called for redemption become due and payable on
the Redemption Date and at the Redemption Price stated in the notice except for
Securities which are converted in accordance with the terms of this Indenture.
Upon surrender to the Paying Agent, such Securities shall be paid at the
Redemption Price stated in the notice.
Section 3.5 Deposit of Redemption Price. Prior to 10:00 a.m.
---------------------------
(New York City time), on the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or a Subsidiary or an Affiliate of either of
them is the Paying Agent, shall segregate and hold in trust) money sufficient to
pay the Redemption Price of all Securities to be redeemed on that date other
than Securities or portions of Securities called for redemption which on or
prior thereto have been delivered by the Company to the Trustee for cancellation
or have been converted. The Paying Agent shall as promptly as practicable return
to the Company any money not required for that purpose because of conversion of
Securities pursuant to Article 10. If such
21
money is then held by the Company in trust and is not required for such purpose
it shall be discharged from such trust.
Section 3.6 Securities Redeemed in Part. Upon surrender of a Security
---------------------------
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Security in an authorized
denomination equal in principal amount to the unredeemed portion of the Security
surrendered.
Section 3.7 Purchase of Securities by the Company at Option of the
------------------------------------------------------
Holder. (a) General. Securities shall be purchased by the Company pursuant to
-------------------
Section 6 of the Securities at the option of the Holder on July 15, 2004, July
15, 2006, July 15, 2008, July 15, 2011 and July 15, 2016 (each, a "Purchase
Date"), at a purchase price equal to the principal amount of those Securities
plus accrued and unpaid interest, including contingent interest and additional
interest, if any, on such Purchase Date (the "Purchase Price"), subject to the
provisions of Section 3.9. Purchases of Securities hereunder shall be made, at
the option of the Holder thereof, upon:
(1) delivery to the Paying Agent by the Holder of a written notice
of purchase (a "Purchase Notice") during the period beginning at
any time from the opening of business on the date that is 20
Business Days prior to the relevant Purchase Date until the
close of business on the third Business Day prior to such
Purchase Date stating:
(A) the certificate number of the Security which the Holder
will deliver to be purchased or the appropriate Depositary
procedures if Certificated Securities have not been issued,
(B) the portion of the principal amount of the Security which
the Holder will deliver to be purchased, which portion must
be in principal amounts of $1,000 or an integral multiple
of $1,000,
(C) that such Security shall be purchased by the Company as of
the Purchase Date pursuant to the terms and conditions
specified in Section 6 of the Securities and in this
Indenture, and
(D) in the event the Company elects, pursuant to Section
3.9(c), to pay the Purchase Price, in whole or in part, in
shares of Common Stock but such portion of the Purchase
Price shall ultimately be paid to such Holder entirely in
cash because any of the conditions to payment of the
Purchase Price in shares of Common Stock is not satisfied
prior to the close of business on the relevant Purchase
Date, as set forth in Section 3.9, whether such Holder
elects (i) to withdraw such Purchase Notice as to some or
all of the Securities to which such Purchase Notice relates
(stating the principal amount and certificate numbers, if
any, of the Securities as to which such withdrawal shall
relate), or (ii) to receive cash in respect of the entire
Purchase Price for all Securities (or portions thereof) to
which such Purchase Notice relates; and
22
(2) delivery of such Security to the Paying Agent at any time after
delivery of the Purchase Notice (together with all necessary
endorsements) at the offices of the Paying Agent, such delivery
being a condition to receipt by the Holder of the Purchase Price
therefor; provided, however, that such Purchase Price shall be so
paid pursuant to this Section 3.7 only if the Security so
delivered to the Paying Agent shall conform in all respects to
the description thereof in the related Purchase Notice.
If a Holder, in such Holder's Purchase Notice and in any written
notice of withdrawal delivered by such Holder pursuant to the terms of Section
3.9, fails to indicate such Holder's choice with respect to the election set
forth in clause (D) of Section 3.7(a)(1), such Holder shall be deemed to have
elected to receive cash in respect of the entire Purchase Price for all
Securities subject to such Purchase Notice in the circumstances set forth in
such clause (D).
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.7, a portion of a Security, if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security also apply to the purchase of such
portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions of
this Section 3.7 shall be consummated by the delivery of the consideration to be
received by the Holder promptly following the later of the Purchase Date and the
time of delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Purchase Notice contemplated by this Section 3.7(a)
shall have the right to withdraw such Purchase Notice at any time prior to the
close of business on the Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Purchase Notice or written notice of withdrawal thereof.
Section 3.8 Purchase of Securities at Option of the Holder upon Change
----------------------------------------------------------
of Control. (a) (1) If a Change of Control occurs (subject to certain exceptions
----------
set forth below), the Securities not previously purchased by the Company shall
be purchased by the Company, at the option of the Holder thereof, at a purchase
price specified in Section 6 of the Securities (the "Change of Control Purchase
Price"), as of the date that is 30 days after the date of a notice of Change of
Control delivered by the Company (the "Change of Control Purchase Date"),
subject to satisfaction by or on behalf of the Holder of the requirements set
forth in Section 3.8(c).
A "Change of Control" will be deemed to have occurred at such time
after the Securities are originally issued when any of the following events
shall occur:
(i) the acquisition by any person, including any syndicate or
group deemed to be a "person" under Section 13(d) (3) of the Exchange Act
of beneficial ownership, directly or indirectly through a purchase, merger
or other acquisition transaction or series of purchase, merger or other
acquisition transactions, of shares of the
23
Capital Stock of the Company entitling that person to exercise 50% or
more of the total voting power of all shares of the Capital Stock of
the Company entitled to vote generally in elections of directors,
other than any acquisition by the Company, any of its subsidiaries or
any of its employee benefit plans (except that any of those persons
shall be deemed to have beneficial ownership of all securities it has
the right to acquire, whether the right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition); or
(ii) the first day on which a majority of the members
of the board of directors of the Company are not Continuing Directors;
or
(iii) the Company consolidates or merges with or into
any other person, any merger of another person into the Company, or
any conveyance, transfer, sale, lease or other disposition of all or
substantially all of the Company's properties and assets to another
person, other than: (A) any transaction: (1) that does not result in
any reclassification, conversion, exchange or cancellation of
outstanding shares of the Company's Capital Stock; and (2) pursuant to
which holders of the Company's Capital Stock immediately prior to the
transaction have the entitlement to exercise, directly or indirectly
50% or more of the total voting power of all shares of Capital Stock
entitled to vote generally in elections of directors of the continuing
or surviving Person immediately after giving effect to such issuance;
and (B) any merger, share exchange, transfer of assets or similar
transaction solely for the purpose of changing the Company's
jurisdiction of incorporation and resulting in a reclassification,
conversion or exchange of outstanding shares of Common Stock, if at
all, solely into shares of common stock, ordinary shares or American
Depositary Shares of the surviving Person or a direct or indirect
parent of the surviving corporation.
A "Continuing Director" shall mean:
(i) An individual who was a member of the Board of
Directors of the Company first elected by the stockholders or by the Board
of Directors prior to the date hereof or prior to the time that any person
becomes after the date hereof the holder of record of in excess of 20% of
the Capital Stock of the Company entitled to vote in the election of
directors; or
(ii) An individual designated (before such
individual's initial election as a director) as a Continuing Director by a
majority of the then Continuing Directors.
(2) Notwithstanding the provisions of Section 3.8(a)(1), the Company shall not
be required to purchase the Securities of the Holders upon a Change of Control
pursuant to this Section 3.8 if:
(i) the Sale Price per share of Common Stock for any five
trading days within (1) the period of 10 consecutive
trading days ending immediately after the later of the
Change of Control or the public announcement of the
Change of Control, in the case of a Change of Control
under clause (i) or (ii) above, or (2) the period of 10
consecutive trading days ending immediately before the
Change of Control, in the case of a Change of
24
Control under clause (iii) above, equals or exceeds 110% of the
Conversion Price of the Securities in effect on each of those
five trading days; or
(ii) 100% of the consideration in the transaction or transactions
(other than cash payments for fractional shares and cash
payments made in respect of dissenters' appraisal rights)
constituting a Change of Control consists of shares of common
stock, ordinary shares or American Depositary Shares traded or
to be traded immediately following a Change of Control on a
national securities exchange or the Nasdaq National Market, and,
as a result of the transaction or transactions, the Securities
become convertible into that common stock, ordinary shares or
American Depositary Shares (and any rights attached thereto).
For the purposes of this Section 3.8, (x) whether a person is a "beneficial
owner" shall be determined in accordance with Rule 13d-3 under the Exchange Act
and (y) the term "person" includes any syndicate or group that would be deemed
to be a "person" under Section 13(d)(3) of the Exchange Act.
(b) No later than 30 days after the occurrence of a Change of
Control, the Company shall mail a written notice of the Change of Control by
first class mail to the Trustee and to each Holder (and to beneficial owners as
required by applicable law). The notice shall include a form of Change of
Control Purchase Notice to be completed by the Holder and shall state:
(1) briefly, the events causing a Change of Control and the date of
such Change of Control;
(2) the date by which the Change of Control Purchase Notice pursuant
to this Section 3.8 must be delivered to the Paying Agent in
order for a Holder to exercise the repurchase rights;
(3) the Change of Control Purchase Date;
(4) the Change of Control Purchase Price;
(5) whether the Change of Control Purchase Price will be paid in
cash or Applicable Stock, or a combination thereof;
(6) the name and address of the Paying Agent and the Conversion
Agent;
(7) the Conversion Rate and any adjustments thereto;
(8) that the Securities as to which a Change of Control Purchase
Notice has been given may be converted if they are otherwise
convertible pursuant to Article 10 hereof only if the Change of
Control Purchase Notice has been withdrawn in accordance with
the terms of this Indenture;
25
(9) that the Securities must be surrendered to the Paying
Agent to collect payment;
(10) that the Change of Control Purchase Price for any
Security as to which a Change of Control Purchase
Notice has been duly given and not withdrawn will be
paid promptly following the later of the Change of
Control Purchase Date and the time of surrender of such
Security as described in (8);
(11) briefly, the procedures the Holder must follow to
exercise rights under this Section 3.8;
(12) briefly, the conversion rights, if any, of the
Securities;
(13) the procedures for withdrawing a Change of Control
Purchase Notice;
(14) that, unless the Company defaults in making payment of
such Change of Control Purchase Price, interest, if
any, on Securities surrendered for purchase by the
Company will cease to accrue on and after the Change of
Control Purchase Date; and
(15) the CUSIP number(s) of the Securities.
(c) A Holder may exercise its rights specified in Section
3.8(a) upon delivery of a written notice of purchase (a "Change of Control
Purchase Notice") to the Paying Agent at any time on or prior to the close of
business on the Business Day immediately preceding the Change of Control
Purchase Date:
(1) the certificate number of the Security which the Holder
will deliver to be purchased or the appropriate
depositary procedures if Certificated Securities have
not been issued;
(2) the portion of the principal amount of the Security
which the Holder will deliver to be purchased, which
portion must be $1,000 or an integral multiple of
$1,000;
(3) that such Security shall be purchased pursuant to the
terms and conditions specified in Section 6 of the
Securities and in this Indenture; and
(4) in the event the Company elects, pursuant to Section
3.9, to pay the Change of Control Purchase Price, in
whole or in part, in shares of Applicable Stock but
such portion of the Change of Control Purchase Price
shall ultimately be paid to such Holder entirely in
cash because any of the conditions to payment of the
Change of Control Purchase Price in shares of
Applicable Stock is not satisfied prior to the close of
business on the third Business Day prior to the
relevant Change of Control Purchase Date, as set forth
in Section 3.9, whether such Holder elects (i) to
withdraw such Change of Control Purchase Notice as to
some or all of the
26
Securities to which such Change of Control Purchase
Notice relates (stating the principal amount and
certificate numbers, if any, of the Securities as to
which such withdrawal shall relate), or (ii) to receive
cash in respect of the entire Change of Control
Purchase Price for all Securities (or portions thereof)
to which such Change of Control Purchase Notice
relates.
"Applicable Stock" means (i) the Common Stock and (ii) in the
event of a merger, consolidation or other similar transaction involving the
Company that is otherwise permitted hereunder in which the Company is not the
surviving corporation, the common stock, ordinary shares or American Depositary
Shares of such surviving corporation or its direct or indirect parent
corporation.
The delivery of such Security to the Paying Agent with the
Change of Control Purchase Notice (together with all necessary endorsements) at
the offices of the Paying Agent shall be a condition to the receipt by the
Holder of the Change of Control Purchase Price therefor; provided, however, that
such Change of Control Purchase Price shall be so paid pursuant to this Section
3.8 and Section 3.9 only if the Security so delivered to the Paying Agent shall
conform in all respects to the description thereof set forth in the related
Change of Control Purchase Notice.
If a Holder, in such Holder's Change of Control Purchase
Notice and in any written notice of withdrawal delivered by such Holder pursuant
to the terms of Section 3.10, fails to indicate such Holder's choice with
respect to the election set forth in Section 3.8(c)(4), such Holder shall be
deemed to have elected to receive cash in respect of the entire Change of
Control Purchase Price for all Securities subject to such Change of Control
Purchase Notice in the circumstances set forth in such Section 3.8(c)(4).
The Company shall purchase from the Holder thereof, pursuant
to this Section 3.8 and Section 3.9, a portion of a Security if the principal
amount of such portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to the purchase of all of a Security also apply to
the purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the
provisions of this Section 3.8 and Section 3.9 shall be consummated by the
delivery of the consideration to be received by the Holder on the Change of
Control Purchase Date.
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Change of Control Purchase Notice
contemplated by this Section 3.8(c) shall have the right to withdraw such Change
of Control Purchase Notice at any time prior to the close of business on the
last Business Day immediately preceding the Change of Control Purchase Date by
delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 3.11.
The Paying Agent shall promptly notify the Company of the
receipt by it of any Change of Control Purchase Notice or written withdrawal
thereof.
27
Section 3.9 Company's Right to Elect Manner of Payment of
---------------------------------------------
Purchase Price and Change of Control Purchase Price for Payment. (a) The
---------------------------------------------------------------
Securities to be purchased on any Purchase Date or Change of Control Purchase
Date, as the case may be, pursuant to Section 3.7(a) and 3.8(a), respectively,
may be paid for, in whole or in part, at the election of the Company, in U.S.
legal tender ("cash") or shares of Applicable Stock, or in any combination of
cash and shares of Applicable Stock, subject to the conditions set forth in
Sections 3.9(c) and (d). The Company shall designate, in the Company Notice
delivered pursuant to Section 3.9(d), whether the Company will purchase the
Securities for cash or shares of Applicable Stock, or, if a combination thereof,
the percentages of the Purchase Price or Change of Control Purchase Price, as
the case may be, of Securities in respect of which it will pay in cash or shares
of Applicable Stock; provided that the Company will pay cash for fractional
interests in shares of Applicable Stock. For purposes of determining the
existence of potential fractional interests, all Securities subject to purchase
by the Company held by a Holder shall be considered together (no matter how many
separate certificates are to be presented). Each Holder whose Securities are
purchased pursuant to Section 3.7 or 3.8, as the case may be, shall receive the
same percentage of cash or shares of Applicable Stock in payment of the Purchase
Price for such Securities, except (i) as provided in this Section 3.9(a) with
regard to the payment of cash in lieu of fractional shares of Applicable Stock
and (ii) in the event that the Company is unable to purchase the Securities of a
Holder or Holders for shares of Applicable Stock because any necessary
qualifications or registrations of the shares of Applicable Stock under
applicable state securities laws cannot be obtained, the Company may purchase
the Securities of such Holder or Holders for cash. The Company may not change
its election with respect to the consideration (or components or percentages of
components thereof) to be paid once the Company has given its Company Notice to
Holders except pursuant to Section 3.9(b) or pursuant to Section 3.9(d) in the
event of a failure to satisfy, prior to the close of business on the Business
Day immediately preceding the Purchase Date or Change of Control Purchase Date,
as the case may be, any condition to the payment of the Purchase Price or Change
of Control Purchase Price, as the case may be, in whole or in part, in shares of
Applicable Stock.
At least three Business Days before each Company Notice Date,
the Company shall deliver an Officers' Certificate to the Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 3.9(d) in
the Company Notice,
(iii) if the Company elects to pay the Purchase Price
or Change of Control Purchase Price, as the case may be, or a
specified percentage thereof, in shares of Applicable Stock,
that the conditions to such manner of payment set forth in
Section 3.9(c) have been or will be complied with, and
(iv) whether the Company desires the Trustee to give
the Company Notice required by Section 3.9(d).
(b) Purchase with Cash. At the option of the Company, the
------------------
Purchase Price or Change of Control Purchase Price, as the case may be, of
Securities in respect of which a Purchase Notice pursuant to Section 3.7(a) or
Change of Control Purchase Notice pursuant to
28
Section 3.8(c), as the case may be, has been given, or a specified percentage
thereof, may be paid by the Company with cash equal to the aggregate Purchase
Price or Change of Control Purchase Price, as the case may be, of such
Securities. The Purchase Price or Change of Control Purchase Price, as the case
may be, of Securities in respect of which a Purchase Notice pursuant to Section
3.7(a) or Change of Control Purchase Notice pursuant to Section 3.8(c), as the
case may be, has been given shall, for all other Purchase Dates or Change of
Control Purchase Dates, as the case may be, be paid in cash. The Company Notice,
as provided in Section 3.9(d), shall be sent to Holders (and to beneficial
owners as required by applicable law) not less than 20 Business Days prior to
such Purchase Date or Change of Control Purchase Date, as the case may be (the
"Company Notice Date").
(c) Payment by Issuance of Shares of Common Stock. At the
---------------------------------------------
option of the Company, the Purchase Price or Change of Control Purchase Price,
as the case may be, of Securities in respect of which a Purchase Notice pursuant
to Section 3.7(a) or Change of Control Purchase Notice pursuant to Section
3.8(c), as the case may be, has been given, or a specified percentage thereof,
may be paid by the Company by the issuance of a number of shares of Applicable
Stock equal to the quotient obtained by dividing (i) the portion of the Purchase
Price or Change of Control Purchase Price, as the case may be, to be paid in
shares of Applicable Stock by (ii) 97.5% of the Market Price determined by the
Company in the Company Notice, subject to the next succeeding paragraph.
The Company will not issue fractional shares of Applicable
Stock in payment of the Purchase Price or Change of Control Purchase Price, as
the case may be. Instead, the Company will pay cash based on the current market
price for all fractional shares. It is understood that if a Holder elects to
have more than one Security purchased, the number of shares of Applicable Stock
shall be based on the aggregate amount of Securities to be purchased.
If the Company elects to purchase the Securities by the
issuance of shares of Applicable Stock or in any combination of cash and
Applicable Stock, the Company Notice, as provided in Section 3.9(d), shall be
sent to the Holders (and to beneficial owners as required by applicable law) not
later than the Company Notice Date.
The Company's right to exercise its election to purchase
Securities through the issuance of shares of Applicable Stock shall be
conditioned upon:
(i) the Company's not having given its Company
Notice of an election to pay entirely in cash and its giving of timely
Company Notice of an election to purchase all or a specified percentage
of the Securities with shares of Common Stock as provided herein;
(ii) the registration of such shares of Applicable
Stock under the Securities Act and the Exchange Act, in each case, if
required;
(iii) the listing of such shares of Applicable Stock
on a national securities exchange or the quotation of such shares of
Applicable Stock in an inter-dealer quotation system of any registered
United States national securities association;
29
(iv) any necessary qualification or registration
under applicable state securities laws or the availability of an
exemption from such qualification and registration; and
(v) the receipt by the Trustee of an Officers'
Certificate and an Opinion of Counsel each stating that (A) the terms
of the issuance of the shares of Applicable Stock are in conformity
with this Indenture and (B) the shares of Applicable Stock to be issued
by the Company in payment of the Purchase Price or Change of Control
Purchase Price, as the case may be, in respect of Securities have been
duly authorized and, when issued and delivered pursuant to the terms of
this Indenture in payment of the Purchase Price or Change of Control
Purchase Price, as the case may be, in respect of the Securities, will
be validly issued, fully paid and non-assessable and, to the best of
such counsel's knowledge, free from preemptive rights, and, in the case
of such Officers' Certificate, stating that the conditions above and
the condition set forth in the second succeeding sentence have been
satisfied and, in the case of such Opinion of Counsel, stating that the
conditions in clauses (i) through (iv) above have been satisfied.
Such Officers' Certificate shall also set forth the number of
shares of Applicable Stock to be issued for each $1,000 principal amount of
Securities and the Sale Price of a share of Applicable Stock on each trading day
during the period commencing on the first trading day of the period during which
the Market Price is calculated and ending on the third day prior to the
applicable Purchase Date or Change of Control Purchase Date, as the case may be.
If the foregoing conditions are not satisfied with respect to a Holder or
Holders prior to the close of business on the last day prior to the Purchase
Date or Change of Control Purchase Date, as the case may be, and the Company has
elected to purchase the Securities pursuant to this Section 3.9 through the
issuance of shares of Applicable Stock, the Company shall pay the entire
Purchase Price or Change of Control Purchase Price, as the case may be, of the
Securities of such Holder or Holders in cash.
The "Market Price" means the average of the Sale Prices of the
shares of Applicable Stock for the 20-trading day period immediately preceding
and including the third day prior to the applicable Purchase Date or Change of
Control Purchase Date, as the case may be, (if the third Business Day prior to
the applicable Purchase Date is a trading day, or if not, then on the last
trading day prior to the third Business Day), appropriately adjusted to take
into account the occurrence, during the period commencing on the first of the
trading days during the 20-trading day period and ending on the Purchase Date or
Change of Control Purchase Date, as the case may be, of any event described in
Sections 10.3 or 10.4.
The "Sale Price" of the shares of Applicable Stock on any date
means the closing per share sale price (or, if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices) on such date as
reported on the NYSE or, if the shares of Applicable Stock are not listed on the
NYSE, as reported on a national securities exchange, or if not reported on a
national securities exchange, as reported by the Nasdaq system. In the absence
of such quotations, the Company shall be entitled to determine the sales price
on the basis of such quotations as it considers appropriate.
30
Upon determination of the actual number of shares of
Applicable Stock to be issued upon redemption or repurchase of Securities, the
Company shall be required to disseminate a press release through Dow Xxxxx &
Company, Inc. or Bloomberg Business News containing this information or publish
the information on the Company's Web site or through such other public medium as
the Company may use at that time.
(d) Notice of Election. In connection with any purchase of
------------------
Securities pursuant to Section 6 of the Securities, the Company shall give
notice to Holders setting forth information specified in this Section 3.9(d)
(the "Company Notice").
In the event the Company has elected to pay the Purchase Price
or Change of Control Purchase Price, as the case may be (or a specified
percentage thereof), with shares of Applicable Stock, the Company Notice shall:
(1) state that each Holder will receive a number of shares of
Applicable Stock with a value equal to 97.5% of the
Market Price determined as of a specified date prior to
the Purchase Date or Change of Control Purchase Date, as
the case may be, equal to such specified percentage of
the Purchase Price or Change of Control Purchase Price,
as the case may be, of the Securities held by such Holder
(except any cash amount to be paid in lieu of fractional
shares);
(2) set forth the method of calculating the Market Price of
the shares of Applicable Stock; and
(3) state that because the Market Price of shares of
Applicable Stock will be determined prior to the Purchase
Date or Change of Control Purchase Date, as the case may
be, Holders of the Securities will bear the market risk
with respect to the value of the shares of Applicable
Stock to be received from the date such Market Price is
determined to the Purchase Date or Change of Control
Purchase Date, as the case may be.
In any case, each Company Notice shall include a form of
Purchase Notice or Change of Control Purchase Notice, as the case may be, to be
completed by a Holder and shall state:
(i) the Purchase Price or Change of Control Purchase
Price, as the case may be, and the Conversion Rate;
(ii) the name and address of the Paying Agent and the
Conversion Agent;
(iii) that Securities as to which a Purchase Notice or
Change of Control Purchase Notice, as the case may be, has been given may
be converted if they are otherwise convertible only in accordance with
Article 10 hereof and Section 8 of the Securities if the applicable
Purchase Notice or Change of Control Purchase Notice, as the case may be,
has been withdrawn in accordance with the terms of this Indenture;
31
(iv) that Securities must be surrendered to the Paying
Agent to collect payment;
(v) that the Purchase Price or Change of Control
Purchase Price, as the case may be, for any security as to which a Purchase
Notice or Change of Control Purchase Notice, as the case may be, has been
given and not withdrawn will be paid promptly following the later of the
Purchase Date or Change of Control Purchase Date, as the case may be, and
the time of surrender of such Security as described in (iv);
(vi) the procedures the Holder must follow to exercise
its put rights under Section 3.7 or 3.8, as the case may be, and a brief
description of those rights;
(vii) briefly, the conversion rights of the Securities;
(viii) the procedures for withdrawing a Purchase Notice
or Change of Control Purchase Notice, as the case may be (including,
without limitation, for a conditional withdrawal pursuant to the terms of
Section 3.7(a)(1)(D), Section 3.8(c)(4)or Section 3.10);
(ix) that, unless the Company defaults in making
payment on Securities for which a Purchase Notice or Change of Control
Purchase Notice, as the case may be, has been submitted, interest, if any,
on such Securities will cease to accrue on the Purchase Date or Change of
Control Purchase Date, as the case may be; and
(x) the CUSIP number of the Securities.
At the Company's request, the Trustee shall give such Company
Notice in the Company's name and at the Company's expense; provided, however,
that, in all cases, the text of such Company Notice shall be prepared by the
Company.
(e) Covenants of the Company. All shares of Common Stock
------------------------
delivered upon purchase of the Securities shall be newly issued shares or
treasury shares, shall be duly authorized, validly issued, fully paid and
nonassessable, and shall be free from preemptive rights and free of any lien or
adverse claim.
(f) Taxes. If a Holder of a purchased Security is paid in
-----
shares of Applicable Stock, the Company shall pay any documentary, stamp or
similar issue or transfer tax due on such issue of Applicable Stock. However,
the Holder shall pay any such tax which is due because the Holder requests the
Applicable Stock to be issued in a name other than the Holder's name. The Paying
Agent may refuse to deliver the certificates representing the shares of
Applicable Stock being issued in a name other than the Holder's name until the
Paying Agent receives a sum sufficient to pay any tax which will be due because
the shares of Applicable Stock are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any income tax withholding required
by law or regulations.
Section 3.10 Effect of Purchase Notice or Change of Control
----------------------------------------------
Purchase Notice. Upon receipt by the Paying Agent of the Purchase Notice or
---------------
Change of Control Purchase Notice specified in Section 3.7(a) or Section 3.8(c),
as applicable, the Holder of the Security in respect
32
of which such Purchase Notice or Change of Control Purchase Notice, as the case
may be, was given shall (unless such Purchase Notice or Change of Control
Purchase Notice, as the case may be, is withdrawn as specified in the following
two paragraphs) thereafter be entitled to receive solely the Purchase Price or
Change of Control Purchase Price, as the case may be, with respect to such
Security. Such Purchase Price or Change of Control Purchase Price shall be paid
to such Holder, subject to receipts of funds and/or securities by the Paying
Agent, promptly following the later of (x) the Purchase Date or the Change of
Control Purchase Date, as the case may be, with respect to such Security
(provided the conditions in Section 3.7(a) or Section 3.8(c), as applicable,
have been satisfied) and (y) the time of delivery of such Security to the Paying
Agent by the Holder thereof in the manner required by Section 3.7(a) or Section
3.8(c), as applicable. Securities in respect of which a Purchase Notice or
Change of Control Purchase Notice has been given by the Holder thereof may not
be converted pursuant to Article 10 hereof on or after the date of the delivery
of such Purchase Notice or Change of Control Purchase Notice unless such
Purchase Notice or Change of Control Purchase Notice has first been validly
withdrawn as specified in the following two paragraphs.
A Purchase Notice or Change of Control Purchase Notice may be
withdrawn by means of a written notice of withdrawal delivered to the office of
the Paying Agent in accordance with the Purchase Notice or Change of Control
Purchase Notice, as the case may be, at any time prior to the close of business
on the third Business Day prior to the Purchase Date or the close of business on
the Business Day immediately preceding the Change of Control Purchase Date, as
the case may be, specifying:
(1) the certificate number, if any, of the Security in respect
of which such notice of withdrawal is being submitted,
(2) the principal amount of the Security with respect to which
such notice of withdrawal is being submitted, and
(3) the principal amount, if any, of such Security which remains
subject to the original Purchase Notice or Change of Control
Purchase Notice, as the case may be, and which has been or
will be delivered for purchase by the Company.
A written notice of withdrawal of a Purchase Notice may be in
the form set forth in the preceding Section or may be in the form of (i) a
conditional withdrawal contained in a Purchase Notice pursuant to the terms of
Section 3.7(a)(1)(D) or (ii) a conditional withdrawal containing the information
set forth in Section 3.7(a)(1)(D) and the preceding Section and contained in a
written notice of withdrawal delivered to the Paying Agent as set forth in the
preceding paragraph.
A written notice of withdrawal of a Change of Control Purchase
Notice may be in the form set forth in the preceding Section or may be in the
form of (i) a conditional withdrawal contained in a Purchase Notice pursuant to
the terms of Section 3.8(c)(4) or (ii) a conditional withdrawal containing the
information set forth in Section 3.8(c)(4) and the preceding Section and
contained in a written notice of withdrawal delivered to the Paying Agent as set
forth in the preceding paragraph.
33
There shall be no purchase of any Securities pursuant to Section
3.7 or 3.8 if there has occurred (prior to, on or after, as the case may be, the
giving, by the Holders of such Securities, of the required Purchase Notice or
Change of Control Purchase Notice, as the case may be) and is continuing an
Event of Default (other than a default in the payment of the Purchase Price or
Change of Control Purchase Price, as the case may be, with respect to such
Securities). The Paying Agent will promptly return to the respective Holders
thereof any Securities (x) with respect to which a Purchase Notice or Change of
Control Purchase Notice, as the case may be, has been withdrawn in compliance
with this Indenture, or (y) held by it during the continuance of an Event of
Default (other than a default in the payment of the Purchase Price or Change of
Control Purchase Price, as the case may be, with respect to such Securities) in
which case, upon such return, the Purchase Notice or Change of Control Purchase
Notice with respect thereto shall be deemed to have been withdrawn.
Section 3.11 Deposit of Purchase Price or Change of Control
----------------------------------------------
Purchase Price. Prior to 10:00 a.m. (local time in The City of New York) on the
--------------
Business Day following the Purchase Date or the Change of Control Purchase Date,
as the case may be, the Company shall deposit with the Trustee or with the
Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of
them is acting as the Paying Agent, shall segregate and hold in trust as
provided in Section 2.4) an amount of cash (in immediately available funds if
deposited on such Business Day) or Applicable Stock, if permitted hereunder,
sufficient to pay the aggregate Purchase Price or Change of Control Purchase
Price, as the case may be, of all the Securities or portions thereof which are
to be purchased as of the Purchase Date or Change of Control Purchase Date, as
the case may be.
As soon as practicable after the Purchase Date or Change of
Control Purchase Date, as the case may be, the Company shall deliver to each
Holder entitled to receive shares of Applicable Stock through the Paying Agent,
a certificate for the number of full shares of Applicable Stock issuable in
payment of the Purchase Price or Change of Control Purchase Price, as the case
may be, and cash in lieu of any fractional interests. The person in whose name
the certificate for the shares of Applicable Stock is registered shall be
treated as a holder of record of Applicable Stock on the Business Day following
the Purchase Date or Change of Control Purchase Date, as the case may be.
Subject to Section 3.9(c), no payment or adjustment will be made for dividends
on the shares of Applicable Stock the record date for which occurred on or prior
to the Purchase Date or Change of Control Purchase Date, as the case may be.
Section 3.12 Securities Purchased in Part. Any Certificated
----------------------------
Security which is to be purchased only in part shall be surrendered at the
office of the Paying Agent (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing) and the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security, without
service charge, a new Security or Securities, of any authorized denomination as
requested by such Holder in aggregate principal amount equal to, and in exchange
for, the portion of the principal amount of the Security so surrendered which is
not purchased.
Section 3.13 Covenant to Comply With Securities Laws Upon
--------------------------------------------
Purchase of Securities. When complying with the provisions of Section 3.7 or 3.8
----------------------
hereof (provided that such
34
offer or purchase constitutes an "issuer tender offer" for purposes of Rule 13e-
4 (which term, as used herein, includes any successor provision thereto) under
the Exchange Act at the time of such offer or purchase), and subject to any
exemptions available under applicable law, the Company shall (i) comply with
Rule 13e- 4 and Rule 14e-1 (or any successor provision) under the Exchange Act,
(ii) file the related Schedule TO (or any successor schedule, form or report)
under the Exchange Act, and (iii) otherwise comply with all Federal and state
securities laws so as to permit the rights and obligations under Sections 3.7
and 3.8 to be exercised in the time and in the manner specified in Sections 3.7
and 3.8.
Section 3.14 Repayment to the Company. The Trustee and the Paying
------------------------
Agent shall return to the Company any cash or shares of Common Stock that remain
unclaimed as provided in Section 12 of the Securities, together with interest or
dividends, if any, thereon (subject to the provisions of Section 7.1(f)), held
by them for the payment of the Purchase Price or Change of Control Purchase
Price, as the case may be; provided, however, that to the extent that the
aggregate amount of cash or shares of Common Stock deposited by the Company
pursuant to Section 3.11 exceeds the aggregate Purchase Price or Change of
Control Purchase Price, as the case may be, of the Securities or portions
thereof which the Company is obligated to purchase as of the Purchase Date or
Change of Control Purchase Date, as the case may be, then, unless otherwise
agreed in writing with the Company, promptly after the Business Day following
the Purchase Date or Change of Control Purchase Date, as the case may be, the
Trustee shall return any such excess to the Company together with interest or
dividends, if any, thereon (subject to the provisions of Section 7.1(f)).
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities. The Company shall promptly
---------------------
make all payments in respect of the Securities on the dates and in the manner
provided in the Securities or pursuant to this Indenture. Any amounts of cash or
shares of Applicable Stock to be given to the Trustee or Paying Agent, shall be
deposited with the Trustee or Paying Agent by 10:00 a.m., New York City time, by
the Company. Principal amount plus accrued interest, if any, including
contingent interest and additional interest, if any, Redemption Price, Purchase
Price, Change of Control Purchase Price and cash interest, if any, shall be
considered paid on the applicable date due if on such date (or, in the case of a
Purchase Price or Change of Control Purchase Price, on the Business Day
following the applicable Purchase Date or Change of Control Purchase Date, as
the case may be) the Trustee or the Paying Agent holds, in accordance with this
Indenture, cash or securities, if permitted hereunder, sufficient to pay all
such amounts then due.
Section 4.2 SEC and Other Reports. The Company shall file with
---------------------
the Trustee, within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. In the event the Company is at any time
no longer subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, it shall continue to provide the Trustee with reports containing
substantially the same information as would have been
35
required to be filed with the SEC had the Company continued to have been subject
to such reporting requirements. In such event, such reports shall be provided at
the times the Company would have been required to provide reports had it
continued to have been subject to such reporting requirements. The Company also
shall comply with the other provisions of TIA Section 314(a). Delivery of such
reports, information and documents to the Trustee is for informational purposes
only and the Trustee's receipt of such shall not constitute constructive notice
of any information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely conclusively on Officers'
Certificates).
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
(beginning with the fiscal year ending on December 31, 2001) an Officers'
Certificate, stating whether or not to the knowledge of the signers thereof, the
Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
Section 4.4 Further Instruments and Acts. Upon request of the
----------------------------
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
Section 4.5 Maintenance of Office or Agency. The Company will
-------------------------------
maintain in the Borough of Manhattan, the City of New York, an office or agency
of the Trustee, Registrar, Paying Agent and Conversion Agent where Securities
may be presented or surrendered for payment, where Securities may be surrendered
for registration of transfer, exchange, purchase, redemption or conversion and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The office of The Bank of New York, 000
Xxxxxxx Xxxxxx, Xxxxx 00X, Xxx Xxxx, Xxx Xxxx 00000 (Attention: Corporate Trust
Trustee Administration), shall initially be such office or agency for all of the
aforesaid purposes. The Company shall give prompt written notice to the Trustee
of the location, and of any change in the location, of any such office or agency
(other than a change in the location of the office of the Trustee). If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 11.2.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission 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, for such purposes.
Section 4.6 Delivery of Certain Information. At any time when the
-------------------------------
Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the
request of a Holder or any beneficial owner of Securities or holder or
beneficial owner of shares of Common Stock issued upon conversion thereof, or in
accordance with Section 3.8(c), the Company will promptly furnish or cause to be
furnished Rule 144A Information (as defined below) to such Holder or any
36
beneficial owner of Securities or holder or beneficial owner of shares of Common
Stock, or to a prospective purchaser of any such security designated by any such
holder, as the case may be, to the extent required to permit compliance by such
Holder or holder with Rule 144A under the Securities Act in connection with the
resale of any such security. "Rule 144A Information" shall be such information
as is specified pursuant to Rule 144A(d)(4) under the Securities Act. Whether a
person is a beneficial owner shall be determined by the Company to the Company's
reasonable satisfaction.
Section 4.7 Tax Treatment of Securities. The Company agrees, and
---------------------------
by acceptance of a beneficial ownership interest in the Debentures, each
beneficial holder of Debentures will be deemed to have agreed, for United States
federal income tax purposes, to treat the Debentures as indebtedness that is
subject to Section 1.1275-4 of the United States Treasury Regulations (the
"Contingent Debt Regulations"). A holder of Debentures may obtain the comparable
yield and projected payment schedule by telephoning The PMI Group, Inc. Investor
Relations Department at (000) 000-0000 or submitting a written request for it to
the Company at the following address: The PMI Group, Inc., 000 Xxxxxxxxxx Xx.,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Investor Relations Department.
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 When Company May Merge or Transfer Assets. The
-----------------------------------------
Company shall not consolidate with or merge with or into any other person or
convey, transfer, sell, lease or otherwise dispose of all or substantially all
of its properties and assets to any person, unless:
(a) either (1) the Company shall be the continuing corporation
or (2) the Person (if other than the Company) formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance,
transfer or lease all or substantially all of the properties and assets of the
Company substantially as an entirety (i) shall be organized and validly existing
under the laws of (A) the United States or any State thereof or the District of
Columbia or (B) Bermuda or the Cayman Islands and (ii) shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, all of the obligations of the
Company under the Securities and this Indenture;
(b) immediately after giving effect to such transaction, no
Event of Default, and no event that, after notice or lapse of time or both,
would become an Event of Default, shall have occurred and be continuing; and
(c) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such (A)
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture, comply with this Article 5 and that all conditions precedent herein
provided for relating to such transaction have been satisfied and (B) in the
case of a merger or consolidation in which the Company is not the continuing
corporation and in which the successor to the Company is an entity organized
under the laws of Bermuda or the Cayman Islands, that
37
such merger will not result in any material adverse tax consequences to any
Holders of the Securities.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of the properties and assets of one or more Subsidiaries
(other than to the Company or another Subsidiary), which, if such assets were
owned by the Company, would constitute all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.
The successor Person formed by such consolidation or into which the
Company is merged or the successor Person to which such conveyance, transfer or
lease 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 had been named as the Company herein; and thereafter, except in
the case of a lease and obligations the Company may have under a supplemental
indenture, the Company shall be discharged from all obligations and covenants
under this Indenture and the Securities. Subject to Section 9.6, the Company,
the Trustee and the successor Person shall enter into a supplemental indenture
to evidence the succession and substitution of such successor Person and such
discharge and release of the Company.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default. So long as any Securities are
-----------------
outstanding, each of the following shall be an "Event of Default":
(1) the Company fails to convert any portion of the principal amount of
any Security following the exercise by the Holder of the right to convert such
Security into Common Stock pursuant to and in accordance with Article X hereof;
(2) the Company defaults in its obligation to repurchase any Security,
or any portion thereof, upon the exercise by the Holder of such Holder's right
to require the Company to purchase such Securities pursuant to and in accordance
with Section 3.7 and 3.8 hereof;
(3) the Company defaults in its obligation to redeem any Security, or
any portion thereof, called for redemption by the Company pursuant to and in
accordance with Section 3.1 hereof.
(4) the Company defaults in the payment of the principal amount on any
Security when the same becomes due and payable at its Stated Maturity;
(5) the Company defaults in the payment of any accrued and unpaid
interest, including contingent interest or additional interest, if any, in each
case when due and payable, and continuance of such default for a period of 30
days;
(6) the Company fails to comply with any of its agreements or covenants
in the Securities or this Indenture (other than those referred to in clause (1)
through (5) above) and such failure continues for 60 days after receipt by the
Company of a Notice of Default;
38
(7) a failure to pay when due at maturity or a default that results in
the acceleration of maturity of any indebtedness for borrowed money of the
Company or any Designated Subsidiary in an aggregate amount of $25.0 million or
more, unless the acceleration is rescinded, stayed or annulled within 30 days
after written notice of default is given to the Company by the Trustee or
Holders of not less than 25% in aggregate principal amount of the Securities
then outstanding;
(8) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company or any of its Subsidiaries
that is a Designated Subsidiary or any group of two or more Subsidiaries that,
taken as a whole, would constitute a Designated Subsidiary, in an involuntary
case or proceeding under any applicable bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree or order adjudging the Company or any of
its Subsidiaries that is a Designated Subsidiary or any group of two or more
Subsidiaries that, taken as a whole, would constitute a Designated Subsidiary, a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company or any of its Subsidiaries that is a Designated Subsidiary or any group
of two or more Subsidiaries that, taken as a whole, would constitute a
Designated Subsidiary, under any applicable law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of any such decree
or order for relief or any such other decree or order unstayed and in effect for
a period of 60 consecutive days; or
(9) the commencement by the Company or any of its Subsidiaries that is
a Designated Subsidiary or any group of two or more Subsidiaries that, taken as
a whole, would constitute a Designated Subsidiary, of a voluntary case or
proceeding under any applicable bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by the Company or any of its Subsidiaries that is a
Designated Subsidiary or any group of two or more Subsidiaries that, taken as a
whole, would constitute a Designated Subsidiary, to the entry of a decree or
order for relief in respect of the Company or any of its Subsidiaries that is a
Designated Subsidiary or any group of two or more Subsidiaries that, taken as a
whole, would constitute a Designated Subsidiary, in an involuntary case or
proceeding under any applicable bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company, or the filing by the Company or any of its
Subsidiaries that is a Designated Subsidiary or any group of two or more
Subsidiaries that, taken as a whole, would constitute a Designated Subsidiary,
of a petition or answer or consent seeking reorganization or relief under any
applicable law, or the consent by the Company to the filing of such petition or
to the appointment of or the taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or of any substantial part of its property, or the making by the Company
or any of its Subsidiaries that is a Designated Subsidiary or any group of two
or more Subsidiaries that, taken as a whole, would constitute a Designated
Subsidiary, of an assignment for the benefit of creditors, or the admission by
the Company or any of its Subsidiaries that is a Designated Subsidiary or any
group of two or more Subsidiaries that, taken as a whole, would constitute a
Designated Subsidiary, in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company or any of its
Subsidiaries that is a Designated Subsidiary or any group of two or more
Subsidiaries that, taken as a whole, would constitute a Designated Subsidiary,
expressly in furtherance of any such action.
39
A Default under clause (6) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the Securities at the time outstanding notify the Company
and the Trustee, of the Default and the Company does not cure such Default (and
such Default is not waived) within the time specified in clause (6) above after
actual receipt of such notice. Any such notice must specify the Default, demand
that it be remedied and state that such notice is a "Notice of Default."
"Designated Subsidiary" shall mean each of PMI, PMI Australia
Holdings, PMI Australia and any other existing or future, direct or indirect,
Subsidiary of the Company whose assets constitute 15% or more of the total
assets of the Company on a consolidated basis.
The Trustee shall, within 90 days of the occurrence of a Default, give
to the Holders of the Securities notice of all uncured Defaults known to it and
written notice of any event which with the giving of notice or the lapse of
time, or both, would become an Event of Default, its status and what action the
Company is taking or proposes to take with respect thereto; provided, however,
the Trustee shall be protected in withholding such notice if it, in good faith,
determines that the withholding of such notice is in the best interest of such
Holders, except in the case of a Default in the payment of the principal of or
interest on any of the Securities when due or in the payment of any redemption
or purchase obligation of the Company.
Section 6.2 Acceleration. If an Event of Default (other than an Event
------------
of Default specified in Section 6.1(8) or (9) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in aggregate
principal amount of the Securities at the time outstanding by notice to the
Company and the Trustee, may declare the principal amount plus accrued and
unpaid interest, including contingent interest and additional interest, if any,
on all the Securities to be immediately due and payable. Upon such a
declaration, such accelerated amount shall be due and payable immediately. If an
Event of Default specified in Section 6.1(8) or (9) occurs and is continuing,
the principal amount plus accrued and unpaid interest, including contingent
interest and additional interest, if any, on all the Securities shall become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Securityholders. The Holders of a majority in aggregate
principal amount of the Securities at the time outstanding, by notice to the
Trustee (and without notice to any other Securityholder) 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 the principal amount plus accrued and unpaid
interest, including contingent interest and additional interest, if any, that
have become due solely as a result of acceleration and if all amounts due to the
Trustee under Section 7.7 have been paid. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
Section 6.3 Other Remedies. If an Event of Default occurs and is
--------------
continuing, the Trustee may pursue any available remedy to collect the payment
of the principal amount plus accrued and unpaid interest, including contingent
interest and additional interest, if any, 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 the Trustee does not
possess any of the Securities or does not produce any of the Securities in the
proceeding. A delay or
40
omission by the Trustee or any Securityholder 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. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.4 Waiver of Past Defaults. The Holders of a majority in
-----------------------
aggregate principal amount of the Securities at the time outstanding, by notice
to the Trustee (and without notice to any other Securityholder), may waive an
existing Default and its consequences except (1) an Event of Default described
in Section 6.1(1) or (2), (2) a Default in respect of a provision that under
Section 9.2 cannot be amended without the consent of each Securityholder
affected or (3) a Default which constitutes a failure to convert any Security in
accordance with the terms of Article 10. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right. This Section 6.4 shall be in lieu of Section
316(a)1(B) of the TIA and such Section 316(a)1(B) is hereby expressly excluded
from this Indenture, as permitted by the TIA.
Section 6.5 Control by Majority. The Holders of a majority in
-------------------
aggregate principal amount of the Securities at the time outstanding may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or that the Trustee determines in good faith is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability unless the Trustee is offered indemnity satisfactory to
it. This Section 6.5 shall be in lieu of Section 316(a)1(A) of the TIA and such
Section 316(a)1(A) is hereby expressly excluded from this Indenture, as
permitted by the TIA.
Section 6.6 Limitation on Suits. A Securityholder may not pursue any
-------------------
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in aggregate principal amount of the
Securities at the time outstanding make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee security or indemnity
satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of such notice, request and offer of security or
indemnity; and
(5) the Holders of a majority in aggregate principal amount of the
Securities at the time outstanding do not give the Trustee a
direction inconsistent with the request during such 60-day
period.
A Securityholder may not use this Indenture to prejudice the rights of
any other Securityholder or to obtain a preference or priority over any other
Securityholder.
41
Section 6.7 Rights of Holders to Receive Payment. Notwithstanding any
------------------------------------
other provision of this Indenture, the right of any Holder to receive payment of
the principal amount, Redemption Price, Purchase Price, Change of Control
Purchase Price or interest, including contingent interest and additional
interest, if any, in respect of the Securities held by such Holder, on or after
the respective due dates expressed in the Securities or any Redemption Date, and
to convert the Securities in accordance with Article 10, or to bring suit for
the enforcement of any such payment on or after such respective dates or the
right to convert, shall not be impaired or affected adversely without the
consent of such Holder.
Section 6.8 Collection Suit by Trustee. If an Event of Default
--------------------------
described in Section 6.1(2), (3) or (4) 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 owing with respect to the Securities and the
amounts provided for in Section 7.7.
Section 6.9 Trustee May File Proofs of Claim. In case of the pendency
--------------------------------
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal amount, Redemption Price, Purchase Price, Change of
Control Purchase Price or interest, including contingent interest and additional
interest, if any, in respect of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of any such
amount) shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of the principal
amount, Redemption Price, Purchase Price, Change of Control Purchase Price, or
interest, including contingent interest and additional interest, if any, and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel or any other amounts due the Trustee under Section 7.7) and of the
Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay the Trustee any amount
due it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
42
Section 6.10 Priorities. If the Trustee collects any money pursuant to
----------
this Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for the principal amount, Redemption Price, Purchase Price, Change of
Control Purchase Price or interest, including contingent interest and additional
interest, if any, as the case may be, ratably, without preference or priority of
any kind, according to such amounts due and payable on the Securities; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10. At least 15 days before such
record date, the Trustee shall mail to each Securityholder and the Company a
notice that states the record date, the payment date and the amount to be paid.
Section 6.11 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 Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) 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 and expenses,
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 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.7 or a suit by Holders of more than 10% in aggregate principal amount of the
Securities at the time outstanding. This Section 6.11 shall be in lieu of
Section 315(e) of the TIA and such Section 315(e) is hereby expressly excluded
from this Indenture, as permitted by the TIA.
Section 6.12 Waiver of Stay, Extension or Usury Laws. The Company
---------------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other law
wherever enacted, now or at any time hereafter in force, which would prohibit or
forgive the Company from paying all or any portion of the principal amount,
Redemption Price, Purchase Price or Change of Control Purchase Price in respect
of Securities, or any interest, including contingent interest and additional
interest, if any, on such amounts, as contemplated herein, or which may affect
the covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not 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 had been
enacted.
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ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee. (a) If an Event of Default has occurred
-----------------
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Indenture and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those dUties that are specifically
set forth in this Indenture and no others; and
(2) 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, but in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture, but
need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein. This Section 7.1(b)
shall be in lieu of Section 315(a) of the TIA and such Section
315(a) is hereby expressly excluded from this Indenture, as
permitted by the TIA.
(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:
(1) this Section (c) does not limit the effect of Section
(b) of this Section 7.1;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) 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 6.5.
Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)(1),
315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and
315(d)(3) are hereby expressly excluded from this Indenture, as permitted by the
TIA.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1.
44
(e) The Trustee may refuse to perform any duty or exercise any right
or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
(acting in any capacity hereunder) shall be under no liability for interest on
any money received by it hereunder unless otherwise agreed in writing with the
Company.
Section 7.2 Rights of Trustee. Subject to its duties and
-----------------
responsibilities under the TIA,
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers' Certificate;
(c) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(d) the Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith which it believes to be authorized or
within its rights or powers conferred under this Indenture;
(e) the Trustee may consult with counsel selected by it and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;
(f) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which may be
incurred therein or thereby;
(g) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
45
(h) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation;
(i) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Securities and this Indenture;
(j) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other person
employed to act hereunder; and
(k) the Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
Section 7.3 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 its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, Conversion
Agent or co-registrar may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.
Section 7.4 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 or application of the proceeds from the
Securities, it shall not be responsible for any statement in the registration
statement for the Securities under the Securities Act or in any offering
document for the Securities, the Indenture or the Securities (other than its
certificate of authentication), or the determination as to which beneficial
owners are entitled to receive any notices hereunder.
Section 7.5 Notice of Defaults. If a Default occurs and if it
------------------
is known to the Trustee, the Trustee shall give to each Securityholder notice of
the Default within 90 days after it occurs or, if later, within 15 days after it
is known to the Trustee, unless such Default shall have been cured or waived
before the giving of such notice. Notwithstanding the preceding sentence, except
in the case of a Default described in Section 6.1(1) or (2), the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that
46
withholding the notice is in the interest of the Securityholders. The preceding
sentence shall be in lieu of the proviso to Section 315(b) of the TIA and such
proviso is hereby expressly excluded from this Indenture, as permitted by the
TIA. The Trustee shall not be deemed to have knowledge of a Default unless a
Responsible Officer of the Trustee has received written notice of such Default,
which notice specifically references this Indenture and the Securities.
Section 7.6 Reports by Trustee to Holders. Within 60 days after each
-----------------------------
May 15 beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to each Securityholder a brief report dated as of such May 15
that complies with TIA Section 313(a), if required by such Section 313(a). The
Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each securities exchange, if any, on which the
Securities are listed. The Company agrees to notify the Trustee promptly
whenever the Securities become listed on any securities exchange and of any
delisting thereof.
Section 7.7 Compensation and Indemnity. The Company agrees:
--------------------------
(a) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited (to
the extent permitted by law) by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses, advances and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(c) to indemnify the Trustee or any predecessor Trustee and their
agents for, and to hold them harmless against, any loss, damage, claim,
liability, cost or expense (including attorney's fees and expenses, and taxes
(other than taxes based upon, measured by or determined by the income of the
Trustee)) incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim (whether asserted
by the Company or any Holder or any other person) or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay the principal
amount, Redemption Price, Purchase Price, Change of Control Purchase Price or
interest, including contingent interest and additional interest, if any, as the
case may be, on particular Securities.
The Company's payment obligations pursuant to this Section 7.7 shall
survive the discharge of this Indenture and the resignation or removal of the
Trustee. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 6.1(5) or (6), the expenses
47
including the reasonable charges and expenses of its counsel, are intended to
constitute expenses of administration under any bankruptcy law.
Section 7.8 Replacement of Trustee. The Trustee may resign by so
----------------------
notifying the Company; provided, however, no such resignation shall be effective
until a successor Trustee has accepted its appointment pursuant to this Section
7.8. The Holders of a majority in aggregate principal amount of the Securities
at the time outstanding may remove the Trustee by so notifying the Trustee and
the Company. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise 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, by
resolution of its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company satisfactory in form and
substance to the retiring Trustee and the Company. Thereupon the resignation or
removal of the retiring Trustee shall become effective, 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
Securityholders. 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 7.7.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in aggregate principal amount of the
Securities at the time outstanding may petition any court of competent
jurisdiction at the expense of the Company for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Section 7.9 Successor Trustee by Merger. If the Trustee
---------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee.
Section 7.10 Eligibility; Disqualification. The Trustee shall at
-----------------------------
all times satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The
Trustee (or its parent holding company) shall have a combined capital and
surplus of at least $50,000,000 as set forth in its most recent published annual
report of condition. Nothing herein contained shall prevent the
48
Trustee from filing with the Commission the application referred to in the
penultimate paragraph of TIA Section 310(b).
Section 7.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with 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.
ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.1 Discharge of Liability on Securities. When (i) the
------------------------------------
Company delivers to the Trustee all outstanding Securities (other than
Securities replaced or repaid pursuant to Section 2.7) for cancellation or (ii)
all outstanding Securities have become due and payable and the Company deposits
with the Trustee cash sufficient to pay all amounts due and owing on all
outstanding Securities (other than Securities replaced pursuant to Section 2.7),
and if in either case the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Section 7.7, cease to be of
further effect. The Trustee shall join in the execution of a document prepared
by the Company acknowledging satisfaction and discharge of this Indenture on
demand of the Company accompanied by an Officers' Certificate and Opinion of
Counsel and at the cost and expense of the Company.
Section 8.2 Repayment to the Company. The Trustee and the Paying
------------------------
Agent shall return to the Company upon written request any money or securities
held by them for the payment of any amount with respect to the Securities that
remains unclaimed for two years, subject to applicable unclaimed property law.
After return to the Company, Holders entitled to the money or securities must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person and the Trustee and the Paying
Agent shall have no further liability to the Securityholders with respect to
such money or securities for that period commencing after the return thereof.
ARTICLE IX
AMENDMENTS
Section 9.1 Without Consent of Holders. The Company and the
--------------------------
Trustee may amend this Indenture or the Securities without the consent of any
Securityholder to:
(a) add to the covenants of the Company for the benefit of the
Holders of Securities;
(b) surrender any right or power herein conferred upon the
Company;
(c) provide for conversion rights of Holders of Securities if
any reclassification or change of the Common Stock or any consolidation, merger
or sale of all or substantially all of the Company's assets occurs;
49
(d) provide for the assumption of the Company's obligations to
the Holders of Securities in the case of a merger, consolidation, conveyance,
transfer or lease pursuant to Article V hereof;
(e) reduce the Conversion Price; provided, however, that such
reduction in the Conversion Price shall not adversely affect the interests of
the Holders of Securities (after taking into account tax and other consequences
of such reduction);
(f) comply with the requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA;
(g) make any changes or modifications necessary in connection
with the registration of the Securities under the Securities Act as contemplated
in the Registration Rights Agreement; provided, however, that such action
pursuant to this clause (g) does not, in the good faith opinion of the Board of
Directors of the Company (as evidenced by a Board Resolution) and the Trustee,
adversely affect the interests of the Holders of Securities in any material
respect;
(h) cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which is
otherwise defective, or to make any other provisions with respect to matters or
questions arising under this Indenture which the Company may deem necessary or
desirable and which shall not be inconsistent with the provisions of this
Indenture; provided, however, that such action pursuant to this clause (h) does
not, in the good faith opinion of the Board of Directors of the Company (as
evidenced by a Board Resolution) and the Trustee, adversely affect the interests
of the Holders of Securities in any material respect; and
(i) add or modify any other provisions herein with respect to
matters or questions arising hereunder which the Company and the Trustee may
deem necessary or desirable and which will not adversely affect the interests of
the Holders of Securities.
Section 9.2 With Consent of Holders. Except as provided below
-----------------------
in this Section 9.2, this Indenture or the Securities may be amended, modified
or supplemented, and noncompliance in any particular instance with any provision
of this Indenture or the Securities may be waived, in each case with the written
consent of the Holders of at least a majority of the principal amount of the
Securities at the time outstanding.
Without the written consent or the affirmative vote of each
Holder of Securities affected thereby, an amendment or waiver under this Section
9.2 may not:
(a) change the maturity of the principal amount of, or any
installment of interest, including contingent interest or additional interest,
on, any Security;
(b) reduce the principal amount of, or interest, including
contingent interest or additional interest, payable on, or the Redemption Price,
Purchase Price or Change of Control Purchase Price of any Security;
(c) impair or adversely affect the conversion rights of any
Holder of Securities;
50
(d) reduce the value of the Common Stock to which reference is
made in determining whether an interest adjustment will be made on the
Securities, or change the method by which this value is calculated;
(e) change the currency of any amount owed or owing under the
Security or any interest thereon from U.S. Dollars;
(f) alter or otherwise modify the rate of interest, including
contingent interest or additional interest, on any Security, or the manner of
calculation thereof, or extend time for payment of any amounts due and payable
to the Holders of the Securities;
(g) impair the right of any Holder to institute suit for the
enforcement of any payment or with respect to, or conversion of, any Security;
(h) modify the obligation of the Company to maintain an office
or agency in The City of New York pursuant to Section 4.5;
(i) adversely affect the purchase right of the Holders of the
Securities as provided in Article III or the right of the Holders of the
Securities to convert any Security as provided in Article X;
(j) modify the provisions of Article III in a manner adverse
to the Holders of the Securities;
(k) modify any of the provisions of this Section, or reduce
the principal amount of outstanding Securities required to waive a default,
except to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each outstanding
Security affected thereby; or
(l) reduce the percentage of the principal amount of the
outstanding Securities the consent of whose Holders is required for any such
supplemental indenture or the consent of whose Holders is required for any
waiver provided for in this Indenture.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.2 becomes effective,
the Company shall mail to each Holder a notice briefly describing the amendment.
Nothing in this Section 9.2 shall impair the ability of the
Company and the Trustee to amend this Indenture or the Securities without the
consent of any Securityholder to provide for the assumption of the Company's
obligations to the Holders of Securities in the case of a merger, consolidation,
conveyance, transfer or lease pursuant to Article V hereof.
Section 9.3 Compliance with Trust Indenture Act. Every
-----------------------------------
supplemental indenture executed pursuant to this Article shall comply with the
TIA.
51
Section 9.4 Revocation and Effect of Consents, Waivers and Actions.
------------------------------------------------------
Until an amendment, waiver or other action by Holders becomes effective, a
consent thereto by a Holder of a Security hereunder is a continuing consent by
the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same obligation as the consenting Holder's Security,
even if notation of the consent, waiver or action is not made on the Security.
However, any such Holder or subsequent Holder may revoke the consent, waiver or
action as to such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the date the amendment, waiver or
action becomes effective. After an amendment, waiver or action becomes
effective, it shall bind every Securityholder.
Section 9.5 Notation on or Exchange of Securities. Securities
-------------------------------------
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
outstanding Securities.
Section 9.6 Trustee to Sign Supplemental Indentures. The Trustee shall
---------------------------------------
sign any supplemental indenture authorized pursuant to this Article 9 if the
amendment contained therein does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign such supplemental indenture. In signing such supplemental indenture
the Trustee shall receive, and (subject to the provisions of Section 7.1) shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
Section 9.7 Effect of Supplemental Indentures. Upon the execution of
---------------------------------
any supplemental indenture under this Article, this Indenture shall be modified
in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
ARTICLE X
CONVERSIONS
Section 10.1 Conversion Privilege. (a) Subject to and upon compliance
--------------------
with the provisions of this Article X, a Holder of a Security shall have the
right, at such Holder's option, to convert all or any portion (if the portion to
be converted is $1,000 or an integral multiple of $1,000) of such Security into
shares of Common Stock at the Conversion Price in effect on the date of
conversion:
(1) during any Conversion Period, if the Sale Price of the Common
Stock for at least 20 Trading Days in the 30 Trading Day period ending on
the first day of such Conversion Period was more than 120% of the
Conversion Price in effect on such 30th Trading Day (in the event that the
Conversion Price on such thirtieth Trading Day is not the same as the
Conversion Price in effect for each of such thirty Trading Days, the
52
Conversion Agent shall make such adjustments as it, in its discretion,
deems appropriate in determining whether the foregoing condition has
been met);
(2) during the five Business Day period following any 10
consecutive Trading Day period in which the average of the Trading
Prices of the Securities for such 10 Trading Day period was less than
105% of the average of the Conversion Values of the Securities during
the same period;
(3) at any time prior to the close of business on the second
Business Day preceding the date fixed for redemption, if such Security
has been called for redemption pursuant to Article III hereof;
(4) during any period after the 30th day following the
original issuance of the Securities in which (A) the credit rating
assigned to the Securities by both Xxxxx'x Investor Services, Inc. and
Standard & Poor's Rating Services is below Baa3 or BBB-, respectively,
(B) the credit rating assigned to the Securities by both such rating
agencies is suspended or withdrawn or (C) neither of such rating
agencies is then rating the Securities; or
(5) as provided in Section (b) of this Section 10.1.
The Conversion Agent shall, on behalf of the Company,
determine on a daily basis whether the Securities shall be convertible as a
result of the occurrence of an event specified in clause (1) or clause (2) above
and, if the Securities shall be so convertible, the Conversion Agent shall
promptly deliver to the Company and the Trustee written notice thereof. Whenever
the Securities shall become convertible pursuant to Section 10.1, the Company
or, at the Company's request, the Trustee in the name and at the expense of the
Company, shall notify the Holders of the event triggering such convertibility in
the manner provided in Section 11.2, and the Company shall also publicly
announce such information and publish it on the Company's Web site. Any notice
so given shall be conclusively presumed to have been duly given, whether or not
the Holder receives such notice.
(b) In addition, in the event that:
(1) (A) the Company distributes to all holders of its shares
of Common Stock rights or warrants entitling them (for a period
expiring within 60 days of the Record Date for such distribution) to
subscribe for or purchase shares of Common Stock, at a price per share
less than the Sale Price of the Common Stock on the Business Day
immediately preceding the announcement of such distribution, (B) the
Company distributes to all holders of its shares of Common Stock, cash
or other assets, debt securities or rights or warrants to purchase its
securities, where the Fair Market Value (as determined by the Board of
Directors) of such distribution per share of Common Stock exceeds 10%
of the Sale Price of a share of Common Stock on the Business Day
immediately preceding the date of declaration of such distribution, or
(C) a Change of Control occurs but Holders of Securities do not have
the right to require the Company to purchase their Securities as a
result of such Change of Control, because of the provisions set forth
in Section 3.8(a)(2), then, in each case, the Securities may be
surrendered for conversion at any time on and
53
after the date that the Company gives notice to the Holders of such
right, which shall be not less than 20 days prior to the Ex-Dividend
Time for such distribution, in the case of (A) or (B), or within 30
days after the occurrence of the Change of Control, in the case of (C),
until the earlier of the close of business on the Business Day
immediately preceding the Ex-Dividend Time or the date the Company
announces that such distribution will not take place, in the case of
(A) or (B), or the earlier of 30 days after the Company's delivery of
the Change of Control Purchase Notice or the date the Company announces
that the Change of Control will not take place, in the case of (C).
(2) the Company consolidates with or merges into another
corporation, or is a party to a binding share exchange pursuant to
which the shares of Common Stock would be converted into cash,
securities or other property as set forth in Section 10.4 hereof, then
the Securities may be surrendered for conversion at any time from and
after the date which is 15 days prior to the date announced by the
Company as the anticipated effective time of such transaction until 15
days after the actual date of such transaction.
"Conversion Period" means the period from and including the
thirtieth trading day in a fiscal quarter to, but not including, the thirtieth
trading day in the immediately following fiscal quarter.
"Conversion Value", on any day, means the product of the Sale
Price for the Common Stock multiplied by the then-current Conversion Rate.
"Ex-Dividend Time" means, with respect to any issuance or
distribution on shares of Common Stock, the first date on which the shares of
Common Stock trade regular way on the principal securities market on which the
shares of Common Stock are then traded without the right to receive such
issuance or distribution.
The "Trading Price" of the Securities, on any date of
determination, means the average of the secondary market bid quotations per
Security obtained by the Company or the Calculation Agent for $10,000,000
principal amount at maturity of Securities at approximately 3:30 p.m., New York
City time, on such determination date from three independent nationally
recognized securities dealers selected by the Company, provided that if at least
three such bids cannot reasonably be obtained by the Company or the Calculation
Agent, but two such bids are obtained, then the average of the two bids shall be
used, and if only one such bid can reasonably be obtained by the Company or the
Calculation Agent, this one bid shall be used. If either the Company or the
Calculation Agent cannot reasonably obtain at least one bid for $10,000,000
principal amount at maturity of Securities from a nationally recognized
securities dealer or in the reasonable judgment of the Company, the bid
quotations are not indicative of the secondary market value of the Securities,
then the trading price of the Securities will equal (a) the then-applicable
Conversion Rate multiplied by (b) the Sale Price of the Common Stock on such
determination date.
The Conversion Rate, at any time, shall equal (A) $1,000
divided by the Conversion Price at such time, rounded to three decimal places
(rounded up if the fourth decimal place thereof is 5 or more and otherwise
rounded down).
54
Section 10.2 Conversion Procedure; Conversion Price;
---------------------------------------
Fractional Shares.
-----------------
(a) Each Security shall be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares (calculated to the
nearest 1/100th of a share) of Common Stock. The Security will be converted into
shares of Common Stock at the Conversion Price therefor. No payment or
adjustment shall be made in respect of dividends on the Common Stock or accrued
interest on a converted Security, except as described in Section 10.9 hereof.
The Company shall not issue any fraction of a share of Common Stock in
connection with any conversion of Securities, but instead shall, subject to
Section 10.3(h) hereof, make a cash payment (calculated to the nearest cent)
equal to such fraction multiplied by the Sale Price of the Common Stock on the
last Trading Day prior to the date of conversion. Notwithstanding the foregoing,
a Security in respect of which a Holder has delivered a Purchase Notice or
Change of Control Purchase Notice exercising such Holder's option to require the
Company to repurchase such Security may be converted only if such notice of
exercise is withdrawn in accordance with the Section 3.10 hereof.
(b) Before any Holder of a Security shall be entitled to
convert the same into Common Stock, such Holder shall, in the case of Securities
issued in global form, comply with the procedures of the Depositary in effect at
that time, and in the case of definitive Securities, surrender such Securities,
duly endorsed to the Company or in blank, at the office of the Conversion Agent,
and shall give written notice to the Company at said office or place that such
Holder elects to convert the same and shall state in writing therein the
principal amount of Securities to be converted and the name or names (with
addresses) in which such Holder wishes the certificate or certificates for
Common Stock to be issued.
Before any such conversion, a Holder also shall pay all funds
required, if any, relating to interest on the Securities, as provided in Section
10.9, and all taxes or duties, if any, as provided in Section 10.8.
If more than one Security shall be surrendered for conversion
at one time by the same Holder, the number of full shares of Common Stock which
shall be deliverable upon conversion shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof to
the extent permitted thereby) so surrendered. Subject to the next succeeding
sentence, the Company will, as soon as practicable thereafter, issue and deliver
at said office or place to such Holder of a Security, or to such Holder's
nominee or nominees, certificates for the number of full shares of Common Stock
to which such Holder shall be entitled as aforesaid, together, subject to the
last sentence of Section (a) above, with cash in lieu of any fraction of a share
to which such Holder would otherwise be entitled. The Company shall not be
required to deliver certificates for shares of Common Stock while the stock
transfer books for such stock or the security register are duly closed for any
purpose, but certificates for shares of Common Stock shall be issued and
delivered as soon as practicable after the opening of such books or security
register.
(c) A Security shall be deemed to have been converted as of
the close of business on the date of the surrender of such Securities for
conversion as provided above, and the person or persons entitled to receive the
Common Stock issuable upon such conversion shall be
55
treated for all purposes as the record Holder or Holders of such Common Stock as
of the close of business on such date.
(d) In case any Security shall be surrendered for partial
conversion, the Company shall execute and the Trustee shall authenticate and
deliver to or upon the written order of the Holder of the Security so
surrendered, without charge to such Holder (subject to the provisions of Section
10.8 hereof), a new Security or Securities in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Securities.
Section 10.3 Adjustment of Conversion Price for Common Stock.
-----------------------------------------------
The Conversion Price shall be adjusted from time to time as
follows:
(a) In case the Company shall, at any time or from time to
time while any of the Securities are outstanding, pay a dividend or make a
distribution in shares of Common Stock to all holders of its outstanding shares
of Common Stock, then the Conversion Price in effect at the opening of business
on the date following the record date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction:
(1) the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the Record Date
fixed for such determination; and
(2) the denominator of which shall be the sum of such number
of shares and the total number of shares constituting such dividend or
other distribution.
Such reduction shall become effective immediately after the
opening of business on the day following the Record Date fixed for such
determination. If any dividend or distribution of the type described in this
Section 10.3(a) is declared but not so paid or made, the Conversion Price shall
again be adjusted to the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.
(b) In case the Company shall, at any time or from time to
time while any of the Securities are outstanding, subdivide its outstanding
shares of Common Stock into a greater number of shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and conversely, in case the Company shall, at any time or from time to
time while any of the Securities are outstanding, combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased.
Such reduction or increase, as the case may be, shall become
effective immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(c) In case the Company shall, at any time or from time to
time while any of the Securities are outstanding, issue rights or warrants
(other than any rights or warrants referred
56
to in Section 10.3(d)) to all holders of its shares of Common Stock entitling
them to subscribe for or purchase shares of Common Stock (or securities
convertible into shares of Common Stock) at a price per share (or having a
conversion price per share) less than the Sale Price on the Business Day
immediately preceding the date of the announcement of such issuance (treating
the conversion price per share of the securities convertible into Common Stock
as equal to (x) the sum of (i) the price for a unit of the security convertible
into Common Stock and (ii) any additional consideration initially payable upon
the conversion of such security into Common Stock divided by (y) the number of
shares of Common Stock initially underlying such convertible security), then the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect at the opening of
business on the date after such date of announcement by a fraction:
(1) the numerator of which shall be the number of shares of
Common Stock outstanding on the close of business on the date of
announcement, plus the number of shares or securities which the
aggregate offering price of the total number of shares or securities so
offered for subscription or purchase (or the aggregate conversion price
of the convertible securities so offered) would purchase at such Sale
Price of the Common Stock; and
(2) the denominator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date of
announcement, plus the total number of additional shares of Common
Stock so offered for subscription or purchase (or into which the
convertible securities so offered are convertible).
Such adjustment shall become effective immediately after the
opening of business on the day following the date of announcement of such
issuance. To the extent that shares of Common Stock (or securities convertible
into shares of Common Stock) are not delivered pursuant to such rights or
warrants, upon the expiration or termination of such rights or warrants, the
Conversion Price shall be readjusted to the Conversion Price which would then be
in effect had the adjustments made upon the issuance of such rights or warrants
been made on the basis of the delivery of only the number of shares of Common
Stock (or securities convertible into shares of Common Stock) actually
delivered. In the event that such rights or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if the date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed. In determining
whether any rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at less than such Sale Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account any consideration received for such rights or warrants, the value
of such consideration if other than cash, to be determined by the Board of
Directors.
(d) In case the Company shall, at any time or from time to
time while any of the Securities are outstanding, by dividend or otherwise,
distribute to all holders of its shares of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation and the Common Stock is not changed or
exchanged), cash, shares of its capital stock (other than any dividends or
distributions to which Section 10.3(a) applies), evidences of its Indebtedness
or other assets, including securities, but excluding (i) any rights or warrants
referred to in Section 10.3(c), (ii) dividends or
57
distributions of stock, securities or other property or assets (including cash)
in connection with a reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance to which Section 10.4 applies
and (iii) dividends and distributions paid exclusively in cash (such capital
stock, evidence of its indebtedness, cash, other assets or securities being
distributed hereinafter in this Section 10.3(d) called the "distributed
assets"), then, in each such case, subject to the third and fourth succeeding
paragraphs and the last Section of this Section 10.3(d), the Conversion Price
shall be reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the Record Date with respect to such distribution by a fraction:
(1) the numerator of which shall be the Current Market Price of the
Common Stock, less the Fair Market Value on such date of the portion of
the distributed assets so distributed applicable to one share of Common
Stock (determined on the basis of the number of shares of Common Stock
outstanding on the record date)(determined as provided in Section 10.3(g))
on such date; and
(2) the denominator of which shall be such Current Market Price.
Such reduction shall become effective immediately prior to the opening of
business on the day following the Record Date for such distribution. In the
event that such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such dividend or distribution had not been declared.
If the Board of Directors determines the Fair Market Value of any
distribution for purposes of this Section 10.3(d) by reference to the actual or
when issued trading market for any distributed assets comprising all or part of
such distribution, it must in doing so consider the prices in such market over
the same period (the "Reference Period") used in computing the Current Market
Price pursuant to Section 10.3(g) to the extent possible, unless the Board of
Directors determines in good faith that determining the Fair Market Value during
the Reference Period would not be in the best interest of the Holders.
In the event any such distribution consists of shares of capital stock
of, or similar equity interests in, one or more of the Company's Subsidiaries (a
"Spin-Off"), the Fair Market Value of the securities to be distributed shall
equal the average of the closing sale prices of such securities on the principal
securities market on which such securities are traded for the five consecutive
Trading Days commencing on and including the sixth day of trading of those
securities after the effectiveness of the Spin-Off, and the Current Market Price
shall be measured for the same period. In the event, however, that an
underwritten initial public offering of the securities in the Spin-Off occurs
simultaneously with the Spin-Off, Fair Market Value of the securities
distributed in the Spin-Off shall mean the initial public offering price of such
securities and the Current Market Price shall mean the Sale Price for the Common
Stock on the same Trading Day.
Rights or warrants distributed by the Company to all holders of its
shares of Common Stock entitling them to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"), (i) are deemed to be transferred with such shares
58
of Common Stock, (ii) are not exercisable and (iii) are also issued in respect
of future issuances of shares of Common Stock shall be deemed not to have been
distributed for purposes of this Section 10.3(d) (and no adjustment to the
Conversion Price under this Section 10.3(d) will be required) until the
occurrence of the earliest Trigger Event. If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant shall
become exercisable to purchase different distributed assets, evidences of
indebtedness or other assets, or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase price, then the occurrence of each such event shall be deemed
to be the date of issuance and record date with respect to a new right or
warrant (and a termination or expiration of the existing right or warrant
without exercise by the holder thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto, that resulted in an adjustment to the Conversion Price under
this Section 10.3(d):
(1) in the case of any such rights or warrants which shall all
have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder of
shares of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to
all holders of shares of Common Stock as of the date of such redemption
or repurchase; and
(2) in the case of such rights or warrants which shall have
expired or been terminated without exercise, the Conversion Price shall
be readjusted as if such rights and warrants had never been issued.
For purposes of this Section 10.3(d) and Sections 10.3(a),
10.3(b) and 10.3(c), any dividend or distribution to which this Section 10.3(d)
is applicable that also includes (i) shares of Common Stock, (ii) a subdivision
or combination of shares of Common Stock to which Section 10.3(b) applies or
(iii) rights or warrants to subscribe for or purchase shares of Common Stock to
which Section 10.3(c) applies (or any combination thereof), shall be deemed
instead to be:
(1) a dividend or distribution of the evidences of
indebtedness, assets, shares of capital stock, rights or warrants,
other than such shares of Common Stock, such subdivision or combination
or such rights or warrants to which Sections 10.3(a), 10.3(b) and
10.3(c) apply, respectively (and any Conversion Price reduction
required by this Section 10.3(d) with respect to such dividend or
distribution shall then be made), immediately followed by
(2) a dividend or distribution of such shares of Common Stock,
such subdivision or combination or such rights or warrants (and any
further Conversion Price reduction required by Sections 10.3(a),
10.3(b) and 10.3(c) with respect to such dividend or distribution shall
then be made), except:
59
(A) the Record Date of such dividend or distribution
shall be substituted as (i) "the date fixed for the
determination of stockholders entitled to receive such
dividend or other distribution," "Record Date fixed for such
determinations" and "Record Date" within the meaning of
Section 10.3(a), (ii) "the day upon which such subdivision
becomes effective" and "the day upon which such combination
becomes effective" within the meaning of Section 10.3(b), and
(iii) as "the date fixed for the determination of stockholders
entitled to receive such rights or warrants," "the Record Date
fixed for the determination of the stockholders entitled to
receive such rights or warrants" and such "Record Date" within
the meaning of Section 10.3(c); and
(B) any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such
determination" within the meaning of Section 10.3(a) and any
reduction or increase in the number of shares of Common Stock
resulting from such subdivision or combination shall be
disregarded in connection with such dividend or distribution.
In the event of any distribution referred to in this Section
10.3(d) in which (1) the Fair Market Value (as determined by the Board of
Directors) of such distribution applicable to one share of Common Stock
(determined as provided above) equals or exceeds the average of the Sale Prices
of the Common Stock over the ten consecutive Trading Day period ending on the
Record Date for such distribution or (2) the average of the Sale Prices of the
Common Stock over the ten consecutive Trading Day period ending on the Record
Date for such distribution exceeds the Fair Market Value of such distribution by
less than $1.00, then, in each such case, in lieu of an adjustment to the
Conversion Price, adequate provision shall be made so that each Holder shall
have the right to receive upon conversion of a Security, in addition to shares
of Common Stock, the kind and amount of such distribution such Holder would have
received had such Holder converted such Security immediately prior to the Record
Date for determining the shareholders entitled to receive the distribution.
In the event of any distribution referred to in Section
10.3(c) or 10.3(d), where, in the case of a distribution described in Section
10.3(d), the Fair Market Value of such distribution per share of Common Stock
(as determined by the Board of Directors) exceeds 10% of the Sale Price of a
share of Common Stock on the Business Day immediately preceding the declaration
date for such distribution, then, if such distribution would also trigger a
conversion right under Section 10.1(b) or the Securities are otherwise
convertible pursuant to this Article X, the Company will be required to give
notice to the Holders of Securities at least 20 days prior to the Ex-Dividend
Time for the distribution and, upon the giving of notice, the Securities may be
surrendered for conversion at any time on and after the date that the Company
gives notice to the Holders of such conversion right, until the close of
business on the Business Day prior to the Ex-Dividend Time or the Company
announces that such distribution will not take place. No adjustment to the
Conversion Price or the ability of a Holder of a Security to convert will be
made if the Holder will otherwise participate in such distribution without
conversion.
(e) In case the Company shall, at any time or from time
to time while any of the Securities are outstanding, by dividend or otherwise,
distribute to all holders of its shares of
60
Common Stock, cash (excluding any cash that is distributed upon a
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance to which Section 10.4 applies or as part of a
distribution referred to in Section 10.3(d)), in an aggregate amount that,
combined together with:
(1) the aggregate amount of any other such distributions to
all holders of shares of Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution, and
in respect of which no adjustment pursuant to this Section 10.3(e) has
been made; and
(2) the aggregate amount of any cash, plus the Fair Market
Value (as determined by the Board of Directors) of consideration
payable in respect of any tender offer by the Company or any of its
Subsidiaries for all or any portion of the shares of Common Stock
concluded within the 12 months preceding the date of such distribution,
and in respect of which no adjustment pursuant to Section 10.3(f) has
been made;
exceeds 10% of the product of the Current Market Price of the Common Stock on
the Record Date with respect to such distribution, times the number of shares of
Common Stock outstanding on such date, then, and in each such case, immediately
after the close of business on such date, the Conversion Price shall be reduced
so that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on such Record Date
by a fraction:
(1) the numerator of which shall be equal to the Current
Market Price on the Record Date, less an amount equal to the quotient
of (x) the excess of such combined amount over such 10% and (y) the
number of shares of Common Stock outstanding on the Record Date; and
(2) the denominator of which shall be equal to the Current
Market Price on such date.
However, in the event that the then Fair Market Value (as so
determined) of the portion of cash and other securities, if any, so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive upon
conversion of a Security (or any portion thereof) the amount of cash in excess
of such 10% such Holder would have received had such Holder converted such
Security (or portion thereof) immediately prior to such Record Date. In the
event that such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such dividend or distribution had not been declared.
(f) In case a tender offer made by the Company or any of its
Subsidiaries for all or any portion of the shares of Common Stock shall expire
and such tender offer (as amended upon the expiration thereof) shall require the
payment to stockholders (based on the acceptance (up to any maximum specified in
the terms of the tender offer) of shares tendered) of an aggregate consideration
having a Fair Market Value (as determined by the Board of Directors) that
combined together with:
61
(1) the aggregate amount of the cash, plus the Fair Market
Value (as determined by the Board of Directors), as of the expiration
of such tender offer, of consideration payable in respect of any other
tender offers, by the Company or any of its Subsidiaries for all or any
portion of the shares of Common Stock expiring within the 12 months
preceding the expiration of such tender offer and in respect of which
no adjustment pursuant to this Section 10.3(f) has been made; and
(2) the aggregate amount of any distributions to all holders
of shares of Common Stock made exclusively in cash within 12 months
preceding the expiration of such tender offer and in respect of which
no adjustment pursuant to Section 10.3(e) has been made;
exceeds 10% of the product of the Current Market Price of the Common Stock as of
the last time (the "Expiration Time") tenders could have been made pursuant to
such tender offer (as it may be amended), times the number of shares of Common
Stock outstanding (including any tendered shares) on the Expiration Time (such
excess, the "Excess Amount"), then, and in each such case, immediately prior to
the opening of business on the day after the date of the Expiration Time, 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 close of business on the date of the Expiration Time by a fraction:
(1) the numerator of which shall be the (x) the product of
(i) the number of shares of Common Stock outstanding (including any
tendered shares) at the Expiration Time and (ii) the Current Market
Price of the Common Stock at the Expiration Time, less (y) the Excess
Amount; and
(2) the denominator shall be the product of the number of
shares of Common Stock outstanding (including any tendered shares) at
the Expiration Time and the Current Market Price of the Common Stock at
the Expiration Time.
Such reduction (if any) shall become effective immediately
prior to the opening of business on the day following the Expiration Time. In
the event that the Company is obligated to purchase shares pursuant to any such
tender offer, but the Company is permanently prevented by applicable law from
effecting any such purchases or all or a portion of such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such (or such portion of the) tender
offer had not been made. If the application of this Section 10.3(f) to any
tender offer would result in an increase in the Conversion Price, no adjustment
shall be made for such tender offer under this Section 10.3(f).
Pursuant to rights issued under the Company's preferred share
purchase rights plan, if holders of the Securities exercising the right of
conversion attaching after the date the rights separate from the underlying
Common Stock are not entitled to receive the rights that would otherwise be
attributable to the shares of Common Stock received upon conversion, the
Conversion Price will be adjusted as though the rights were being distributed to
holders of Common Stock on the date of such separation. If such an adjustment is
made and the rights are later redeemed, invalidated or terminated, then a
corresponding reversing adjustment will be made to the conversion price on an
equitable basis.
62
(g) For purposes of this Article X, the following terms
shall have the meanings indicated:
"Current Market Price" on any date means the average of the
daily Sale Prices per share of Common Stock for the ten consecutive Trading Days
immediately prior to such date; provided, however, that if:
-------- -------
(1) the "ex" date (as hereinafter defined) for any event
(other than the issuance or distribution requiring such computation)
that requires an adjustment to the Conversion Price pursuant to Section
10.3(a), (b), (c), (d), (e) or (f) occurs during such ten consecutive
Trading Days, the Sale Price for each Trading Day prior to the "ex"
date for such other event shall be adjusted by dividing such Sale Price
by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event;
(2) the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to
the Conversion Price pursuant to Section 10.3(a), (b), (c), (d), (e) or
(f) occurs on or after the "ex" date for the issuance or distribution
requiring such computation and prior to the day in question, the Sale
Price for each Trading Day on and after the "ex" date for such other
event shall be adjusted by dividing such Sale Price by the reciprocal
of the fraction by which the Conversion Price is so required to be
adjusted as a result of such other event; and
(3) the "ex" date for the issuance or distribution requiring
such computation is prior to the day in question, after taking into
account any adjustment required pursuant to clause (1) or (2) of this
proviso, the Sale Price for each Trading Day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the Fair
Market Value (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes of Section
10.3(d), (e) or (f)) of the evidences of Indebtedness, shares of
capital stock or assets being distributed applicable to one share of
Common Stock as of the close of business on the day before such "ex"
date.
For purposes of any computation under Section 10.3(f), if the "ex" date for any
event (other than the tender offer requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 10.3(a), (b), (c), (d),
(e) or (f) occurs on or after the Expiration Time for the tender or exchange
offer requiring such computation and prior to the day in question, the Sale
Price for each Trading Day on and after the "ex" date for such other event shall
be adjusted by dividing such Sale Price by the reciprocal of the fraction by
which the Conversion Price is so required to be adjusted as a result of such
other event. For purposes of this paragraph, the term "ex" date, when used:
(1) with respect to any issuance or distribution, means the
first date on which the shares of Common Stock trade regular way on the
relevant exchange or in the relevant market from which the Sale Price
was obtained without the right to receive such issuance or
distribution;
(2) with respect to any subdivision or combination of shares
of Common Stock, means the first date on which the shares of Common
Stock trade regular way on
63
such exchange or in such market after the time at which such
subdivision or combination becomes effective; and
(3) with respect to any tender or exchange offer, means the
first date on which the shares of Common Stock trade regular way on
such exchange or in such market after the Expiration Time of such
offer.
Notwithstanding the foregoing, whenever successive adjustments to the Conversion
Price are called for pursuant to this Section 10.3, such adjustments shall be
made to the Current Market Price as may be necessary or appropriate to
effectuate the intent of this Section 10.3 and to avoid unjust or inequitable
results as determined in good faith by the Board of Directors.
"Fair Market Value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction (as determined
by the Board of Directors, whose determination shall be conclusive).
"Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of shares of
Common Stock have the right to receive any cash, securities or other property or
in which the shares of Common Stock (or other applicable security) is exchanged
for or converted into any combination of cash, securities or other property, the
date fixed for determination of stockholders entitled to receive such cash,
securities or other property (whether such date is fixed by the Board of
Directors or by statute, contract or otherwise).
(h) The Company shall be entitled to make such additional
reductions in the Conversion Price, in addition to those required by Sections
10.3(a), (b), (c), (d), (e) and (f), as shall be necessary in order that any
dividend or distribution of Common Stock, any subdivision, reclassification or
combination of shares of Common Stock or any issuance of rights or warrants
referred to above shall not be taxable to the holders of Common Stock for United
States Federal income tax purposes.
(i) To the extent permitted by applicable law, the Company
may, from time to time, reduce the Conversion Price by any amount for any period
of time, if such period is at least 20 days and the reduction is irrevocable
during the period. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall mail to the Trustee and each Holder at the
address of such Holder as it appears in the register of the Securities
maintained by the Registrar, at least 15 days prior to the date the reduced
Conversion Price takes effect, a notice of the reduction stating the reduced
Conversion Price and the period during which it will be in effect.
(j) In any case in which this Section 10.3 shall require
that any adjustment be made effective as of or retroactively immediately
following a Record Date, the Company may elect to defer (but only for five
Trading Days following the filing of the statement referred to in Section 10.5)
issuing to the Holder of any Securities converted after such Record Date the
shares of Common Stock issuable upon such conversion over and above the shares
of Common Stock issuable upon such conversion on the basis of the Conversion
Price prior to adjustment; provided, however, that the Company shall deliver to
-------- -------
such Holder a due xxxx or other appropriate
64
instrument evidencing such Holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(k) All calculations under this Section 10.3 shall be made
to the nearest cent or one-hundredth of a share, with one-half cent and 0.005 of
a share, respectively, being rounded upward. Notwithstanding any other provision
of this Section 10.3, the Company shall not be required to make any adjustment
of the Conversion Price unless such adjustment would require an increase or
decrease of at least 1% of such price. Any lesser adjustment shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least 1% in such price.
Any adjustments under this Section 10.3 shall be made successively whenever an
event requiring such an adjustment occurs.
(l) In the event that at any time, as a result of an
adjustment made pursuant to this Section 10.3, the Holder of any Securities
thereafter surrendered for conversion shall become entitled to receive any
shares of stock of the Company other than shares of Common Stock into which the
Securities originally were convertible, the Conversion Price of such other
shares so receivable upon conversion of any such Security 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
subparagraphs (a) through (k) of this Section 10.3, and the provision of
Sections 10.1, 10.2 and 10.4 through 10.9 with respect to the Common Stock shall
apply on like or similar terms to any such other shares and the determination of
the Board of Directors as to any such adjustment shall be conclusive.
(m) No adjustment shall be made pursuant to this Section
10.3 (i) if the effect thereof would be to reduce the Conversion Price below the
par value (if any) of the Common Stock or (ii) if the Holders of the Securities
may participate in the transaction that would otherwise give rise to an
adjustment pursuant to this Section 10.3.
Section 10.4 Consolidation or Merger of the Company.
--------------------------------------
If any of the following events occurs, namely:
(1) any reclassification or change of the outstanding Common
Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision or combination);
(2) any merger, consolidation, statutory share exchange or
combination of the Company with another corporation as a result of
which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to
or in exchange for such Common Stock; or
(3) any sale or conveyance of the properties and assets of
the Company as, or substantially as, an entirety to any other
corporation as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock;
65
the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Trustee a supplemental indenture (which shall comply with
the Trust Indenture Act as in force at the date of execution of such
supplemental indenture, if such supplemental indenture is then required to so
comply) providing that such Securities shall be convertible into the kind and
amount of shares of stock and other securities or property or assets (including
cash) which such Holder would have been entitled to receive upon such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance had such Securities been converted into Common
Stock immediately prior to such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance assuming such holder
of Common Stock did not exercise its rights of election, if any, as to the kind
or amount of securities, cash or other property receivable upon such merger,
consolidation, statutory share exchange, sale or conveyance (provided, that if
--------
the kind or amount of securities, cash or other property receivable upon such
merger, consolidation, statutory share exchange, sale or conveyance is not the
same for each share of Common Stock in respect of which such rights of election
shall not have been exercised ("Non-Electing Share"), then for the purposes of
this Section 10.4, the kind and amount of securities, cash or other property
receivable upon such merger, consolidation, statutory share exchange, sale or
conveyance for each Non-Electing Share shall be deemed to be the kind and amount
so receivable per share by a plurality of the Non-Electing Shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
X. If, in the case of any such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance, the stock or other
securities and assets receivable thereupon by a holder of Common Stock includes
shares of stock or other securities and assets of a corporation other than the
successor or purchasing corporation, as the case may be, in such
reclassification, change, merger, consolidation, statutory share exchange,
combination, 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 shall reasonably consider necessary by reason of the foregoing,
including to the extent practicable the provisions providing for the Repurchase
Rights set forth in Article X hereof.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder, at the address of such Holder as it
appears on the register of the Securities maintained by the Registrar, within 20
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section 10.4 shall similarly apply to
successive reclassifications, mergers, consolidations, statutory share
exchanges, combinations, sales and conveyances.
If this Section 10.4 applies to any event or occurrence, Section 10.3
shall not apply.
Section 10.5 Notice of Adjustment.
---------------------
Whenever an adjustment in the Conversion Price with respect to the
Securities is required:
66
(1) the Company shall forthwith place on file with the
Trustee and any Conversion Agent for such securities a certificate of
the Treasurer of the Company, stating the adjusted Conversion Price
determined as provided herein and setting forth in reasonable detail
such facts as shall be necessary to show the reason for and the manner
of computing such adjustment; and
(2) a notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion Price shall
forthwith be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company, to each Holder
in the manner provided in Section 11.2. Any notice so given shall be
conclusively presumed to have been duly given, whether or not the
Holder receives such notice.
Section 10.6 Notice in Certain Events.
-------------------------
In case:
(1) of a consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is
required, or of the sale or conveyance to another Person or entity or
group of Persons or entities acting in concert as a partnership,
limited partnership, syndicate or other group (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
all or substantially all of the property and assets of the Company; or
(2) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(3) of any action triggering an adjustment of the Conversion
Price referred to in clauses (x) or (y) below;
then, in each case, the Company shall cause to be filed with the Trustee and the
Conversion Agent, and shall cause to be given, to the Holders of the Securities
in the manner provided in Section 11.2, at least 15 days prior to the applicable
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of any distribution or grant of rights or warrants
triggering an adjustment to the Conversion Price pursuant to this Article X, or,
if a record is not to be taken, the date as of which the holders of record of
Common Stock entitled to such distribution, rights or warrants are to be
determined, or (y) the date on which any reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up triggering an
adjustment to the Conversion Price pursuant to this Article X is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reclassification, consolidation, merger
sale, conveyance, dissolution, liquidation or winding up.
Failure to give such notice or any defect therein shall not
affect the legality or validity of the proceedings described in clause (1), (2)
or (3) of this Section 10.6.
67
Section 10.7 Company To Reserve Stock: Registration; Listing.
------------------------------------------------
(a) The Company shall, in accordance with the laws of the
State of Delaware, at all times reserve and keep available, free from preemptive
rights, out of its authorized but unissued shares of Common Stock, for the
purpose of effecting the conversion of the Securities, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all Securities then Outstanding into such Common Stock
at any time (assuming that, at the time of the computation of such number of
shares or securities, all such Securities would be held by a single Holder);
provided, however, that nothing contained herein shall preclude the Company from
-------- -------
satisfying its obligations in respect of the conversion of the Securities by
delivery of purchased shares of Common Stock which are then held in the treasury
of the Company. The Company covenants that all shares of Common Stock which may
be issued upon conversion of Securities will upon issue be fully paid and
nonassessable and free from all liens and charges and, except as provided in
Section 10.8, taxes with respect to the issue thereof.
(b) If any shares of Common Stock which would be issuable
upon conversion of Securities hereunder require registration with or approval of
any governmental authority before such shares or securities may be issued upon
such conversion, the Company will in good faith and as expeditiously as possible
endeavor to cause such shares or securities to be duly registered or approved,
as the case may be. The Company further covenants that so long as the Common
Stock shall be listed on the New York Stock Exchange, the Company will, if
permitted by the rules of such exchange, list and keep listed all Common Stock
issuable upon conversion of the Securities, and the Company will endeavor to
list the shares of Common Stock required to be delivered upon conversion of the
Securities prior to such delivery upon any other national securities exchange
upon which the outstanding Common Stock is listed at the time of such delivery.
Section 10.8 Taxes on Conversion.
-------------------
The issue of stock certificates on conversion of Securities
shall be made without charge to the converting Holder for any documentary, stamp
or similar issue or transfer taxes in respect of the issue thereof, and the
Company shall pay any and all documentary, stamp or similar issue or transfer
taxes that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any such tax which may be payable in respect of any
transfer involved in the issue or delivery of shares of Common Stock or the
portion, if any, of the Securities which are not so converted in a name other
than that in which the Securities so converted were registered, and no such
issue or delivery shall be made unless and until the Person requesting such
issue has paid to the Company the amount of such tax or has established to the
satisfaction of the Company that such tax has been paid.
Section 10.9 Conversion After Record Date.
----------------------------
Except as provided below, if any Securities are surrendered
for conversion on any day other than an Interest Payment Date, the Holder of
such Securities shall not be entitled to receive any interest that has accrued
on such Securities since the prior Interest Payment Date.
68
By delivery to the Holder of the number of shares of Common Stock or other
consideration issuable upon conversion in accordance with this Article X, any
accrued and unpaid interest on such Securities will be deemed to have been paid
in full.
If any Securities are surrendered for conversion subsequent to
the Record Date preceding an Interest Payment Date but on or prior to such
Interest Payment Date, the Holder of such Securities at the close of business on
such Record Date shall receive the interest payable on such Securities on such
Interest Payment Date notwithstanding the conversion thereof. Securities
surrendered for conversion during the period from the close of business on any
Record Date preceding any Interest Payment Date to the opening of business on
such Interest Payment Date shall (except in the case of Securities which have
been called for redemption on a Redemption Date within such period) be
accompanied by payment by Holders, for the account of the Company, in New York
Clearing House funds or other funds of an amount equal to the interest payable
on such Interest Payment Date on the Securities being surrendered for
conversion. Except as provided in this Section 10.9, no adjustments in respect
of payments of interest on Securities surrendered for conversion or any
dividends or distributions or interest on the Common Stock issued upon
conversion shall be made upon the conversion of any Securities.
Section 10.10 Company Determination Final.
----------------------------
Any determination that the Company or the Board of Directors
must make pursuant to this Article X shall be conclusive if made in good faith
and in accordance with the provisions of this Article, absent manifest error,
and set forth in a Board Resolution.
Section 10.11 Responsibility of Trustee for Conversion
----------------------------------------
Provisions.
-----------
The Trustee has no duty to determine when an adjustment under
this Article X should be made, how it should be made or what it should be. The
Trustee makes no representation as to the validity or value of any securities or
assets issued upon conversion of Securities. The Trustee shall not be
responsible for any failure of the Company to comply with this Article X. Each
Conversion Agent other than the Company shall have the same protection under
this Section 10.11 as the Trustee.
The rights, privileges, protections, immunities and benefits
given to the Trustee under the Indenture including, without limitation, its
rights to be indemnified, are extended to, and shall be enforceable by, the
Trustee in each of its capacities hereunder, and each Paying Agent or Conversion
Agent acting hereunder.
Section 10.12 Unconditional Right of Holders to Convert.
------------------------------------------
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to convert its Security in accordance with this Article X and to
bring an action for the enforcement of any such right to convert, and such
rights shall not be impaired or affected without the consent of such Holder.
69
ARTICLE XI
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls. If any provision of
----------------------------
this Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
Section 11.2 Notices. Any request, demand, authorization,
-------
notice, waiver, consent or communication shall be in writing and delivered in
person or mailed by first-class mail, postage prepaid, addressed as follows or
transmitted by facsimile transmission (confirmed by guaranteed overnight
courier) to the following facsimile numbers:
if to the Company:
The PMI Group, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: General Counsel and Secretary
Facsimile No. (000) 000-0000
if to the Trustee:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
Attention: Corporate Trust Administration
The Company or the Trustee by notice given to the other in the
manner provided above may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication given to a Securityholder shall be
mailed to the Securityholder, by first-class mail, postage prepaid, at the
Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.
If the Company mails a notice or communication to the
Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying
Agent, Conversion Agent or co-registrar.
70
Section 11.3 Communication by Holders with Other Holders.
-------------------------------------------
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar, the Paying Agent, the
Conversion Agent and anyone else shall have the protection of TIA Section
312(c).
Section 11.4 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:
(1) 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
(2) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 11.5 Statements Required in Certificate or Opinion.
---------------------------------------------
Each Officers' Certificate or Opinion of Counsel with respect to compliance with
a covenant or condition provided for in this Indenture shall include:
(1) a statement that each person making such Officers' Certificate or
Opinion of Counsel has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such Officers'
Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such person, he 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
(4) a statement that, in the opinion of such person, such covenant or
condition has been complied with.
Section 11.6 Separability Clause. 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 11.7 Rules by Trustee, Paying Agent, Conversion Agent
------------------------------------------------
and Registrar. The Trustee may make reasonable rules for action by or a meeting
-------------
of Securityholders. The Registrar, the Conversion Agent and the Paying Agent may
make reasonable rules for their functions.
Section 11.8 Legal Holidays. A "Legal Holiday" is any day
--------------
other than a Business Day. If any specified date (including a date for giving
notice) is a Legal Holiday, the action shall be taken on the next succeeding day
that is not a Legal Holiday, and, if the action to
71
be taken on such date is a payment in respect of the Securities, no interest, if
any, shall accrue for the intervening period.
Section 11.9 GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED
-------------
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 11.10 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 this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
Section 11.11 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 11.12 Multiple Originals. The parties may sign any
------------------
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
72
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this
Indenture on behalf of the respective parties hereto as of the date first above
written.
THE PMI GROUP, INC.
By:____________________________________
Name:
Title:
THE BANK OF NEW YORK
As Trustee
By:____________________________________
Name:
Title:
EXHIBIT A
[FORM OF FACE OF GLOBAL SECURITY]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO
NOMINEES OF THE DEPOSITORY TRUST COMPANY, 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
ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT OF 1933"), OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE BY ACQUISITION HEREOF, THE HOLDER:
(1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933;
(2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THE
SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OF 1933, (C)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT OF 1933 (IF AVAILABLE), (D) TO ANY
INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE
MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT OF 1933 AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
SUCH TRANSFER; AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY
EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT
TO CLAUSE 2(C) OR 2(E) ABOVE), A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
The foregoing legend may be removed from this Security on satisfaction
of the conditions specified in the Indenture.
PURSUANT TO SECTION 4.7 OF THE INDENTURE, THE PMI GROUP, INC. AGREES,
AND BY ACCEPTANCE OF A BENEFICIAL OWNERSHIP INTEREST IN THE SECURITY, EACH
BENEFICIAL HOLDER OF THE SECURITIES WILL BE DEEMED TO HAVE AGREED, FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES, TO TREAT THE SECURITIES AS INDEBTEDNESS THAT
IS SUBJECT TO XXXXXXX 0.0000-0 XX XXX XXXXXX XXXXXX TREASURY REGULATIONS (THE
"CONTINGENT PAYMENT DEBT REGULATIONS"). YOU MAY OBTAIN THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT, ISSUE DATE, YIELD TO MATURITY, COMPARABLE YIELD AND PROJECTED
PAYMENT SCHEDULE FOR THE SECURITY BY TELEPHONING THE PMI GROUP, INC. INVESTOR
RELATIONS DEPARTMENT AT (000) 000-0000 OR SUBMITTING A WRITTEN REQUEST FOR SUCH
INFORMATION TO: THE PMI GROUP, INC., 000 XXXXXXXXXX XXXXXX, XXX XXXXXXXXX,
XXXXXXXXXX 00000, ATTENTION: INVESTOR RELATIONS DEPARTMENT.
A-2
THE PMI GROUP, INC.
2.50% Senior Convertible Debentures due 2021
No. CUSIP: 69344M AC 5
Issue Date: July 16, 2001 Principal Amount: $______________
THE PMI GROUP, INC., a Delaware corporation, promises to pay to Cede &
Co. or registered assigns, the principal amount of [_____________________
dollars ($__________)] on July 15, 2021.
Interest Payment Dates: January 15 and July 15, commencing January 15,
2002.
Record Dates: January 1 and July 1.
Reference is hereby made to the further provisions of this Security
set forth on the reverse side of this Security, which further provisions shall
for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: July __, 2001 THE PMI GROUP, INC.
By:________________________________
Title:_____________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is one
of the Securities referred to in the
within-mentioned Indenture.
By__________________________________
Authorized Signatory
Dated: July __, 2001
A-3
[FORM OF REVERSE OF GLOBAL SECURITY]
2.50% Senior Convertible Debentures due 2021
This Security is one of a duly authorized issue of 2.50% Senior
Convertible Debentures due 2021 (the "Securities") of the PMI Group, Inc., a
Delaware corporation (including any successor corporation under the Indenture
hereinafter referred to, the "Company"), issued under an Indenture, dated as of
July 16, 2001 (the "Indenture"), between the Company and The Bank of New York,
as trustee (the "Trustee"). The terms of the Security include those stated in
the Indenture, those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended ("TIA"), and those set forth in this Security.
This Security is subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of all such terms. To the extent permitted
by applicable law, in the event of any inconsistency between the terms of this
Security and the terms of the Indenture, the terms of the Indenture shall
control. Capitalized terms used but not defined herein have the meanings
assigned to them in the Indenture referred to below unless otherwise indicated.
1. Interest
--------
General. The Company promises to pay Interest on the principal amount
-------
of the Securities plus accrued and unpaid interest, if any, including contingent
interest and additional interest, if any, at the interest rate specified herein
(the "Interest Rate") from the date of issuance until repayment in full at July
15, 2021, redemption or purchase. The Company will pay Interest on this Security
semi-annually in arrears on January 15 and July 15 of each year (each, an
"interest payment date"), commencing January 15, 2002.
(a) The Securities shall bear interest from July 16, 2001 until the
principal amount thereof is paid or made available for payment, or until such
date on which the Securities are converted, redeemed or purchased as provided
herein at a rate of 2.50% per annum.
(b) Interest on the Securities shall be computed (i) for any full semi-
annual period for which a particular Interest Rate is applicable, on the basis
of a 360-day year of twelve 30-day months and (ii) for any period for which a
particular Interest Rate is applicable for less than a full semiannual period
for which Interest is calculated, on the basis of a 30-day month and, for such
periods of less than a month, the actual number of days elapsed over a 30-day
month. For purposes of determining the Interest Rate, the Trustee may assume
that the Trading Price Condition has not been satisfied and that Reset Rate is
not in effect unless the Trustee has received an Officers' Certificate stating
that the Trading Price Condition has been satisfied and specifying the Reset
Rate then in effect.
(c) The Interest Rate on this Security will increase to the Reset Rate for
any semi-annual period commencing on July 15, 2004, July 15, 2006, July 15,
2008, July 15, 2011 or July 15, 2016, each of which shall be referred to as a
"Reset Rate Determination Date", if the Trading Price Condition for that semi-
annual period is satisfied. The "Trading Price Condition" shall be satisfied for
any semi-annual period if the Sale Price of the Common Stock for any 20
A-4
out of the last 30 trading days ending five days prior to the first day of such
semi-annual period is less than or equal to 60% of the Conversion Price of the
Security in effect for each of those 20 trading days. Such interest payable at
the Reset Rate is sometimes referred to herein as "contingent interest."
Following an increase to the Reset Rate, the Interest Rate on the
Security will remain at the Reset Rate unless and until the first day of a
subsequent semi-annual period for which the Trading Price Condition is not
satisfied, at which time the Interest Rate on the Security will revert to 2.50%
per annum and will remain at such rate unless and until the Trading Price
Condition is satisfied for a semi-annual period commencing on a subsequent Reset
Rate Determination Date.
If the Reset Rate is in effect for a particular semi-annual period,
the Company will pay a portion of any increase represented by the change to the
Reset Rate as cash interest at an annualized rate of 0.35% per annum (0.175% per
semi-annual period) and any remaining increase in interest will be added to the
principal amount of the Security (but which will not affect the number of shares
of Common Stock issuable upon conversion of the Security) and will be accrued
and payable at maturity and upon any purchase by the Company at the option of
the Holder or upon any optional redemption by the Company. Interest, additional
interest and contingent interest will accrue on any such remaining increase in
interest and will be payable at such times as interest, additional interest and
contingent interest is otherwise payable.
The "Reset Rate" determined as of each Reset Rate Determination Date
will be equal to 75% of the rate that would, in the sole judgment of the Reset
Rate Agent, result in a trading price of par of a hypothetical issue of senior,
nonconvertible, noncontingent, fixed-rate debt securities of the Company with
(i) a final maturity comparable to the Security; (ii) an aggregate principal
amount equal to the aggregate principal amount of all Securities then
outstanding; and (iii) covenants and other provisions that are, insofar as would
be practicable for an issue of senior, nonconvertible, non-contingent fixed-rate
debt security, substantially identical to those of this Security, but which are
not subject to repurchase by the Company at the option of the Holder. In no
case, however, will the Reset Rate ever be greater than 12% or less than 2.85%.
Also, if the Reset Rate Agent has not established the Reset Rate for the
applicable semi-annual period, or if the Reset Rate Agent determines in its sole
judgment that there is no suitable reference rate from which the Reset Rate may
by determined, the Reset Rate for that period will be the Reset Rate most
recently determined (except if there is no Reset Rate most recently determined,
in which case the Reset Rate shall be a rate mutually agreed upon by the Reset
Rate Agent and the Company reflecting current market conditions), and such Reset
Rate shall remain in effect until the Reset Rate Agent shall determine a new
Reset Rate.
The Company will appoint a Reset Rate Agent. For the determination of
the Reset Rate, the Reset Rate Agent will seek indicative reference rates from
three nationally-recognized investment banks, and the Reset Rate shall be the
average of such three indicative reference rates, provided that if at least
three such indicative reference rates cannot reasonably be obtained by the Reset
Rate Agent, but two such indicative reference rates are obtained, then the
average of the two indicative reference rates shall be used, and if only one
such indicative reference rate can reasonably be obtained by the Reset Rate
Agent, this one indicative reference rate shall be used. The determination of
any Reset Rate will be conclusive and binding upon the
A-5
Reset Rate Agent, the Company, the Trustee and the Holders of the Security, in
the absence of manifest error. The Company may remove the Reset Rate Agent and
appoint a successor Reset Rate Agent at anytime.
The "sale price" of the Common Stock on any date means the closing per
share sale price (or if no closing sale price is reported, the average of the
bid and ask prices or, if more than one in either case, the average of the
average bid and the average asked prices) on that date as reported on the New
York Stock Exchange or, if the Common Stock is not listed on the New York Stock
Exchange, then as reported by the Nasdaq system.
In the event contingent interest is payable, the Company will
disseminate a press release through Dow Xxxxx & Company, Inc. or Bloomberg
Business News containing this information or publish the information on the
Company's Web site or through such other public medium as the Company may use at
that time.
(d) If this Security is redeemed or the Holder elects to require the
Company to purchase this Security pursuant to Section 6 of this Security, on a
date that is after the record date and prior to the corresponding interest
payment date, interest, including contingent interest, if any, accrued and
unpaid hereon to but not including the applicable Redemption Date, Purchase Date
or Change of Control Purchase Date as the case may be will be paid to the same
Holder to whom the Company pays the principal of this Security.
Interest on Securities converted after a record date but prior to the
corresponding interest payment date will be paid to the Holder of the Securities
on the record date but, upon conversion, the Holder must pay the Company the
interest, including contingent interest, which has accrued and will be paid on
such interest payment date. No such payment need be made with respect to
Securities which will be redeemed after a record date and prior to the
corresponding interest payment date.
If the principal amount hereof or any portion of such principal amount
or any interest, including contingent interest and additional interest, if any,
on any Security is not paid when due (whether upon acceleration pursuant to
Section 6.2 of the Indenture, upon the date set for payment of the Redemption
Price pursuant to Section 5 hereof or the Purchase Price or Change of Control
Purchase Price pursuant to Section 6 hereof or upon the Stated Maturity of this
Security), then in each such case the overdue amount shall, to the extent
permitted by law, bear interest at the applicable Interest Rate, compounded
semi-annually, which interest shall accrue from the date of such overdue amount
was originally due to the date of payment of such amount, including interest
thereon, has been made or duly provided for. All such interest shall be payable
on demand.
2. Method of Payment.
-----------------
Except as provided below, interest will be paid (i) on the Global
Securities to DTC in immediately available funds, (ii) on any definitive
Securities having an aggregate principal amount of $5,000,000 or less, by check
mailed to the Holders of such Securities; and (iii) on any definitive Securities
having an aggregate principal amount of more than $5,000,000, by wire transfer
in immediately available funds at the election of the Holders of these
Securities.
A-6
At Stated Maturity the Company will pay interest on definitive
Securities at the Company's office or agency in New York City, which initially
will be the Corporate Trust Office of the trustee in New York City.
Principal on definitive Securities will be payable, upon Stated
Maturity or when due, at the office or agency of the Company in New York City,
maintained for such purpose, initially the Corporate Trust Office of the Trustee
in New York City.
Subject to the terms and conditions of the Indenture, the Company will
make payments in cash, shares of Common Stock or a combination thereof, as the
case may be, in respect of Redemption Prices, Purchase Prices, Change of Control
Purchase Prices and at Stated Maturity to Holders who surrender Securities to a
Paying Agent to collect such payments in respect of the Securities. The Company
will pay cash amounts 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 make such cash payments by check payable in such money.
3. Paying Agent, Conversion Agent and Registrar.
--------------------------------------------
Initially, The Bank of New York (the "Trustee") will act as Paying
Agent, Conversion Agent and Registrar. The Company may appoint and change any
Paying Agent, Conversion Agent or Registrar without notice, other than notice to
the Trustee; provided that the Company will maintain at least one Paying Agent
in the State of New York, City of New York, Borough of Manhattan, which shall
initially be an office or agency of the Trustee. The Company or any of its
Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion
Agent or Registrar.
4. Indenture.
---------
The Securities are general unsecured obligations of the Company
limited to $360,000,000 aggregate principal amount. The Indenture does not limit
other indebtedness of the Company, secured or unsecured.
5. Redemption at the Option of the Company.
---------------------------------------
No sinking fund is provided for the Securities. The Securities are
redeemable for cash at the option of the Company, in whole or in part, at any
time or from time to time on, or after July 15, 2006 upon not less than 30 nor
more than 60 days' notice by mail for a redemption price equal to the principal
amount of those Securities plus accrued and unpaid interest, including
contingent interest and additional interest, if any, up to the Redemption Date
(the "Redemption Price").
6. Purchase By the Company at the Option of the Holder.
---------------------------------------------------
Subject to the terms and conditions of the Indenture, the Company
shall become obligated to purchase, at the option of the Holder, all or any
portion of the Securities held by such Holder on July 15, 2004, July 15, 2006,
July 15, 2008, July 15, 2011 and July 15, 2016 in integral multiples of $1,000
at a Purchase Price equal to the principal amount of those Securities plus
accrued and unpaid interest, including contingent interest and additional
interest, if any, of
A-7
such Security on the Purchase Date. To exercise such right, a Holder shall
deliver to the Company a Purchase Notice containing the information set forth in
the Indenture, at any time from the opening of business on the date that is 20
Business Days prior to such Purchase Date until the close of business on the
third Business Day prior to such Purchase Date, and shall deliver the Securities
to the Paying Agent as set forth in the Indenture.
The Purchase Price may be paid, at the option of the Company, in cash
or by the issuance and delivery of shares of Common Stock, or in any combination
thereof, subject to the terms and conditions of the Indenture.
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to offer to purchase the
Securities held by such Holder within 30 days (which purchase shall occur 30
days after the date of such offer) after the occurrence of a Change of Control
of the Company for a Change of Control Purchase Price equal to the principal
amount plus accrued and unpaid interest, including contingent interest and
additional interest, if any, of such Security on the Change of Control Purchase
Date. The Change of Control Purchase Price may be paid, at the option of the
Company, in cash or by the issuance and delivery of shares of Applicable Stock,
or in any combination thereof, subject to the terms and conditions of the
Indenture.
Holders have the right to withdraw any Purchase Notice or Change of
Control Purchase Notice, as the case may be, by delivering to the Paying Agent a
written notice of withdrawal in accordance with the provisions of the Indenture.
If cash (and/or Applicable Stock if permitted under the Indenture)
sufficient to pay the Purchase Price or Change of Control Purchase Price, as the
case may be, of all Securities or portions thereof to be purchased as of the
Purchase Date or the Change of Control Purchase Date, as the case may be, is
deposited with the Paying Agent, on the Business Day following the Purchase Date
or the Change of Control Purchase Date, interest will cease to accrue on such
Securities (or portions thereof) immediately after such Purchase Date or Change
of Control Purchase Date, and the Holder thereof shall have no other rights as
such other than the right to receive the Purchase Price or Change of Control
Purchase Price upon surrender of such Security.
7. Notice of Redemption.
--------------------
Notice of redemption pursuant to Section 5 of this Security will be
mailed at least 30 days but not more than 60 days before the Redemption Date to
each Holder of Securities to be redeemed at the Holder's registered address. If
money sufficient to pay the Redemption Price of all Securities (or portions
thereof) to be redeemed on the Redemption Date is deposited with the Paying
Agent prior to or on the Redemption Date, immediately after such Redemption Date
interest ceases to accrue on such Securities or portions thereof. Securities in
denominations larger than $1,000 of principal amount may be redeemed in part but
only in integral multiples of $1,000 of principal amount.
8. Conversion.
----------
Subject to and in compliance with the provisions of the Indenture
(including, without limitation, the conditions to conversion of this Security
set forth in Section 10.1 thereof),
A-8
a Holder is entitled, at such Holder's option, to convert the Holder's Security
(or any portion of the principal amount thereof that is $1,000 or an integral
multiple $1,000), into fully paid and nonassessable shares of Common Stock at
the Conversion Price in effect at the time of conversion.
The Company will notify Holders of any event triggering the right to
convert the Securities as specified above in accordance with the Indenture.
A Security in respect of which a Holder has delivered a Purchase
Notice or Change of Control Purchase Notice, as the case may be, exercising the
option of such Holder to require the Company to purchase such Security may be
converted only if such Purchase Notice or Change of Control Purchase Notice, as
the case may be, is withdrawn in accordance with the terms of the Indenture.
The initial Conversion Price is $88.31, subject to adjustment in
certain events described in the Indenture. A Holder which surrenders Securities
for conversion will receive cash or a check in lieu of any fractional share of
Common Stock.
To surrender a Security for conversion, a Holder must (1) complete and
manually sign the conversion notice below (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Conversion Agent, (2)
surrender the Security to the Conversion Agent, (3) furnish appropriate
endorsements and transfer documents and (4) pay any transfer or similar tax, if
required.
No fractional shares of Common Stock shall be issued upon conversion
of any Security. Instead of any fractional share of Common Stock that would
otherwise be issued upon conversion of such Security, the Company shall pay a
cash adjustment as provided in the Indenture.
No payment or adjustment will be made for dividends on the shares of
Common Stock, except as provided in the Indenture.
If the Company (i) is a party to a consolidation, merger or binding
share exchange (ii) reclassifies the Common Stock or (iii) conveys, transfers or
leases its properties and assets substantially as an entirety to any Person, the
right to convert a Security into shares of Common Stock may be changed into a
right to convert it into securities, cash or other assets of the Company or such
other Person, in each case in accordance with the Indenture.
9. Conversion Arrangement on Call for Redemption.
---------------------------------------------
Any Securities called for redemption, unless surrendered for
conversion before the close of business on the day that is two Business Days
prior to the Redemption Date, may be deemed to be purchased from the Holders of
such Securities at an amount not less than the Redemption Price, by one or more
investment bankers or other purchasers who may agree with the Company to
purchase such Securities from the Holders, to convert them into shares of Common
Stock and to make payment for such Securities to the Trustee in trust for such
Holders.
A-9
10. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of principal amount and integral multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, 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 transfer or exchange
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities in respect of which a Purchase Notice or Change of Control Purchase
Notice has been given and not withdrawn (except, in the case of a Security to be
purchased in part, the portion of the Security not to be purchased) or any
Securities for a period of 15 days before the mailing of a notice of redemption
of Securities to be redeemed.
11. Persons Deemed Owners.
---------------------
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
12. Unclaimed Money or Securities.
-----------------------------
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years,
subject to applicable unclaimed property law. After return to the Company,
Holders entitled to the money or securities must look to the Company for payment
as general creditors unless an applicable abandoned property law designates
another person.
13. Amendment; Waiver.
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate principal amount of the outstanding
Securities and (ii) certain Defaults may be waived with the written consent of
the Holders of a majority in aggregate principal amount of the outstanding
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company and the Trustee may amend the
Indenture or the Securities (i) to add to the covenants of the Company for the
benefit of the Holders of Securities, (ii) to surrender any right or power
conferred upon the Company in the Indenture, (iii) to provide for conversion
rights of Holders of Securities if any reclassification or change of the
Company's Common Stock or any consolidation, merger or sale of all or
substantially all of the Company's assets occurs, (iv) to provide for the
assumption of the Company's obligations to the Holders of Securities in the case
of a merger, consolidation, conveyance, transfer or lease pursuant to Article V
of the Indenture, (v) to reduce the Conversion Price; provided, however, that
such reduction in the Conversion Price shall not adversely affect the interest
of the Holders of Securities (after taking into account tax and other
consequences of such reduction), (vi) to comply with the requirements of the SEC
in order to effect or maintain the qualification of the Indenture under the TIA,
(vii) to make any changes or modifications necessary in connection
A-10
with the registration of the Securities under the Securities Act as contemplated
in the Registration Rights Agreement; provided, however, that such action
pursuant to this clause does not, in the good faith opinion of the Board of
Directors of the Company (as evidenced by a Board Resolution) and the Trustee,
adversely affect the interests of the Holders of Securities in any material
respect, (viii) to cure any ambiguity, to correct or supplement any provision in
the Indenture which may be inconsistent with any other provision therein or
which is otherwise defective, or to make any other provisions with respect to
matters or questions arising under the Indenture which the Company may deem
necessary or desirable and which shall not be inconsistent with the provisions
of the Indenture; provided, however, that such action pursuant to this clause
does not, in the good faith opinion of the Board of Directors of the Company (as
evidenced by a Board Resolution) and the Trustee, adversely affect the interests
of the Holders of Securities in any material respect, and (ix) to add or modify
any other provisions in the Indenture with respect to matters or questions
arising hereunder which the Company and the Trustee may deem necessary or
desirable and which will not adversely affect the interests of the Holders of
Securities.
14. Defaults and Remedies.
---------------------
If any Event of Default with respect to Securities shall occur and be
continuing, the principal of all the Securities may be declared due and payable
in the manner and with the effect provided in the Indenture.
15. Trustee Dealings with the Company.
---------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
16. Calculations in Respect of Securities.
-------------------------------------
The Company or its agents will be responsible for making all
calculations called for under the Securities including, but not limited to,
determination of the market prices for the Securities and of the Common Stock
and the amounts of interest and contingent payments, if any, on the Securities.
Any calculations made in good faith and without manifest error will be final and
binding on Holders of the Securities. The Company or its agents will be required
to deliver to the Trustee a schedule of its calculations and the Trustee will be
entitled to conclusively rely upon the accuracy of such calculations without
independent verification.
17. No Recourse Against Others.
--------------------------
A director, officer, employee or shareholder, 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. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
A-11
18. Authentication.
--------------
This Security shall not be valid until an authorize signatory of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
19. Abbreviations.
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. GOVERNING LAW.
-------------
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
SECURITY.
The Company will furnish to any Securityholder upon written request
and without charge a copy of the Indenture which has in it the text of this
Security in larger type. Requests may be made to:
THE PMI GROUP, INC.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel and Secretary
Facsimile No. (000) 000-0000
21. Registration Rights.
-------------------
The Holders of the Securities are entitled to the benefits of a Resale
Registration Rights Agreement, dated as of July 16, 2001, among the Company,
Bank of America Securities LLC and Xxxxxx Brothers Inc., including the receipt
of additional interest upon a registration default (as defined in such
agreement).
A-12
--------------------------------------------------------------------------------------
ASSIGNMENT FORM CONVERSION NOTICE
--------------------------------------------------------------------------------------
To assign this Security, fill in the To convert this Security into
form below: Common Stock of the Company,
check the box [_]
--------------------------------------------------------------------------------------
I or we assign and transfer this To convert only part of this
Security to Security, state the principal
____________________________________ amount to be converted (which
____________________________________ must be $1,000 or an integral
(Insert assignee's soc. sec. or tax ID multiple of $1,000):
no.)
____________________________________ If you want the stock certificate
____________________________________ made out in another person's name
____________________________________ fill in the form below
(Print or type assignee's name, ____________________________________
address and zip code) ____________________________________
(Insert the other person's soc. sec.
and irrevocably appoint tax ID no.)
___________________________ agent to ____________________________________
transfer this Security on the books of ____________________________________
the Company. The agent may ____________________________________
substitute another to act for him. ____________________________________
____________________________________
(Print or type other person's name,
address and zip code)
--------------------------------------------------------------------------------------
Date: _______________ Your Signature: _______________________________________
_____________________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guaranteed
________________________________________
Participant in a Recognized Signature
Guarantee Medallion Program
By:_____________________________________
Authorized Signatory
A-13
SCHEDULE OF INCREASES AND DECREASES OF GLOBAL SECURITY
Initial Principal Amount of Global Security: ____________($___________).
________________________________________________________________________________
Date Amount of Amount of Principal Notation by
Increase in Decrease in Amount of Registrar or
Principal Principal Global Security Security
Amount of Amount of After Increase or Custodian
Global Security Global Security Decrease
--------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
X-00
XXXXXXX X
[FORM OF FACE OF CERTIFICATED SECURITY]
PURSUANT TO SECTION 4.7 OF THE INDENTURE, THE PMI GROUP, INC. AGREES,
AND BY ACCEPTANCE OF A BENEFICIAL OWNERSHIP INTEREST IN THE SECURITY, EACH
BENEFICIAL HOLDER OF THE SECURITIES WILL BE DEEMED TO HAVE AGREED, FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES, TO TREAT THE SECURITIES AS INDEBTEDNESS THAT
IS SUBJECT TO XXXXXXX 0.0000-0 XX XXX XXXXXX XXXXXX TREASURY REGULATIONS (THE
"CONTINGENT PAYMENT DEBT REGULATIONS"). YOU MAY OBTAIN THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT, ISSUE DATE, YIELD TO MATURITY, COMPARABLE YIELD AND PROJECTED
PAYMENT SCHEDULE FOR THE SECURITY BY TELEPHONING THE PMI GROUP, INC. INVESTOR
RELATIONS DEPARTMENT AT (000) 000-0000 OR SUBMITTING A WRITTEN REQUEST FOR SUCH
INFORMATION TO: THE PMI GROUP, INC., 000 XXXXXXXXXX XXXXXX, XXX XXXXXXXXX,
XXXXXXXXXX 00000, ATTENTION: INVESTOR RELATIONS DEPARTMENT.
THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT OF 1933") OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE BY ACQUISITION HEREOF, THE HOLDER:
(1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933;
(2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THE
SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OF 1933, (C)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT OF 1933 (IF AVAILABLE), (D) TO ANY
INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE
MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT OF 1933 AND WHICH CONTINUES TO BE EFFECTIVE AT
THE TIME OF SUCH TRANSFER; AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY
EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT
TO CLAUSE 2(C) OR 2(E) ABOVE), A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
The foregoing legend may be removed from this Security on satisfaction
of the conditions specified in the Indenture.
B-2
THE PMI GROUP, INC.
2.50% Senior Convertible Debentures due 2021
No. CUSIP:
Issue Date: July 16, 2001
Issue Price: $1,000
THE PMI GROUP, INC., a Delaware corporation, promises to pay to
___________________. or registered assigns, the principal amount of [ ($ )] on
July 15, 2021.
Interest Payment Dates: January 15 and July 15, commencing January 15,
2002.
Record Dates: January 1 and July 1.
Reference is hereby made to the further provisions of this Security
set forth on the reverse side of this Security, which further provisions shall
for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: THE PMI GROUP, INC.
By: _______________________
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this
is one of the Securities referred
to in the within-mentioned Indenture.
By _______________________________
Authorized Signatory
Dated:
B-3
[FORM OF REVERSE OF CERTIFICATED SECURITY IS IDENTICAL TO EXHIBIT A]
EXHIBIT C
2.50% Senior Convertible Debentures due 2021
Transfer Certificate
In connection with any transfer of any of the Securities within
the period prior to the expiration of the holding period applicable to the sales
thereof under Rule 144(k) under the Securities Act of 1933, as amended (the
"Securities Act") (or any successor provision), the undersigned registered owner
of this Security hereby certifies with respect to $____________ principal amount
of the above-captioned Securities presented or surrendered on the date hereof
(the "Surrendered Securities") for registration of transfer, or for exchange or
conversion where the securities issuable upon such exchange or conversion are to
be registered in a name other than that of the undersigned registered owner
(each such transaction being a "transfer"), that such transfer complies with the
restrictive legend set forth on the face of the Surrendered Securities for the
reason checked below:
[_] A transfer of the Surrendered Securities is made to the
Company or any subsidiaries; or
[_] The transfer of the Surrendered Securities complies with
Rule 144A under the Securities Act; or
[_] The transfer of the Surrendered Securities complies with
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act; or
[_] The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act;
or
[_] The transfer of the Surrendered Securities is pursuant to
another available exemption from the registration
requirement of the Securities Act;
and unless the box below is checked, the undersigned confirms
that, to the undersigned's knowledge, such Securities are not being transferred
to an "affiliate" of the Company as defined in Rule 144 under the Securities Act
(an "Affiliate").
[_] The transferee is an Affiliate of the Company.
DATE: ______________________________________
Signature(s)
(If the registered owner is a corporation, partnership or
fiduciary, the title of the person signing on behalf of such registered owner
must be stated.)
Signature Guaranteed
________________________________________
Participant in a Recognized Signature
C-2
